Why we should support SMEs to adopt AI

Small and medium-sized enterprises, or SMEs, play a crucial role in the UK economy, driving employment, promoting innovation and encouraging growth. A staggering 99.8% of all UK businesses are SMEs. However, recent global shifts such as the COVID-19 pandemic have highlighted the challenges and vulnerabilities that small businesses face from disruption and changing technological landscapes, from accurately forecasting business demand to supply chain sustainability.  

Data-driven AI technologies have the potential to significantly improve the outlook for small businesses, by enhancing productivity, strengthening resilience and creating a strong competitive edge. But are SMEs ready to fully embrace AI?  

The opportunity 

Integrating data-driven and AI technologies into an SME can help to strengthen its resilience, reduce vulnerability to change and minimise business risks by providing more evidence-based insights to inform decision-making, through a combination of advanced data analysis and the predictive capabilities that AI can provide.  

By learning how to collect, manage and clean data correctly, and apply best practice to validate AI approaches, we can improve the quality and accuracy of its conclusions and predictions, allowing SMEs to make informed decisions and take proactive measures to prevent or minimise risks. By effectively managing risks, SMEs can move towards sustainable development and create cost-effective solutions. 

AI technologies also offer SMEs the opportunity to create innovative new products and services that have the potential to disrupt markets or create a compelling competitive edge that increases market share and enhances customer engagement. Some great examples of this exist in the tourism and fashion retail spaces, such as smart mirrors and visual search, which enable customers to interact with products and services they are considering virtually, creating a more engaging user journey. 

Alongside providing a competitive edge, digital integrations in some applications, for example smart kitchens and smart restaurants, can also enable more robust data collection that can be used to enhance a product or service further by predicting how the customer will interact with it in future.  

The ability to accurately forecast customer demand is crucial for SMEs, who often need to be more agile and operate more efficiently than larger operations to enable them to survive changing markets. This is essential in the manufacturing sector, where lean operations with low or no-waste are the optimum solution for SMEs in terms of both cost-effectiveness and environmental sustainability. AI technologies can assist SMEs in demand forecasting and supply chain optimisation, both through in-house data analysis and by predicting external customer behaviour and market trends using open datasets. 

The state of play 

Many SMEs have already turned to digital technologies, including artificial intelligence (AI), to help them navigate these challenges and achieve more sustainable development and growth.  

According to a study published in 2022 by the Department for Digital, Culture, Media & Sport (DCMS), 15% of all UK businesses have adopted at least one AI-based technology. Around 2% of businesses are currently piloting AI, and 10% plan to adopt AI technologies in the future, so there is an increasing awareness and acknowledgement of the ability of AI to support business growth and resilience. The report goes on to state that the most prevalent well-established AI solutions UK firms are using tend to be data management and analysis, followed by natural language processing, machine learning, AI hardware and image recognition. The IT and telecommunications and legal sectors currently have the highest rates of adoption, while the hospitality, health, and retail sectors have the lowest.  

The challenges 

While the potential benefits of AI adoption for SMEs are evident, there are key challenges that need to be addressed to ensure the integration is smooth and effective: 

• Skills and knowledge

Many SMEs need to upskill and retrain existing staff and recruit new expertise to effectively integrate and benefit from AI technologies. As the technologies develop at an increasing rate, this is an ongoing requirement to stay up to date in the latest developments.

• Funds to invest into the technologies 

Access to resources and funding is a common barrier for SMEs looking to adopt AI technologies. Public-private partnerships, like the collaboration between the HNCDI and industry partners, can help bridge this gap by providing financial support, access to advanced technologies, and expert guidance. 

• Organisational readiness 

The change management required to adapt to AI with the limited resources mentioned above can seem like a daunting prospect for SMEs. Managing the large amounts of data required for accurate AI predictions, for example, or upskilling your workforce to enable effective use of complex methods such as deep learning is no mean feat! 

• Ethical and regulatory considerations 

As AI technologies become more prevalent, new ethical and regulatory considerations are emerging in various sectors. Striking a balance between innovation and responsible use of AI is crucial, and SMEs need guidance and support in navigating these complexities, ensuring best practice and compliance with regulations. 

Is there help available?

That’s where the Hartree Centre comes in! One of the ways we are supporting SMEs through our Hartree National Centre for Digital Innovation (HNCDI) programme is with our new regional SME Engagement Hubs located in Cardiff, North East England and Northern Ireland.

We are funding local support from organisations with significant expertise in data science and AI applications to help SMEs explore and adopt advanced digital technologies to support their growth and long-term sustainability. With access to advanced technologies, expert guidance and upskilling and training programmes, our hubs will play a vital role in equipping SMEs with the expertise needed to adopt and integrate AI into their operations.