KI im Mittelstand

These are the challenges of implementing AI in medium-sized companies

Medium-sized companies are the economic backbone of Germany. This makes it all the more important that medium-sized companies continue to be innovative and adaptable. Over the next few years, this will become particularly important in the field of artificial intelligence (AI); the potential of AI is enormous. The management consultancy McKinsey even predicts that AI will help the German gross domestic product to grow by 1.3 percent by 2030. AI thus has much more potential than steam engines,  which once had a growth effect of 0.3 percent of the GDP.

AI in medium-sized companies: What are the obstacles?

However, it seems that a large part of medium-sized businesses still find it difficult to adapt to and benefit from the constantly evolving conditions of digitisation. A survey of the accompanying research by Mittelstand-Digital among experts from research and associations is alarming: 70 percent fear that German medium-sized businesses could be left behind in the course of international AI development. The experts’ findings also provide information on which areas medium-sized companies have to focus on and build up.

#1 Lack of expertise

The shortage of skilled workers is a well-known problem in the German economy. Experts from research and associations all agree that a lack of know-how or skilled workers is a strong (36%) or very strong (64%) obstacle to the implementation of AI solutions in medium-sized companies. IT specialists in particular are scarce on the labour market. In this battle for personnel, medium-sized companies can often barely compete with the high salaries paid by large companies.

#2 Poor database

An inadequate database is particularly relevant for medium-sized companies. Because of the smaller size of the company, the internal data potential of SMEs is lower than that of large companies. There is simply not enough data collected. Artificial intelligence, on the other hand, requires large amounts of data in order to learn and make valid conclusions.

#3 Insufficient digital infrastructure

Providing digital infrastructure is usually very expensive. In addition, technology evolves so rapidly that permanent investments are required at short intervals. It is therefore not surprising that many companies are reluctant to do so. Added to this is the aforementioned problem of the lack of expertise within the company.

According to the experts, financial resources are the least of the obstacles. This shows that investments in AI primarily fail not because of financial conditions but because of implementation.

Possible solutions for AI in medium-sized companies: integration vs. AI-as-a-service

How can this implementation be successful and what are the possible applications of artificial intelligence for medium-sized companies? In general, there are two options for implementing AI in a company. On the one hand, it is possible to integrate intelligent systems into one’s own processes, products and services (active AI use). On the other hand, it is possible to use third-party services, so-called AI-as-a-Service products (passive AI use).

The result of the Mittelstand Digital expert survey shows that both the active and passive use of AI is relevant for SMEs, but that passive use plays a more important role. The reason for this is that cooperation with specialized AI-as-a-service providers is often more tailored to demand. Medium-sized companies save cost-intensive investments in skilled personnel and infrastructure by collaborating with external service providers.

AI applications in e-commerce: an opportunity to differentiate

Medium-sized vendors in e-commerce face different challenges to medium-sized companies in other fields. Unlike the German economy in general, e-commerce is firmly in the hands of a few large players. In view of this platform economy, it is advisable for SMEs to choose a positioning in the market that sets them apart from their competitors. One of the most promising means of achieving this is the introduction of artificial intelligence. According to a study by the CMS manufacturer Sitecore, the largest investments in medium-sized e-commerce are already being made in AI applications, in particular the introduction of chatbots and virtual personal shoppers. These applications aim to compensate for one of the biggest disadvantages of e-commerce compared to brick-and-mortar retail: How do you create the most individual shopping experience possible with good advice in the digital world? Chatbots and personal shoppers enable webshops to offer suitable products at any time or to be quickly available for questions and advice.

Other AI applications offer practical solutions for specific e-commerce problems. Other products can be bought online just a few clicks away. Given this high level of price transparency, how do you manage to maintain and improve your market position? The best way to achieve this is through strategic pricing based on current market data. In view of the immense number of vendors and products, you can only obtain this by using AI applications such as blackbee Insights, which are specially designed for this task.

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