Will AI replace traditional software tools for small businesses in the UK?

New YouGov data explores whether the nation’s smaller businesses plan to replace their existing software solutions with LLMs and other AI tools.

AI enthusiasts, commentators, and policymakers have stressed the importance of LLMs for UK SMEs. In January, for example, the government launched a free AI training initiative targeted at small businesses, with the aim of increasing adoption nationwide.

But what do smaller businesses think about the technology, especially in comparison to their existing software tools? New data from YouGov Surveys: Serviced shows that just 5% of SME decision makers say they are using the technology extensively, while 29% say they are using it in a more limited way. A fifth are exploring the idea, whilst over two in five (44%) say they are not. Looking towards the future, over half of SME decision makers (54%) do not believe AI is going to replace traditional software platforms in the next three years, while just three in ten (30%) say the opposite.

This may partially be because, for the most part, these businesses are happy with their current technological setup: four in five (80%) businesses who use traditional software solutions describe themselves as satisfied with the software they already use.

SMEs are also more likely to say they plan to increase AI spending rather than decrease it (29% vs 2%) in the next year, but the majority still say they don’t intend to make any changes.

What are the top barriers to AI adoption for small businesses in the UK? 

We asked businesses who use software solutions what their top barriers to AI adoption were. Two-thirds say the reliability and accuracy of the technology (65%), while half cite data security and privacy (51)%.

A third cite regulatory and compliance issues (33%), and nearly as many say the cost of switching (30%) or the training requirements (29%) are a concern. A quarter are worried about the loss of existing functionality (25%).

Based on these findings, AI companies may need to reassure smaller businesses on multiple fronts to increase adoption. To that end, we asked SMEs what would motivate them to switch from traditional software to AI tools. Half said improvements in efficiency or productivity (51%), while 45% cited cost savings. A third said ease of use would be a factor (34%), and three in ten cited better features and capabilities (30%) as well as better integration with other tools (28%). Nearly as many said they would want the tools to offer a competitive advantage (26%).

A quarter are outright AI avoidant, saying nothing at all would motivate them to switch to AI (24%).

Image: Getty