The Challenges of AI Implementation in Small Businesses
Written by Dr Egena Ode, Centre for Enterprise, Faculty of Business and Law, Manchester Metropolitan University.
Small businesses are the foundation of the UK economy, boosting employment and stimulating growth at both local and national levels.
However, managing and sustaining a small business is inherently challenging due to several financial, operational, and technical challenges that affect their operations. They also struggle with staff retention, succession planning, rising costs, and now how to integrate Artificial Intelligence (AI) into current operations.
In the last decade, several businesses have adopted AI technology to enhance their efficiency, gain a competitive edge, or promote corporate growth and expansion.
Tiong (2023) report of 1,000 UK organisations about AI deployment among UK businesses suggests a notable gap in AI adoption between small and large enterprises: 34% of medium to large firms (with 250 or more people) are now employing AI, whereas just 14% of small firms (fewer than 250 employees) are exploiting AI.
Recent data from HRDirector indicates that over one-third (31%) of small businesses in the UK are reluctant to use AI, despite acknowledging its potential advantages (Barbour, 2024).
Like all technologies, the reluctance has been linked to the inherent limitations and risks associated with AI systems. Despite efforts to mitigate the negative impacts of AI, businesses and individuals continue to express some challenges related to its deployment. For example, small businesses often lack the financial resources and technical expertise to implement AI initiatives, build proprietary AI systems or employ AI professionals for deployment and use. Despite this constraint, there are examples of small businesses successfully integrating AI into their existing processes.
Training data limitations, ongoing model development, and potential biases in algorithms can lead to AI systems producing errors and perpetuating prejudices. The last thing you want is for an AI-driven chatbot on your business website to convey erroneous product information to clients!
In addition, small businesses may experience other additional obstacles.
Although cost-efficient AI technologies exist, sophisticated AI applications often need substantial investment in software, hardware, and expertise. For businesses with constrained margins, the initial expenses of deploying AI may appear daunting, notwithstanding the prospective long-term savings and improvements in productivity.
Moreover, despite the ease of using AI technology, small businesses might not have the internal expertise to use it efficiently. While AI is great for streamlining certain tasks, the technology isn’t smart enough to provide customised solutions on its own and many businesses cannot afford to hire data scientists or AI specialists.
Similarly, it can be challenging to maintain compliance while using AI due to the heightened scrutiny of data protection laws and the shifting regulatory landscape across several industries.
Furthermore, identifying the owner and author of outputs generated or aided by AI may be challenging, particularly when several human and machine contributors are involved. Small businesses also need to make sure that IP rights aren’t stolen or violated when AI systems are used in bad or illegal ways, like when they are reverse engineered, hacked, or copied.
References
- Barbour, C. (2024) HRDirector Report: Third of SMEs fear implementing AI : despite the benefits of the technology.
- Tiong, J. C. (2023) Savanta – Small businesses face hurdles in embracing AI: Insights from Savanta Business Tracker.
