Artificial intelligence is steadily becoming a key tool for SMEs. Rather than grand, enterprise-level deployments, most SMEs find AI's power in everyday problem solving. A University of St Andrews study from April suggests that AI adoptions could increase productivity in SMEs by anywhere from 27% to 133%.

The path to AI adoption, however, is not without its challenges. Many SMEs feel caught in a digital divide: support systems are fragmented, training is insufficient, and public funding often never reaches the companies that need it most. According to Make UK, closing this divide and increasing technological access could add a staggering £150 billion to the UK economy over the next decade. Moreover, many AI tools are cloud-based, introducing their own challenges, such as rising costs, latency, and concerns over data control. These are, in turn, prompting a shift toward hybrid models with smarter, on device AI (AI tasks and modules which run directly on local hardware such as laptops or phones).

This integrated AI approach is enabling UK SMEs to handle administrative tasks, streamline recruitment, and offer more responsive customer service through consolidated platforms that free up time for higher value work. Hybrid approaches, such as leveraging cloud scalability or deploying AI directly on devices, are emerging as the most suitable strategy.

For SMEs, AI holds real transformative potential but needs to be applied pragmatically. The key is likely starting with incremental, high-value use cases and continuously adapting to operational needs. With a thought-through strategy, SMEs can efficiently convert AI from a promise for the future into a present-day competitive advantage.

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