Summary Bullets:

• Research from Verizon Business and opinion from Deutsche Telekom highlight the growing importance and transformative role of artificial intelligence (AI) in the SMB segment.
• The challenge is how to convert this demand into money when SMBs have become the focus of telco growth in enterprise revenues.

AI is for hyperscalers, data centers, large corporates, and geeky consumers. Right? Wrong. Research from Verizon Business has found that small and medium-sized businesses (SMBs) in the US are rapidly adopting AI. Verizon’s annual State of Small Business Survey found that the proportion of SMBs using AI has more than doubled in the past year (39% from 14% in 2023, with a further 35% considering using AI), as awareness and accessibility to AI in business applications has grown. The leading sectors adopting AI are largely the entertainment, hospitality, and accommodation verticals, which also tend to dominate much of the SMB market. The main use cases for adoption of AI cover marketing/social media, data analysis, and customer service – which makes sense as this has been largely the early adopter case across most markets to date.

The benefits of AI adoption are seen mainly as augmenting productivity by saving time, and looking to develop additional revenue streams – so essentially boosting what are the core goals of most enterprises. Today, AI is broadly seen as a tool rather than a game-changer.

Meanwhile, across the Atlantic, Deutsche Telekom’s T Business division has also identified AI as “a unique opportunity for small and medium-sized companies” that can increase efficiency and deliver competitive advantage. Of course, Germany is renowned for its strength in the SMB segment (the ‘Mittelstand’), which is growing again in importance as traditional large industries such as automotive and chemical have recently faced challenges. Indeed, the KfW (the German state-owned investment and development bank) has forecast that AI has the potential to increase Germany’s gross domestic product (GDP) by over 11%.

It is important to note that SMBs are not only becoming ever more important to every national economy for growth, but they also have access to the tools, techniques, and skills previously only available to their larger corporate counterparts. This technology rocket-boost combines with SMBs’ natural agility and commercial focus to underline their dynamism and to deliver disproportionate growth. Cybersecurity, AI, and cloud-based services are no longer the preserve of larger enterprises and government bodies – their reach now extends to the full business community. Service providers are recognizing this and looking to exploit the market opportunity.

Service providers were slow to understand the impact of the internet on their businesses. Today, they are aware of the impact of AI on the enterprise market, including their current sweet-spot target SMB segment. The challenge is to turn their knowledge, market insight, and customer relationships into new revenue streams.