Nevertheless, the process of economic “cell” replacement is ongoing and has intensified in the digital era, particularly under the impact of artificial intelligence.
Dr. Vo Dinh Tri from IPAG Business School, Paris, France: A critical opportunity for transformation
The digital era, coupled with advances in artificial intelligence, is generating unprecedented opportunities for SMEs that were previously unattainable.
First, digital technology helps businesses work faster and make better decisions. Instead of replacing workers, technology relieves them of repetitive tasks so they can concentrate on more creative and value-added work.
Second, the advantages of big data enable enterprises to anticipate consumer behavior and deploy recommendation algorithms that deliver products and services precisely when demand arises.
For instance, a beverage retailer can integrate data on purchase history, weather patterns, time of day, and even customer sentiment to generate real-time, personalized drink recommendations.
Third, digital platforms and AI have dramatically expanded SMEs’ access to global markets, effectively dismantling geographical barriers. In the past, exporting was largely the domain of multinational corporations with strong financial capacity and advanced logistics systems. SMEs were once confined to domestic markets, held back by geographic barriers and the high costs of cross-border marketing. Today, the rapid expansion of digital platforms and AI is rewriting the rules, allowing even small household businesses to compete on a global scale.
Finally, by dramatically lowering costs through SaaS and cloud computing, the democratization of technology has dismantled one of the largest structural disadvantages faced by SMEs. Technologies that once required massive upfront investment are now accessible, scalable, and financially viable for smaller firms.
Challenges in the digital transformation process
Digital and AI-driven transformation is not risk-free. Opportunities inevitably come with challenges, which SMEs must address carefully. By nature, opportunities always come with risks and challenges. Below are key issues that SMEs need to pay close attention to.
The primary and most critical barrier is financial. Even with the spread of SaaS, businesses can still fall into the trap of overspending on sophisticated software, mistakenly believing that advanced tools will automatically generate better outcomes.
The second obstacle is data quality. Amid accelerating digital and AI adoption, SMEs often prioritize advanced technologies without addressing fundamental data weaknesses. Fragmented and low-quality data is not a marginal technical concern but a structural barrier that undermines profitability and modernization efforts.
The third challenge is the shortage of digital skills. Despite widespread access to advanced technologies, software, and cloud infrastructure, many organizations lack the human capital required to deploy and manage these systems effectively. For SMEs, this skills gap represents not merely a technical constraint but a growing workforce crisis.
Many believe the greatest obstacle to digital transformation is technology costs. Reality tells a different story: technology is getting cheaper, but talent capable of using it well is becoming rarer and more expensive. An equally dangerous misconception is treating digital skills as synonymous with IT. The true bottleneck is not a lack of coders, but a shortage of digitally fluent professionals across core business functions (Digital Fluency).
Fourth is the issue of security, particularly the rise of “shadow AI”. Shadow AI refers to the practice of employees using AI tools, such as ChatGPT, Claude, Gemini, or image-generation applications, for work purposes without approval, oversight, or even awareness from the IT department or senior management.
Employees adopt these tools with the intention of working faster, writing better emails, or coding more efficiently. However, this spontaneous and ungoverned usage introduces significant risks. For SMEs, where governance and internal control mechanisms are often less robust than in multinational corporations, these risks can be even more pronounced.
When organizations fail to provide approved, secure AI tools, employees will inevitably find their own solutions. And that is when internal security controls are effectively compromised from the inside.
Shadow AI poses significant risks to intellectual property protection and customer data security. SMEs frequently misunderstand the privacy implications of public AI tools, many of which reuse input data for model training.
Hackers now leverage AI to identify vulnerabilities and conduct large-scale, highly targeted phishing attacks. Shadow AI opens new backdoors for such threats, while unverified AI extensions provide a direct route for malware and ransomware to penetrate internal systems.
In the digital and AI era, data is a critical strategic asset. This requires a strong focus on clean, high-quality data, treating it as an asset that must be maintained, governed by clear standards, and audited regularly.
Control mechanisms should follow a “trust but verify” approach, such as establishing secure sandboxes, providing employee awareness training, and implementing clear and well-defined AI policies.
The digital and AI era is defined by rapid shifts and heightened competition. Opportunities for SMEs are real, but so are the challenges. This race will not reward hesitation; only those who adapt decisively will achieve breakthrough growth.
