Dive Brief:
- Small and midsize businesses are grappling with AI governance as they move forward with AI deployments, according to a survey of 1,150 SMB leaders published Monday by Pax8. Two-thirds of SMBs regularly use self-built AI tools such as agentic automation, yet more than one-third have uncovered unapproved, shadow AI use in the past six months, per the survey.
- The AI and cloud marketplace provider found that standard AI review processes are inadequate. Only 36% of respondents reported formally reviewing or approving internally built AI.
- “SMBs are moving from using AI tools to building AI into the way their businesses operate,” said Nick Heddy, president and Chief Commerce Officer at Pax8, in a press release accompanying the report. “The opportunity is significant, but so are the new demands around governance, security, cost and accountability.”
Dive Insight:
The midmarket has become fertile ground for AI deployment, creating opportunities for IT service providers and other channel partners to deliver more than APIs.
In September, OpenAI announced a partnership with America’s Small Business Development Center, a network of national resource hubs for entrepreneurs. The LLM maker aimed to bring training, credentialing and advisory services to help more small businesses use AI at work. Anthropic, Accenture and AWS have also prioritized midmarket firms for AI deployment initiatives.
SMBs are already creating comprehensive AI systems, according to Pax8. More than half have developed automated workflows that connect AI to business systems, and another half are creating standalone tools for specific needs. Respondents said they are building or testing AI agents that can complete multi-step tasks on their own, creating custom integrations using an AI provider’s API and designing or fine-tuning models.
The momentum is expected to continue. Two-thirds of respondents said they need to adopt AI immediately or within six months, and over three-quarters maintained or accelerated technology investment despite ongoing economic uncertainty.
AI implementation can be risky, especially for companies with limited security resources. Breaches have disproportionately impacted businesses with fewer than 1,000 employees, according to a 2026 Verizon cybersecurity report.
SMBs are facing an uphill battle as AI usage spreads, according to Daniel Dobrygowski, a cybersecurity and AI legal expert at Sophos. “Both cybersecurity and resilience are core components of digital trust and organizational reliability,” Dobrygowski said in a recent Harvard Business Review article. “Customers, investors, suppliers and insurance carriers increasingly evaluate a company’s market viability through its security posture. A single breach can instantly erode customer confidence that took decades to build.”
For over one-third of SMB leaders, the top concerns for risk resulting from AI tools are data security and privacy, according to the survey.
That’s where partners can step in. Many SMBs already use outside help for AI implementation — up to 41% of respondents said they use a mix of internal and external support, while up to 23% rely primarily on an MSP or IT service provider, depending on their geographical location. Over one-third of SMB leaders said internal IT and technology leads are the most common drivers of AI adoption at their companies.
