AI for MSME: Benefits & Challenges

Micro, Small & Medium Enterprises (MSMEs) MSME companies face challenges when it comes to adopting AI technologies but benefits of AI are many fold!

Data availability and transparency is the key for a seamless AI adaption operationally. According to the Woodard Report, 40% of CFOs do not trust their organization’s data accuracy. More than 76% of CFOs report that data inaccuracy and inconsistency are top pain points and 77% believe they should be leading business-wide operational transformation. However, without a solid data foundation, these goals are difficult to achieve. Poor data quality and complex manual processes often keep businesses stuck in a reactive mode.

Although many MSME owners view AI favorably, most of them lack a strong digital foundation. Most of the time good data is being generated, however either it is not captured, collated nor synthesized for drawing inferences through business analysis for informed decision making and predicting way forward.

I recently interacted with a medium size pharma company, and it was quite amazing to see how much data is generated but it is so fragmented. No one can make any business sense at any level and in any department, let it be manufacturing, supply chain, distribution, marketing, sales or even finance. The simple reason is that each department had their own digital system to capture, store and share data - largely using Excel Files. It made very little sense to other departments as they could not co-relate it with their own data whose source, data field names and types and even formatting was very different. In such cases AI Adaption is near to impossible.

If they want to leverage AI and it’s power, the organization will have to quickly get their act together. Most of the time the leadership team will have a knee jerk reaction to bring in the latest technology without taking any corrective steps to update/upgrade the existing system. That will lead to a catastrophic situation as

• the two systems may not be interoperable and there is a very high possibility of loss of very valuable data.?
• this may lead to building non-synchronized data streams that will not provide valuable continuous insights and hence the desired data driven decision making.

To unlock new efficiencies, improve decision-making ability and create long-term value, MSMEs need to systematically digitally upgrade by simplifying workflows, use new technology, and reducing operational costs. Leading to better data flow, aggregation, and analysis. MSME should hire a Digital Transformation consultant, an IT partner, before thinking of AI adaption as digital integration, seamless data flow and digital literacy is utmost important for any kind of AI strategy and it’s adoption.

Organizing and Democratization data

Democratizing data and leveraging AI for efficiency are crucial aspects of modern businesses. Providing Data Accessibility by implementing self-service data platforms and enabling non-technical users to access and analyse data, MSME can gain the data driven benefit from anyone and everyone. Instead of complex Data tables, AI can share simple insights and inferences that can help make informed decision.? AI analytics helps inform business decisions, reducing uncertainty. AI will enhance efficiencies by democratizing data as Data democratization empowers MSME by providing universal access to data, fostering a culture of data-driven decision-making, and driving business growth. It Improves Decision-Making as Data-driven insights enables informed strategic decision making. It Increases Collaboration between Cross-functional teams as they leverage shared data for collective success. Data democratization leads to Enhanced Innovation as Democratized data sparks creativity and new idea generation through intrinsic motivation.

Enhancing Efficiencies

With AI Adaption, MSME gets Better Customer Understanding as Access to customer data and its analysis provides insights into customer behavior and actions personalized experiences. AI streamlines tasks, eliminates repetitive tasks, reducing manual labor and increasing productivity. AI-powered customer insights improve retention rates along with AI-powered chatbots provide 24/7 support, enhancing customer experience.

Building Competitive Advantage

There is no doubt that Data-driven organizations outpace competitors as they thrive by developing Data-Driven Insights with AI analytics providing actionable intelligence. Predictive Modeling with AI predicting market trends and customer behavior and Optimized Operations as AI streamlines processes and reduces costs. Further AI can bring in operational efficiencies thru Automation & process Optimization as AI automates repetitive tasks, freeing resources, streamlines workflows, reducing costs and hence productivity.

Innovation

By integrating AI technologies, MSMEs can streamline processes, enhance customer experiences, create new product or service offerings, and improve decision-making. AI adoption can help create New Products and Services as it provides new insight into customers latent needs. It can even help provide Personalized Experiences that would enhance customer satisfaction. Further with new insight in customers' ever changing behavior, AI can suggest new business models to capture untapped customer segments thus discovering new revenue streams. AI can also help innovate by helping in New Product Development as AI-driven insights can identify market gaps and hence new opportunities for innovation. AI can be used for predictive analytics and trend forecasting, enabling MSMEs to design products that are more likely to succeed in the market. Tools like AI-based sentiment analysis can gauge customer opinions on products, allowing businesses to refine their offerings.

Challenges and Considerations

While AI offers tremendous potential, MSMEs face certain challenges when adopting AI, including Cost, Lack of Talent, Data Security and Privacy. AI can require significant upfront investment, though there are increasing numbers of affordable AI tools and platforms designed for MSMEs. Many MSMEs may not have in-house AI expertise, which could necessitate hiring specialized personnel or outsourcing AI-related tasks. This could be challenging due to lack of Skilled Talent in AI Space, Finally Data Privacy and Security could be an issue as MSME need to ensure that they are handling customer data responsibly and in compliance with regulations like GDPR.

To overcome these challenges, MSMEs can Start small with a? Pilot of AI projects to test feasibility. Jumping the whole hogg is not a good idea. Hence MSME should Partner with some strategic AI solution providers -by Collaborating with AI solution providers. This should be done post Digital Transformation as these are sequential activities. In fact ideal would be to choose a? Digital transformation Consultant who is also an AI advisor or consultant.

In the long run, to have operational excellence, an MSME needs to develop AI skills within the organization as all users may not be very AI savvy. They would need help and a set of trainings may get everyone on the same page. This would help monitor the AI Adoption in the organisation. Finally, as explained earlier in this article, data quality has to be of highest quality to get the right and productive output from AI. Hopefully with Digital Transformation, MSME can achieve this efficiently.

As AI technologies become more accessible, and as awareness of their potential grows, MSMEs can increasingly overcome these challenges and tap into the transformative benefits that AI has to offer.