Top SMB and Midmarket Predictions for 2025

Conventional wisdom suggests that large enterprises spearhead technological adoption, with smaller businesses lagging. However, small and medium-sized businesses (SMBs) leverage their agility and propensity for experimentation to overcome challenges that often hinder larger organizations. As generative AI becomes more accessible, SMBs will likely emerge as innovators rather than passive followers in the technological arena.

Despite enduring challenges such as limited capital and technical expertise, the decreasing cost of AI tools and cloud services presents new opportunities. These developments enable smaller firms to compete more effectively in areas traditionally dominated by larger corporations.

As analysts, we are keen to explore these trends and assist businesses in anticipating future developments. This article outlines key predictions for 2025, highlighting the opportunities and challenges that await SMBs and midmarket firms.

1. Rise of Vertical Intelligence Solutions as SMBs Demand Measurable ROI

In 2025, SMBs and midmarket organizations will shift from generic AI tools to industry-specific solutions, signaling a maturing market in which the initial excitement over GenAI will give way to demands for measurable ROI in specific industries.

Vertical AI solutions will dominate sectors like insurance automated underwriting, retail inventory optimization, patient engagement in healthcare, and regulatory compliance in financial services. These tools will come pre-configured with industry datasets, compliance frameworks, and workflow templates, significantly reducing implementation time and costs for SMBs.

By Q4 2025, each major vertical will have 3-4 dominant players, sidelining less specialized vendors. The winners will be those delivering pre-configured solutions that cut implementation time from months to weeks while ensuring compliance with industry standards.

2. Agentic AI - The Next Evolution in SMB Business Automation

As SMBs embrace these specialized, industry-specific solutions, they will also look to drive efficiencies through automation to enhance their internal workflows, prompting the exploration of more adaptable automation tools. This will lead to the adoption of Agentic AI, which will redefine business automation beyond traditional RPA. These intelligent agents will handle complex, multi-step processes requiring decision-making and adaptability, complementing RPA rather than competing with it.

RPA will remain the go-to for high-volume, rules-based tasks, while Agentic AI tackles variable processes that demand judgment. Integrated platforms combining both capabilities will enable SMBs to match tools to functions seamlessly.

Adoption, however, won’t be immediate or straightforward. To work alongside these systems, SMBs must invest in process analysis and employee upskilling. Early adopters will focus on augmenting existing workflows, targeting use cases where current automation fails due to complexity rather than pursuing wholesale process transformation.

3. SMB Adoption of "Automation-in-a-Box" Solutions

SMBs will increasingly turn to "automation-in-a-box" solutions tailored to their industries to overcome the complexity of piecing together individual automation tools. These pre-packaged, end-to-end solutions will eliminate the complexity of assembling individual tools, covering areas like HR, IT services, inventory management, and customer engagement.

These cost-effective and scalable solutions will enable SMBs to automate processes and expand operations without large IT teams. Hyperscalers like AWS, Azure, and Google Cloud will play a pivotal role by providing the infrastructure to integrate diverse automation tools into cohesive, ready-to-deploy solutions.

Key priorities will include scalability, customization, ease of implementation, and adaptability to specific business processes. To maximize these benefits, SMBs must ensure well-defined processes and seamless integration of BPA tools with their existing technology stacks.

4. Embedded AI-as-a-Service: Accelerating SMB Adoption

SMBs are seeking ways to make AI solutions more accessible. This will drive the next wave of AIaaS adoption through deep integration with existing business applications, bypassing the technical challenges of standalone AI platforms. This shift will lead to two key trends:

1.  Industry-optimized solutions tailored to specific business contexts, such as retail inventory management or healthcare scheduling.
2. Pre-built workflows and templates that cut implementation time from months to weeks or days.

Composable AI architectures will allow SMBs to mix and match models for precise use cases, opening opportunities for vendors to deliver hyper-localized, fine-tuned solutions without requiring extensive datasets. Persistent challenges like AI hallucinations and rising compute costs will drive innovation in lightweight, energy-efficient models, making AI more accessible and affordable.

5. AI PCs: Redefining Hardware Innovation for SMBs

AI PCs will significantly impact the hardware space in 2025, but their adoption will be driven by business outcomes rather than hardware specifications. We expect three tiers of AI PC solutions to emerge:

1. Entry-level systems with basic AI acceleration for everyday tasks (an ideal starting point for SMBs)
2. Mid-tier systems supporting multiple AI workloads for team productivity (suitable for mid-market firms)
3. Advanced systems capable of running complete AI workflows without cloud dependency

To a certain extent, vendors must recognize that SMBs and Midmarket firms prioritize outcomes over technical specifications like GPUs or NPUs. What matters to them are reduced task completion times, improved customer response rates, and measurable productivity gains. Vendors unable to articulate these benefits will struggle to remain competitive.

Pricing models are also expected to evolve to meet SMB needs. "AI PC-as-a-Service" offerings, which combine hardware, software, and AI model updates in a subscription, will lower entry barriers and provide scalable solutions.

6. Reimagining SMB IT Services for AI-First Workplaces

As AI PCs become mainstream, SMBs will require specialized IT services to optimize, manage, and support these advanced devices. IT providers must evolve, combining technical expertise with AI literacy to address the unique challenges of an AI-enabled workplace.

Support teams will shift from traditional troubleshooting to optimizing AI performance and enabling effective human-AI collaboration. Predictive support will become standard, with AI systems identifying and resolving issues before they impact users, significantly reducing downtime and boosting productivity. This shift will demand new metrics tailored to a preventive support model.

7. Hybrid Evolution: AI Economics will Drive SMB Smart Infrastructure Choices

With the increasing adoption of AI, SMBs will also rethink their infrastructure strategies. Hybrid architectures will gain traction as a solution to rising GPU/TPU costs for AI workloads. The shift toward hybrid environments won’t be about abandoning cloud services but finding a balance between the cloud's flexibility and the cost-effectiveness of on-premises infrastructure.

New modular, power-efficient on-premises infrastructure optimized for AI workloads makes local deployment more feasible for SMBs. These solutions handle predictable inference workloads, sensitive data processing, and latency-critical applications while maintaining cloud integration for training and burst capacity.

Success will depend on sophisticated workload placement strategies that consider performance requirements, utilization patterns, and total cost of ownership. Organizations that build hybrid environments leveraging the strengths of both approaches, supported by cloud providers' evolving AI services and pricing models, will have the advantage.

8. Platform-Driven Consulting: New Era of SMB Advisory Services

Consulting services for SMBs and Midmarket firms will evolve from traditional models focusing on advising businesses about infrastructure needs and managed services into a platform-driven approach.

Leading consulting firms are already developing platforms combining industry expertise with AI capabilities. These platforms will compress consulting timelines, accomplishing in days or weeks what previously took months. By leveraging pre-built, industry-specific tools, these platforms will help SMBs tackle complex challenges quickly, streamline their processes, and improve overall operational efficiency.

The economics of consulting will shift from time-and-materials billing to platform-based access, democratizing high-quality advisory services for smaller organizations. Firms that fail to adapt will struggle to compete in a market that increasingly favors efficiency and accessibility over traditional models.

9. SMB Adopt Unified Experience Platforms

In 2025, SMBs will increasingly seek Unified Experience Platforms (UXP) as the need to streamline internal and external communication intensifies. Hybrid platforms will be the preferred choice, leveraging the best on-premises and cloud-based solutions to meet each organization's unique needs.

The convergence of Contact Center as a Service (CCaaS) and Unified Communications as a Service (UCaaS) with traditional Unified Communications (UC) will accelerate. This trend reflects a growing understanding among SMBs that seamless employee and customer experiences are intertwined and crucial for success. UEX platforms will be in high demand, offering integrated solutions that enhance collaboration, data sharing, and operational efficiency across all departments. By adopting UXP, SMBs can expect to:

• Streamline internal communication: Improve team collaboration, boost productivity, and foster a more connected workforce.
• Enhance customer interactions: Deliver superior customer service, improve customer satisfaction, and build stronger customer relationships.
• Gain a competitive edge: Simplify operations, increase efficiency, and thrive in a dynamic and competitive market.

Vendors who successfully deliver comprehensive UEX solutions that address both employee and customer needs will gain a significant advantage in the SMB market.

10. Vendor Risk Management: SMBs Navigating the AI Supply Chain

With increased reliance on AI, vendor risk management will become increasingly important. Beyond traditional assessments, SMBs must evaluate the risks associated with AI vendors, such as data handling, model accuracy, and bias controls.

Data governance will become a critical factor in vendor selection. SMBs will prioritize vendors offering transparency in AI data handling, retention policies, and data portability procedures, especially in regulated industries where non-compliance could result in severe repercussions.

Cost management will also redefine vendor relationships. Vendors must provide detailed pricing models for AI usage scaling, model retraining, and integration costs. Sophisticated contracts with performance guarantees, cost caps, and explicit terms for AI-related changes will become the norm.

11. The AI Security Imperative for SMBs

Without proper security measures, organizations risk consequences as AI will continue to reshape security as a vulnerability and defense mechanism. Identity and access management will evolve to include AI system authentication and authorization, requiring controls to distinguish between legitimate AI operations and malicious activities. This will drive the adoption of AI-specific security frameworks capable of real-time monitoring and validating AI behaviors. Three key challenges will emerge:

1. AI Model Protection: Preventing unauthorized access and manipulation of AI models and training data.
2. AI Decision Validation: Ensuring AI systems make authorized and appropriate decisions.
3. AI-Enhanced Social Engineering: Defending against sophisticated impersonation and manipulation attempts.

To address these challenges, SMBs and Mid-market firms must adopt new security postures that combine AI-powered threat detection with traditional measures. This includes continuous AI behavior monitoring, regular security audits, and enhanced employee training on AI-specific threats.

12. SMB Growth with AI-Analytics for Better Insights, Smarter Decisions

Organizations across the SMB and midmarket segments will adopt AI-powered analytics tools to understand customer behavior better and optimize operations. While "digital twins" might be an overstatement for SMBs, they will increasingly use predictive analytics to forecast sales, manage inventory, and personalize marketing. The key development will be simplified, and affordable AI tools will be designed specifically for small business needs. Success will depend on clean data and proper tool configuration - many SMBs will struggle with data quality and integration issues.

13. SMB Sales with AR-Powered Enhanced E-commerce Experiences

The metaverse remains largely aspirational for SMBs in 2025. Instead, they will focus on practical augmented reality features for e-commerce - like virtual product try-ons and 3D product visualization through standard web browsers and mobile apps. These tools will become more accessible through e-commerce platforms like Shopify and WooCommerce. The main challenges will be implementation costs and creating 3D assets, though template-based solutions will help reduce barriers.