AI isn’t just for the big players: How SMEs can effectively leverage AI

Only a few short years ago, generative AI was a cutting-edge technology that only large organisations with vast budgets could afford. Fast forward to today, while AI remains an innovative technology it is becoming more accessible for businesses of all sizes and spanning all industries. In fact, for small-to-medium sized enterprises (SMEs), getting ahead of the AI curve has now become essential to remaining competitive.

The shift toward AI adoption isn’t as simple as buying premium licenses to a popular large language model and using it out-of-the-box. There are risks that go hand-in-hand with AI implementation. For example, the potential for significant fines to be incurred, if businesses neglect proper governance of these tools. To get the most out of AI and minimise potential risks, SMEs must take a balanced approach to implementation, which prioritises strong governance and education over speed.

Although AI adoption has its challenges, SMEs can successfully harness its benefits by following these guidelines, ensuring a smooth integration into systems and workflows while mitigating potential risks.

Picking the right AI partner

One of the first considerations compliance teams should make when starting their AI adoption journey is choosing a reputable AI provider. While larger enterprises may have the resources available to create purpose-built AI solutions with their in-house technical teams, SMEs are likely to find it more cost-effective to partner with an AI provider.

As SMEs consider AI adoption, they must prioritize compliance, security and reliability to avoid operational disruptions and reputational damage. For example, ensuring new AI tools are compliant with cybersecurity and data protection standards such as ISO 27001 or SOC 2. There are also new AI-specific certifications, such as ISO/IEC 42001, which outline requirements for establishing, implementing and maintaining AI management systems. SMEs should always do their homework and avoid partnering with providers who cannot present evidence of their adherence to the relevant regulations.

Balancing innovation and compliance strategy

AI is rapidly becoming a necessary component for SMEs that want to remain competitive, especially in a landscape where emerging technologies are increasingly shaping business demands. In a recent survey, 42% of US public company board directors cited optimisation of operations and enhanced workforce productivity as the top opportunities presented by AI adoption. While AI offers significant opportunities and benefits for SMEs, practical considerations for governance should remain top of mind.

Board members and leaders may feel pressured to adopt AI quickly. However, rapid adoption comes with challenges, as SMEs might not have the same access to resources as larger businesses do. Therefore, it’s essential that SMEs develop a clear adoption strategy that considers exactly what they intend to do with AI, how it will fit with existing workflows, as well as setting realistic goals and timelines for AI integration into existing systems and workflows. Designating an accountable individual, such as a Chief AI Officer, can ensure that deadlines are met and AI adoption is happening in an effective and timely manner.

In addition, SMEs must be aware of the governance and compliance implications that AI adoption may have on their businesses. For instance, new legislation such as the EU AI Act enforces robust risk management procedures, outlines prohibited AI practices and introduces guidelines around a company’s transparency of AI usage. Penalties for misconduct can reach a substantial fine of up to 7% of a company’s annual turnover, making it critical for businesses to take proactive steps to mitigate such risks. For Europe-based entities, non-compliance to the new rules simply isn’t worth it. It is critical for business leaders to liaise with their compliance teams about what AI legislation looks like in their jurisdiction, and how it may affect their operations. 

Responsibly bridging the AI skills gap

Implementing AI efficiently is an important step in an SME’s journey toward AI adoption, but it only goes so far. If employees are not aware of how to effectively utilise AI tools in their day-to-day work, then businesses should not expect a good return on investment. Instead, it’s worth upskilling employees on how to effectively, ethically and responsibly use AI.

While more companies are practising good AI data hygiene and responsible use, according to research by McKinsey, only 27% of businesses say employees review all content created by generative AI before it is used. Yet, generative AI is still prone to error or hallucination. In fact, 26% of board directors view AI hallucinations or false information as a top risk of AI use in businesses. This means that the lack of human oversight could be detrimental to both internal operations and public reputation.

To ensure human oversight for AI tools, SMEs should develop and implement ethical and responsible use guidelines. While these are often developed as legal documents, they can also be created in a way that is understandable and easy-to-follow. These guidelines should be distributed to employees, with regular training sessions to ensure these rules are being upheld. As previously mentioned, these guidelines should comply with region-specific legislation but also mandate human oversight and enforce structures of accountability in the case of potential misconduct.

Accountability lies with business leaders

To successfully integrate AI into their operations, SMEs should focus on using trusted AI providers, implementing an effective adoption strategy, building comprehensive compliance guidelines and upskilling employees on AI usage. While this article offers guidelines for successful AI adoption, the onus is on business leaders to connect with their IT and compliance teams to understand what responsible, ethical and compliant AI integration looks like for their businesses.