By Dr Joel Than Chia Ming
Artificial Intelligence is revolutionizing business by driving innovation, operational efficiency, and growth, offering strategic advantages for both large corporations and SMEs while addressing challenges like cost, complexity, and ethics.
Recent research and industry insights underscore how rapidly Artificial Intelligence (AI) is making its mark for businesses. According to PwC’s “AI Predictions” series, organizations worldwide are investing in AI solutions at an unprecedented pace, recognizing their potential to unlock new sources of value. Similarly, McKinsey’s “The State of AI” report highlights that many businesses are now well beyond the proof-of-concept stage, deploying AI at scale across multiple functions—from manufacturing and logistics to sales, marketing, and customer service.
Meanwhile, insights from Microsoft’s blog on how real-world businesses are transforming with AI offer concrete examples of measurable impact. A staggering 85% of companies in the US Fortune 500 are already using Microsoft AI solutions. Microsoft now has Copilot which is an AI-powered tool that provides chat, content generation, and task automation to help users be more productive and efficiency. Similar to ChatGPT that many are familiar with, Copilot is further integrated into Microsoft’s various software. Corporations such as Asahi Europe & International (AEI), a leading global brewer has adopted Microsoft 365 Copilot. This move has potentially saved 15% of employees’ time previously spent on administrative tasks.
One of the most significant ways AI is affecting business is by creating strategic competitive advantages. Traditional differentiators such as brand loyalty, economies of scale, and exclusive partnerships are now augmented—or even replaced—by AI-driven insights and capabilities. One possible scenario for a retailer is in employing an AI-powered recommendation engines to personalize product suggestions. This can lead to higher conversion rates and customer satisfaction, translating directly into improved financial performance. For Coles a retailer in Australia, AI has helped it to deliver more personalised shopping experiences. More than four million Coles’ customers now benefit from personalized, weekly product suggestions crafted by an AI system. This technology refines its recommendations by not only analysing each individual’s likes and dislikes, but also by considering how these preferences align with larger patterns observed across the broader customer base.
Another key driver behind the adoption of AI in business is the promise of operational efficiency. AI-driven automation can handle mundane, repetitive tasks that would otherwise consume a significant amount of employee time. Intelligent chatbots can manage basic customer inquiries 24/7, freeing up human staff to tackle more complex problems and deliver enhanced customer experiences. On the data analytics front, AI can quickly sift through enormous datasets—sales figures, marketing KPIs, customer feedback, supply chain metrics—and deliver actionable insights in moments rather than days. McKinsey’s research indicates that companies effectively scaling AI often see cost reductions and revenue increases of up to 20%.
While AI is beneficial to businesses, the implementation is often not as simple as one thought. A significant barrier to AI adoption in Small and Medium-sized Enterprises (SMEs) is the fear of complexity and cost. Many business owners perceive AI as an expensive and intricate technology suitable only for large corporations. A survey highlighted by Computer Weekly revealed that one third of SMEs in UK are apprehensive about how AI will integrate into their operations, with concerns about employee resistance and the potential disruption of existing workflows. Malaysian SMEs, for instance, face additional challenges such as limited digital infrastructure and stiff competition from global brands, as reported by The Exchange Asia. These obstacles are compounded by a lack of technical expertise and support, making the transition to AI-driven solutions daunting for smaller organizations. Moreover, there is an inherent fear of the unknown. Many SMEs worry about the ethical implications and potential misuse of AI, particularly in areas like data privacy and job displacement. This hesitance underscores the need for targeted education and policy interventions to build trust and awareness around AI’s benefits. Thus, SMEs face very significant concerns that can be summed into technical, personnel, cost and ethical concerns.
Despite these concerns, the potential for AI to transform SMEs is immense. By automating repetitive tasks, AI enables businesses to focus on strategic initiatives and customer engagement. For example, conversational AI tools like chatbots can provide 24/7 customer support, enhancing service quality while reducing operational costs. Additionally, AI-driven analytics empower SMEs to make data-informed decisions, optimize inventory management, and predict market trends, as highlighted in McKinsey’s insights on thriving SMEs. Furthermore, the scalability and affordability of cloud-based AI solutions lower the barriers to entry. Platforms like AWS, Google Cloud, and Microsoft Azure offer SMEs access to advanced AI tools without significant upfront investments. These technologies enable SMEs to experiment with AI applications tailored to their specific needs, fostering innovation and competitive differentiation.
To maximize the benefits of AI, SMEs must adopt a strategic approach to implementation. This includes investing in workforce training to address skill gaps and ensure employees are equipped to work alongside AI systems. Collaboration with government, industry bodies and universities can also provide SMEs with the necessary resources and guidance to navigate the complexities of AI adoption. Universities like Swinburne develop and train AI practitioners to solve real-world problems. SMEs partnering with universities can potentially develop customised AI solutions at minimal cost and minimal exposure to risk.
Thus, AI offers SMEs a pathway to enhanced productivity, innovation, and growth. While concerns around cost, complexity, and ethical implications remain, these challenges can be mitigated through targeted education, accessible technologies, and strategic planning. By embracing AI, SMEs can not only thrive in today’s digital economy but also lay the groundwork for long-term sustainability and success.
