Manchester, England.
A new global survey of 79,000 businesses conducted by the Peninsula Group, parent company of BrightHR, has found that although small business owners are optimistic about the potential of AI, with 1 in 3 believing it has the potential to positively transform the workplace, only 1 in 10 are regularly using it.
The results suggest that concerns around security and a fear of the unknown are driving the lack of AI adoption among SMEs, with almost half (47%) of those surveyed citing security risk as their biggest concern (a 60% increase on last year), and a 21% increase since 2023 in the number of employers saying they are ‘fearful of the unknown’.
There were also year-on-year increases since 2023 in concerns around reputational impact (+183%), risk of breaking the law (+178%), and loss of intellectual property (+178%).
Commenting on the results, Alan Price, CEO at BrightHR, says: “Despite being optimistic about its transformative potential, SMEs are hesitant to pull the trigger on AI and implement this rapidly advancing technology in their organisations.
“With a 21% increase since 2023 in the number of small business owners saying they are ‘fearful of the unknown’ when it comes to AI, it seems this hesitation is being driven by a lack of knowledge and confidence about how to implement AI effectively, safely, and compliantly.
“In many ways, it’s not surprising that SMEs are more hesitant to embrace AI than larger businesses. Large companies, 66% of which in the UK have already incorporated at least one AI technology, have the resources needed to invest in robust data governance frameworks and develop in-house AI models in a controlled and secure environment, both of which go a long way in helping to mitigate security risks.
“Small businesses simply don’t have access to the same level of resource or in-house expertise to develop their own AI models, and are clearly worried about the potential loss of confidential company data and intellectual property that could result from experimenting with third-party AI tools.
“This is unfortunate, because AI adoption by SMEs has extensive and well-documented benefits, from optimising profits and reaching broader customer bases to driving efficiency and improving employee experience.
“Lack of resource shouldn’t prevent small businesses from reaping the benefits of cloud-based AI systems and third-party AI tools, which—as long as certain principles are followed—can be used safely and effectively for a variety of purposes, from responding to customer issues to using predictive analytics to tailor and improve services. What is needed is a concerted effort from Government and industry to increase knowledge and awareness among the small business community about how to leverage AI responsibly and successfully."
Alastair Brown, CTO at BrightHR, adds, “Although well-known to large organisations, the principles of effective data governance may not be as familiar to SMEs, a knowledge gap which could be contributing to the widening disparity in AI adoption between large and small businesses.
“Data governance strategies are an easy and cost-effective way for SMEs to experiment with the potential applications of AI in a controlled and secure manner. This should include storing all company data in cloud-based storage systems, developing guidelines to manage the types of data that AI tools have access to, and making sure that staff do not share sensitive information with third-party AI tools.
“By taking these steps, SMEs can reap the many benefits of AI adoption without falling prey to its risks. Making up 99.9% of UK private sector businesses, SMEs are the economic backbone of the UK, and as such it is vital they act now to pull the trigger on AI and put a roadmap in place for how they can maximise its potential to keep pace with disruptors who may otherwise encroach on their market share.
“I would advise SMEs to conduct a cost-benefit analysis to determine where AI should be applied across the business to achieve the greatest benefits while reducing risk. By leveraging AI only where it offers the potential to improve business operations and enhance customer experience, small business owners can be proactive in using AI effectively to stay competitive and adapt to a fast-paced digital landscape.”