The small and medium-sized business (SMB) landscape can feel like a crowded elevator. Every time the doors open, a few organizations step out trying to carve out a space for themselves. But for each organization that leaves, three more squeeze through the gap and competition for space intensifies—it’s getting pretty claustrophobic in there, isn’t it? Knowing this, it’s no surprise that SMBs are engines of innovation – always on the lookout for new ways to differentiate themselves from the crowd. That’s why generative artificial intelligence (AI) is now such a priority for decision makers who are hunting for new competitive advantages.
Tools like conversational chatbots and coding companions have impressive potential, but the success of any AI-powered solution hinges on one thing: the quality of the data it’s trained on.
Data pays off, whether part of a broader AI strategy or not. It enables SMBs to consistently financially outperform the peers—and the gap is widening. A recent report by Amazon Web Services (AWS) and S&P Market Intelligence reveals exactly how much.
Data is the strong foundation for weathering uncertainty and supporting growth
As markets fluctuate and customer expectations evolve, SMBs face daily uncertainty and constant change. Data has become a crucial tool for small businesses, helping them to navigate that uncertainty with confidence. This approach delivers financial stability and steady growth, with 65% of highly data-driven SMBs financially outperforming their competitors—almost twice as much as less data-driven SMBs (33%).
Building on a secure and stable foundation, data-driven SMBs prime themselves for growth in multiple ways. For example, data empowers businesses to make decisions based on evidence, not guesswork. It facilitates personalized customer experiences, more accurate forecasting, and even automated security threat detection.
Data-driven SMBs are pulling ahead, leaving the rest of the pack behind
In today’s competitive market, highly data-driven SMBs have a significant edge. These businesses are roughly twice as likely to experience positive impact from data across key business outcomes compared to their less data-driven competitors. AWS found that this data-driven approach results in significantly higher customer satisfaction (69%), increased revenue (65%), improved process efficiency (65%), more effective marketing (61%), greater cost reduction (55%), and reduced risk (50%).
Looking to the future, SMBs that invest in data also anticipate ongoing benefits. For example, 65% of highly data-driven SMBs expect data to positively impact their marketing efforts in the next two years, compared to just 33% of less data-driven SMBs.
But what does being data-driven actually mean in practice?
It starts with developing a clear data strategy that defines the technology, processes, people, and rules associated with data. This strategy represents an SMB’s long-term vision for data collection, storage, sharing, and usage. With a data strategy in place, SMBs can build data maturity and foster a culture that encourages cross-team collaboration, innovation, and data-first thinking.
Fast-tracking success through data maturity investment
According to the AWS’ report, SMBs investing in data maturity and a well-defined data strategy gain a significant financial advantage over their peers: 60% of organizations with a mature data strategy financially outperform their competitors, while only 24% of those still developing their strategy can make the same claim.
Why? Because SMBs with a high level of data maturity have access to larger volumes of quality data. This enhances collaboration, improves forecasting, and enables precise customer segmentation. Additionally, they experience reduced risk thanks to robust data governance and compliance policies.
Moreover, a mature data strategy is crucial for maximizing the benefits of both generative and traditional forms of AI, ensuring SMBs stay ahead in a highly competitive market. Today, investing in data strategies is no longer an option – it’s a necessity for SMBs’ long-term success and stability.
A roadmap for data maturity to AI transformation
In today’s competitive market, creating a roadmap for data maturity is essential for businesses aiming to effectively leverage AI. Companies that invest in enhancing their data maturity yield approximately 30% more value from AI, highlighting the real importance of this transformation. Value is evident in various applications: over half of highly data-driven businesses use AI to automatically detect and remediate phishing attempts, 41% utilize it to enhance marketing and advertising, and 53% to accelerate content creation.
This directly shows that businesses with higher data maturity significantly outperform their less data-driven counterparts, underscoring the critical importance for SMB owners to prioritize data maturity in their strategic planning. By investing in data maturity, SMBs can unlock the full potential of AI, driving a comprehensive approach that enhances operational performance and provides a competitive edge.
As buzz around generative AI rumbles on, it’s important to not rush towards implementation. The key is to first identify a meaningful business challenge that AI can solve and then develop a strategy around that pain point. By investing in data maturity, SMBs position themselves to capitalize on AI effectively, empowering financial performance and competition.
Data-driven SMBs have the advantage, but there’s still time to catch up
Data is a differentiator for any SMB seeking competitive advantages, but most have yet to capitalize on its full potential. In today’s fiercely competitive landscape, data is fundamental to improving financial performance, decision-making, and market differentiation. With affordable access to cloud infrastructure, there has never been a better time to become a data-first organization. Modern data architectures and cutting-edge technologies like generative AI make this transition even more accessible.
Returning to the crowded elevator, SMBs investing in data will find room to breathe. As the doors open and close, their position remains secure, and they move in only one direction—up.
Claire Gribbin is the Head of Worldwide SMB Segment Strategy at AWS.
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