Small and medium-sized businesses are adopting AI at a rapid pace, but a critical skills gap is preventing them from turning technology into tangible business results. According to research from Pax8, a managed service provider cloud marketplace, nine in ten SMBs are actively using or experimenting with AI. Yet nearly one-quarter of business leaders cite a lack of internal expertise as their top barrier to AI adoption, alongside concerns about security and return on investment (ROI).

Why Are SMBs Struggling Despite High AI Adoption Rates?

The disconnect between adoption and execution reveals a fundamental problem in how businesses approach AI implementation. SMBs are eager to experiment with AI tools, but they lack the strategic guidance and governance frameworks needed to deploy them confidently. Pax8 surveyed 400 small business leaders in the United States for its AI pulse report, and the findings suggest that technology alone is not enough.

The expertise gap extends beyond technical knowledge. Many SMBs struggle to identify which use cases make sense for their business, establish governance policies, define success metrics, and integrate AI into existing workflows. Without this foundational work, AI implementations often stall or fail to deliver measurable value.

"Businesses don't just need technology; they need guidance, governance and expertise. That's where MSPs and managed intelligence providers can differentiate themselves," said Eric Torres, VP of Channel and Community Engagement at Pax8.

Eric Torres, VP of Channel and Community Engagement at Pax8

What Competitive Advantage Does AI Actually Provide?

For SMBs that successfully implement AI, the payoff is significant. Among businesses deploying AI, 31% reported having a technical edge on competitors, compared to just 12% of companies not using AI. This competitive advantage is backed by substantial investment: 53% of SMBs using AI increased their technology spending over the past year, while only 24% of non-users did the same.

AI acts as a workforce multiplier for smaller organizations. Nearly three-quarters of survey respondents said AI helps small businesses compete with much larger enterprises. The technology allows smaller teams to operate with capabilities that previously required significantly larger organizations to maintain. However, this advantage only materializes when businesses have the expertise to deploy AI strategically.

How Can Partners Help SMBs Move From Experimentation to Results?

IT service providers and managed service providers (MSPs) have an opportunity to position themselves as strategic advisors rather than technology vendors. The shift requires moving away from a sales-focused conversation about AI tools and toward a business-outcomes conversation.

• Focus on Business Problems: Partners should identify specific operational challenges where AI can deliver measurable improvements, such as productivity gains, faster customer response times, improved employee efficiency, or revenue growth.
• Establish Governance Frameworks: Only 23% of SMBs surveyed reported having documented AI use policies, raising significant security concerns. Partners can help businesses create approved tool lists, usage guidelines, human review processes, and employee training programs.
• Define Success Metrics: Partners should work with SMBs to establish clear, measurable benchmarks for AI projects before implementation begins, ensuring both parties understand what success looks like.
• Create Scaling Roadmaps: Rather than treating AI as a one-off project, partners can help SMBs develop long-term strategies for expanding AI use across the organization as capabilities mature.

"The message shouldn't be, 'Let us help you buy AI.' It should be, 'Let us help you get results from AI.' The experimenters in our research aren't questioning whether AI matters. They're telling us they lack the expertise to deploy it confidently," Torres explained.

Eric Torres, VP of Channel and Community Engagement at Pax8

Interestingly, the most successful AI users often have more governance guardrails in place, not fewer. This counterintuitive finding suggests that strong governance frameworks actually enable adoption by reducing risk and building organizational confidence in AI tools. Governance is not a barrier to AI adoption; it is a prerequisite for sustainable, scalable implementation.

What Does the Next Phase of AI Adoption Look Like for SMBs?

The conversation around AI in the SMB market is shifting from whether businesses should adopt AI to how effectively they can execute on AI initiatives. Nearly 40% of SMBs are either still experimenting with or not using AI at all, suggesting significant room for growth. However, this growth will depend on partners' ability to make a compelling business case for AI and provide the expertise to implement it successfully.

Torres predicts that the industry is moving from an era of AI curiosity to an era of AI operational maturity. Organizations that build the right leadership structures, governance frameworks, and external partnerships are likely to widen their competitive gap over the next year. For SMBs without these elements in place, the risk of falling behind grows larger as AI becomes increasingly central to business operations.

The path forward for SMBs is clear: technology adoption alone is not enough. Success requires expertise, governance, and a strategic focus on business outcomes. Partners who can provide this guidance will become indispensable to SMB growth in the AI era.