AI Adoption in SMBs and Midmarket: Opportunities and Challenges for Channel Partners

Key findings from Techaisle’s SMB and Midmarket AI Adoption Trends Research of 2100 businesses paint a promising future where AI is set to revolutionize traditional channel business models. This technological advancement offers a multitude of benefits, reshaping business operations, transforming IT economics, and enhancing service delivery capabilities. AI's reach extends beyond technical managers, presenting a vast array of opportunities for channel partners to explore and cater to a broader buying group.

SMB and Midmarket AI spending plans indicate that high expectations for business impact will indeed map to significant increases in solution spending. Over 40% of upper midmarket firms, nearly 40% of core midmarket firms, and almost 30% of small businesses expect AI-related IT spending to increase by more than 25% in 2024. The mean increase across these segments ranges from 22% to 28%. This potential increase in solution spending should motivate channel partners to seize the AI opportunity and drive their businesses forward.

While AI presents significant opportunities, it poses potential risks for channel businesses. Some vendor partners may bypass the channel and develop AI-powered sales tools and self-service platforms, potentially disrupting the traditional channel model. Additionally, customers may favor partners who are more adept at leveraging the business options that AI brings to infrastructure and operations. To navigate these challenges, channel leaders are encouraged to adopt a “sense and respond” approach, identifying developments that align with their financial and operational goals while avoiding overcommitment to technically impressive but misaligned avenues. This approach empowers channel leaders to steer their businesses toward AI adoption with confidence and control.

Tying value propositions to different SMB and midmarket functions is critical to aligning with customer decision-makers. But channel firms also need to consider another vector: the extent to which various types of solutions support the SMB and midmarket AI objectives. Where will AI pegs be matched to similarly shaped holes in client business infrastructure? Figure 5 illustrates a wide range of AI-driven solution opportunities for the IT channel. The top categories include:

Cybersecurity:

Cybersecurity as a stand-alone solution area and IT security operations/management as a function rank as the top three target areas for AI in every SMB and Midmarket segment. The combination of tools that can automate and orchestrate essential functions and operational insight and agility that can help businesses – especially smaller firms – to redress the asymmetries that contribute to the “defender’s dilemma” offer real promise in cyber defense. Channel firms will want to build cyber portfolios that include AI-driven tools that connect with services frameworks (supported within the customer’s environment or delivered via managed services) that use AI to systematically and comprehensively remediate vulnerabilities.

Customer experience:

The top-ranked solution category for upper midmarket firms and a top option for core midmarket businesses as well, customer experience is a solution that addresses many of the compelling use cases – customer-centric or patient-centric design, more comprehensive and faster information delivery, customized packaging and service extensions, relevant product assortments – that are expected to drive business success within firms that successfully adopt AI. As channel members roll out solutions addressing these objectives, they will want to articulate clearly how each system contributes to a superior customer experience.

IT operations and management:

The prominence of this category is driven by its importance to Upper Midmarket firms, which see IT operations and management as a functional area that will benefit from AI. The emphasis on IT operations and management within the segment reflects the reality that these firms have more IT to manage than smaller peers. However, digital businesses rely on digital operations; even SMBs dependent on the cloud must maintain an effective management connection to resources and cloud-based SaaS applications. As small businesses and core midmarket firms continue to build essential links between IT and business performance, they will look for powerful ways of managing these systems without heavy staff investments – and AI may offer a path to that objective.

This is not to say that immediate success is on the horizon for any particular AI solution category, product, or supplier. The data indicates that AI as a core technology will attract significant investment in the SMB and Midmarket. Channel firms that successfully work with relevant solutions, products, and suppliers can capitalize on this rapid growth.

High expectations for a new technology must motivate an increased appetite for corporate change. Financial resources must also back them: no significant impact is achieved without a willingness to fund the systems that deliver improved competitiveness – new levels of efficiency, innovation, and business agility.