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Techaisle Blog

Insightful research, flexible data, and deep analysis by a global SMB IT Market Research and Industry Analyst organization dedicated to tracking the Future of SMBs and Channels.

SMB and Midmarket adoption of Artificial Intelligence – key market facts

AI will arrive as a capability integrated within other solutions

When artificial intelligence (AI) comes up in a discussion that focuses on SMBs, the first question is likely to be “how many organizations are using it – and how?”. Results from Techaisle survey on US SMB and Midmarket Analytics and Artificial Intelligence adoption research indicate that AI penetration within the midmarket, driven primarily by firms with more than 250 employees, is reasonably robust. Both small and midmarket businesses are forecasting a substantial rise in use in 2021. In both cases, “use of AI” actually means “use of systems/tools/other products that embed AI.” This is an important distinction. As an earlier-stage technology that is typically embedded when it reaches the SMB market, AI is within the top 15 IT priority list for SMBs. AI is far more likely to arrive in SMBs as capabilities within other products than as a stand-alone offering.

The survey research data indicates that SMB adoption of AI capabilities is still at an early point. Small businesses have little to lose by treating 2021 as an evaluation year, understanding how AI is being used to create real advantage within peer organizations. The situation is different for midmarket organizations, where early adopters are already gaining experience (and potentially, benefits) from AI-based systems. Midmarket firms will not alter their 2021 plans, and AI capabilities will be on IT’s radar and maybe, on evaluation lists for new tools/solutions.

SMBs are not ready to adopt AI as a core platform capability. If one reads “planning to use” as meaning “we consider AI to be a selling feature or factor in the evaluation of new solutions,” however, the SMB market for AI starts to become interesting.

Techaisle asked a follow-on question about AI deployment to respondents who reported that their organizations were currently using or planning to use: is AI currently deployed/in production within their organizations, are they presently implementing AI solutions, are they in a trial/pilot phases, or have they not yet started implementation?

With the caution that the stats below represent only the organizations committed to an AI path, AI – especially in midmarket organizations (and particularly within those with 500-999 employees) – is becoming reasonably well established. Within small businesses, 11% of the organizations using or planning to use AI report that they have AI in production. Midmarket figures are more robust: 24% of firms using/planning to use AI report having at least one AI-inclusive solution in production.

SMB and IT supplier call-to-action

Real production use of AI is still rare, especially for small businesses. SMBs should stay on the lookout for potential breakthrough AI-based solutions but shouldn’t feel pressured to adopt systems that don’t offer compelling value propositions and ROIs. Given the early stage of AI, these findings are indicators of interest, rather than definitive statements on market readiness. Every firm is a prospect for systems with embedded AI; the current state data mostly shows how advanced they are in their consideration of these capabilities.

Areas where AI is/will be integral to business success

To understand where AI is most likely to impact SMB businesses, Techaisle inserted two questions into the survey instrument: one asking respondents to identify areas where AI will be integral to business success. A second asks which internal functions were most likely to benefit from AI-based systems.

Research data shows that small business and midmarket organizations have very different visions of business processes most likely to benefit from AI adoption. By a healthy margin, small business respondents are most focused on AI to impact the customer experience positively. Business intelligence and analytics, HR/recruiting are cited as potentially benefitting from AI. Several other functions – process automation, finance and operations, web/social media analytics, and marketing/advertising – are also viewed as opportunity areas.

Midmarket firms are keen to apply data to risk reduction: these respondents view fraud analytics as the most likely area to benefit from AI. Midmarket decision-makers believe that web/social media analytics, customer experience, and process automation are good targets for AI. They also see “automation of repetitive tasks” and IT automation and management as high-potential areas for AI-based solutions.

There are no doubt other variants of “AI” that will emerge as the technology and its use cases mature. AI-deployment is a potentially-fertile opportunity for SMB users and suppliers alike, but flexibility will be a critical success component.

Geo research:

Techaisle survey on Europe SMB and Midmarket Analytics and Artificial Intelligence adoption research
Techaisle survey on Asia/Pacific SMB and Midmarket Analytics and Artificial Intelligence adoption research
Techaisle survey on Latin America SMB and Midmarket Analytics and Artificial Intelligence adoption research

If you missed our 2021 Top 10 SMB and Midmarket Predictions, here is the link

Top 10 SMB and Midmarket Predictions for 2021

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Top 10 SMB and Midmarket Predictions for 2021

In all sectors, 2020 was a challenging year – and as a result, 2021 is challenging from a market planning perspective. The disconnect between 2020 and 2019 was so severe that it rendered spend forecasts virtually useless: IT suppliers reacted to shifting market trends in real-time. As we enter 2021, IT product and service suppliers look to create a context for understanding the range of outcomes that the new year may bring. Techaisle's 2021 report series illuminates issues and requirements in the vast SMB market to support that effort. To start 2021, here are our top 10 predictions.

1. Digital inequality will be more important than the digital divide
2. Quest for reinvention, innovation, resiliency will drive bursts of incremental transformation goals
3. The hybrid workplace will require HR focus and drive adoption of workspace, workflow solutions
4. Meaningful customer partners and not trusted advisors will determine supplier success
5. Pragmatism will overtake progressiveness in technology adoption for a future-ready organization
6. Requirements for automation and enhanced IT services will become time-critical
7. Security and risk mitigation will focus on a safe middle ground
8. Systems of insight will move into the analytics mainstream
9. AI will arrive as a capability integrated within other solutions
10. Open source adoption will become an indicator of cloud success

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SMB security and risk management – IT focusing on ensuring integrity of technology infrastructure

Risk mitigation is everyone's business, and SMB IT is uniquely positioning to manage reliability, privacy, and cyber-risk. In most SMBs, IT's role is to provide users with fast and reliable connections to needed systems and data. Increasingly IT is expected to prevent leakage of sensitive information that could harm the business or its customers. A global survey conducted by leading research firm Techaisle found that security solutions (cloud and mobility) are seen as a top IT priority by 75% of SMBs.

There is evidence of the enormous requirement for the defense of an ever-expanding perimeter – but if anything, it understates SMB's focus on cybersecurity. SMBs have deployed, and continue to deploy, increasingly-sophisticated shields to protect against the relentless advance of threat sources attacking businesses of all sizes through their cloud instances, mobile devices and connected users, and new technologies (such as IoT) and core networks and systems. SMBs (and the managed services suppliers they work with) are responding by developing better internal processes and deploying IT security solutions that are frequently enhanced by advanced features rooted in analytics and AI.
Defense against cyber-threats requires a comprehensive approach that spans people, process, and technology: appropriate systems need to be deployed, configured, integrated and continuously upgraded, processes – particularly related to the management of sensitive data – need to be established and embedded in work routines, and staff (all users, including IT) need regular and relevant training. A gap anywhere in this continuum will leave openings that intruders can exploit.
And as daunting as a defense against cyber-risk may be, the reality is that IT's role in ensuring information and infrastructure integrity is extending into other vital areas as well. With businesses now reliant on technology for most tasks' performance, IT must deliver continuous access to systems and safeguard data against loss. And in most environments, it is expected that IT will play a meaningful role in maintaining the privacy of sensitive data. In today's SMB, the IT leader is responding to multiple risk management demands.

SMBs typically start with basic endpoint/user security technologies – and many stop there as well. Even organizations that deploy additional 'shields' often shy away from taking the next step beyond trying to prevent a breach: assuming that a breach will occur and developing processes and deploying technologies needed to minimize the resulting damage and exposure. Some experts also point out that many firms – SMBs and enterprises – don't fully understand their devices (including back-end infrastructure, user devices and sensors), access points, applications, data, and system users. Building this inventory is an essential step in understanding the scope of potential exposure to breaches or losses.
Deployment of security technology will be an ongoing challenge as SMBs attempt to identify, budget for, deploy, integrate, and operate the security shields that are most important to their businesses' operations. In many cases, access to skilled professionals is the most tricky part of this equation. In this environment, SMBs struggle to attract and retain capable security staff members. Increasingly, this is leading to the use of managed security services: Techaisle's global survey shows that managed security, currently used by 29% of SMBs, is in the plans of an additional 44% of small and medium businesses – which will result in a 152% increase in the use of managed security services. 

Privacy is a component of many different SMB business responsibilities: it is critical to compliance, and as a result, to senior executives and shareholders; it is a crucial issue for legal advisors; included in statements made by marketing; and of course, concerning data, it is assumed to be something that is managed by IT. Privacy is a cross-functional responsibility. Sensitive data needs to be classified as such and prioritized for the highest-level security; the security may be an IT function, but the classification needs to be done by the business leaders closest to the inputs and implications of disclosure. Leaks are very often the work of insiders rather than anonymous external hackers. Here, too, while IT plays a role (through monitoring technologies and systems that look to prevent data exfiltration), HR and business unit managers also need to be proactive in preventing privacy breaches.

Security – both the technology and the skills needed to optimize security systems and keep them current, integrated, and complete – is one of IT's most complex areas. To address these complex (and related) issues, SMB IT is needing to develop a portfolio of security technologies and skills that is equal to the task of defending against cyber-threats; develop and continuously execute on business continuity plans; deploy network and access technologies that are aligned with user needs; implement training approaches and management processes that reduce the risk that human error (or malfeasance) will bypass the SMB's technology shields.

They cannot do it in isolation. There is no 'silver bullet' that SMB executives can use to deliver a failure-proof, future-proof approach to risk management. However, by connecting security, privacy, and reliability/continuity – by working with the right suppliers who understand business requirements – SMB IT leaders want to make a real difference to their organizations' regulatory compliance, customer trust, and bottom-line success.

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Midmarket technology and business buyers – must sell to two different groups

Over the past six months, the need for advanced solutions and professionals supporting strategy, implementation, integration, and optimization has become much more acute. Business patterns changed by COVID-19 require businesses to accelerate digital transformation within their operations. Purchasing authority has shifted from IT to business management, requiring solution providers to position their offerings and services in terms that emphasize business metrics, such as time to market and measurable revenue and cost impact, rather than technical specifications and targets. This focus on business outcomes ripples through partner marketing and technical operations: marketing needs to emphasize time-to-benefit, the ability of individual solutions to contribute to overall business agility, and the direct application of IT features to pressing business needs; on the technology side, partners need to focus as much as possible on services centered around pre-built vertical solutions that can be deployed and integrated rapidly, with replicable processes and predictable outcomes, so that delivery matches the vision set by marketing and the requirements of the customer executives.

In a unique survey, Techaisle posed several and the same questions to both BDMs (business decision-makers) and ITDMs (IT decision-makers) and probed to identify what each expected from the other. Techaisle data shows that although BDMs have higher expectations of ITDMs, they align reasonably well in some areas, and there is a broad expectation gap in others.

  • 53% of midmarket BDMs say that it is very critical for business success that ITDMs can identify and associate IT solutions with business efficiency, productivity & profitability. On the flip side, only 30% of IT executives in these midmarket businesses say that business executives should be able to associate IT solutions with business efficiency, productivity, and profitability. Responsibility for delivery rests with IT, and BDMs have very high expectations from ITDMs.
  • Data also shows that BDMs have high expectations for support in using technology to build customer experience. Over 40% of BDMs believe that IT must understand solutions that enable beneficial customer & supplier interactions. In contrast, less than 25% of ITDMs say that BDMs should understand such solutions.
  • Employee productivity is an essential aspect of a business, and in most cases, business management expects IT to understand and deploy core technology solutions to make employees more productive.
  • Business process automation is an area where there is better alignment between IT and business. Nearly 40% of BDMs say that it is critical for business success that IT can identify requirements for automation and associate IT solutions with these needs.
  • Cross-organizational integration is vital for both BDMs and ITDMs, and over 50% of both groups agree that the other should associate and adopt technology solutions with changing business demands.

Business decision-makers (BDMs) are an intrinsic force in most midmarket organizations. They are the primary decision-makers in some high-growth technology areas, including collaboration and analytics – meaning that increasingly, BDMs are 'the boss of IT.' These BDMs view IT as a component of business processes rather than as a stand-alone silo. Techaisle SMB & Midmarket Decision Authority data shows that twice as many BDMs as ITDMs (IT decision-makers) in midmarket businesses say that IT must understand how technology contributes to overall organizational success. These BDMs have specific objectives for technology usage, clear perspectives on adoption drivers and impediments, and tend to be influenced by information sources that are different from the inputs used by ITDMs.

This pressure from business managers leaves IT leaders scrambling to stretch limited budgets to meet seemingly limitless requirements, striving to deliver predictable, secure systems that respond to their business users' increasingly varied needs and competitive environments. The divide increases because business perspectives on technology are shaped by information channels that are not part of the IT professional dialogue. The different information channels create an environment where businesses are struggling to develop the cohesion needed to promote or embrace new IT capabilities to achieve business objectives within existing IT and business process structures.

ITDM and BDM divergence will continue, and although there is cross-pollination, they may continue to operate from different pods. Although it may be tempting to try to bring the various parties together, IT suppliers cannot successfully act as intra-corporate matchmakers: they have to grasp the reality of selling to two different constituencies with different expectations.

 

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