AI Adoption: How Small and Medium-Sized Enterprises (SMEs) Are Leveraging Generative AI for Business Decision-Making and Cost Reduction

Abstract

The democratization of artificial intelligence through generative AI (GenAI) has altered the technological options available to small and medium-sized enterprises (SMEs). This study examines how SMEs use GenAI to support business decision-making and reduce operating costs. Using the mixed-methods multi-case basis stated in the source document, covering 45 SMEs across manufacturing, professional services, and retail, the paper synthesizes functional adoption pathways in market intelligence, financial scenario analysis, customer support, marketing, administration, and software development. The reported evidence indicates that GenAI can scale cognitive capabilities while automating repetitive administrative, creative, and technical work. The paper also retains a cost-optimization model that relates initial AI integration expenditure and recurring infrastructure cost to reductions in marginal transaction cost. Across the reported three-year projections, aggregate functional spending declines from a baseline of USD 410,000 to USD 170,000 in the mature state, corresponding to the reported net saving of 58.5%. The study further identifies data confidentiality, hallucination, algorithmic bias, and vendor dependency as implementation risks and proposes a phased governance and adoption roadmap for SMEs.