Feature
Business coverage of AI typically centers on the trials and opportunities faced by enterprises, but small and medium businesses (SMBs) are pursuing advanced technology as well.
This makes sense. SMBs face challenges when it comes to managing their workforce, ranging from compliance to engagement to payroll management. And half of small businesses using AI said the technology is a critical component of their approach to HR.
The State of AI in SMBs
According to Paychex, 72% of SMBs have positive feelings about AI, and 51% are already spending between $1,000 and $9,999 on AI. More than half of those companies, 62%, will spend the equivalent amount specifically on AI-based HR tools.
SMBs are keen to take advantage of AI, especially when it comes to helping with routine HR-related work, such as writing and posting job descriptions, summarizing resumes or performing initial screening. Job seekers are also comfortable with AI’s use in talent acquisition: According to Capterra, 65% of them have positive feelings about employers who use AI in recruiting, as long as they don’t have to sacrifice too much human contact.
Overall, Paychex found, more than a third of respondents, 35%, believe AI has helped improve their recruiting while almost as many, 34%, credit AI with improvements in employee satisfaction.
Technology vendors have noticed. Workday markets a package of AI tools for SMBs, as does Salesforce and Microsoft.
Unlike enterprises, which have the budgets to use AI in broad, sometimes experimental projects, SMBs focus on specific improvements when they implement solutions. Improving efficiency and saving time are the key drivers for SMBs adopting AI, according to the Small Business & Entrepreneurship Council in Washington, D.C. While 79% seek to automate repetitive work, 76% said AI frees time to focus on more important projects. And, efficiency affects the bottom line: About 71% of SMBs said AI helps save on labor costs.
AI is “a particularly great equalizer for small- and medium-sized businesses in an increasingly competitive landscape,” said Beaumont Vance, Paychex’s senior vice president of data, analytics and AI.
How SMBs Use AI
Unlike many enterprise users, SMB owners wear a lot of hats. They may handle HR even as they lead finance, marketing, sales and operations. That makes ease of use and efficiency critical considerations. They also have less money to spend, which means both direct and indirect costs matter. Yet, SMBs lack the resources and expertise to implement and operate their AI solutions, which more than half of small businesses consider to be their biggest challenge when it comes to adopting AI tools, according to research by the Boston analytics firm Databox.
Not surprisingly, then, many small companies use AI through publicly available, consumer-focused services. In fact, 98% of SMBs told the U.S. Chamber of Commerce they use other tools that incorporate AI. Sixty-three percent use AI-enabled web browsers, for example, while 58% use AI-embedded email tools such as Google Gmail or Microsoft Outlook. More than a third, 36%, use recruiting tools with AI, such as LinkedIn or Indeed. Thirty-four percent use AI-based digital assistants such as Amazon’s Alexa, Apple’s Siri or Google Assistant.
For all of the technology’s complexity, adopting AI solutions isn’t much different from other business problems SMBs face. So, they can make the transition by following a traditional path toward new initiatives or products. That begins with a plan.
How SMBs Should Plan for AI
The first step is articulating goals and understanding how and why technology adds value to the business. This is all about operations and ROI. With limited budgets, SMBs want to use money where it will generate the most return, whether that’s by offering more responsive customer service, streamlining distribution or conducting a sales and marketing campaign.
1. Identify a Specific Use Case
Rather than just “implement AI,” business owners should identify specific areas where new technology can help them. For some companies, that might mean allowing customers to track their own orders rather than call a sales rep. For others, it could mean using technology to screen resumes and identify the most promising candidates. Knowing specifically what you need AI to do helps you choose the right applications to invest in. And keep your eyes on the ball. Avoid “scope creep,” where you expand the goals and needs of your project one step at a time.
2. Map Out the Tools You'll Need
Once that’s done, create a plan to map out how to reach those goals. This is particularly important if, like most SMBs, you don’t have access to technical resources and expertise.
A plan will also help take advantage of solutions you already have. Be sure to think about the challenges involved with connecting new products to existing ones, for example. Your systems must be able to share data, sync with other packages and, ideally, minimize switching between programs so the tech stack doesn’t become too convoluted.
As part of this, audit your existing technology so you know what capabilities you already have. That will help avoid spending money on solutions that only duplicate, rather than enhance, your current tool kit.
3. Inventory Skills
Identify internal resources you already have to both implement new AI solutions and use them once in production. People who know their way around spreadsheets, for instance, may be able to learn products that use AI, including the advanced versions of Google Sheets or analytics packages such as Tableau.
4. Plan for Training
Implementing technology isn’t, in and of itself, a solution. Your workforce needs to know how to use new products in their work. Tech vendors can be some help, but for basic AI upskilling courses look at commonly used resources such as Coursera or Udacity.
The Time Savings Advantage for SMBs
A lot of AI’s appeal to SMBs centers on its ability to save time. "People spend inordinate amounts of time doing … very basic tasks," such as building a quote for a client or qualifying a sales lead, Salesforce Senior Vice President Kris Billmaier told the U.S. Chamber of Commerce. “That now should be automated and should be done for you. People will get to spend more time actually running their businesses rather than doing the kinds of menial tasks that an agent or some assistive AI could do for them.”
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Implementing AI — or any kind of digital transformation, for that matter — involves more than technology. Before exploring specific solutions, or how to integrate advanced tools into operations, SMBs must think through what they need to accomplish their goals and where their investment will have the greatest impact.
Editor's Note: Catch up on other trends in AI adoption:
- AI Adoption and the Blind Man's Elephant — Adoption of generative AI depends on the role, the industry and the culture of a workplace. If leaders want to close the adoption gap, they should pay heed.
- Reduce Uncertainty to Drive AI Adoption — Leaders are excited about the application of AI in the workplace. Employees aren't so sure. What it takes to overcome employee doubts.
- How HR and L&D Professionals Can Responsibly Use AI: 5 Tips — To successfully embed AI within the learning function, organizations need to ask themselves some important questions.
