The cost of complacency is becoming crystal clear in the small and medium-sized business (SMB) space. There’s little room for those who rest on their laurels, especially when they make up over 95% of businesses globally emerging all the time. Amid fierce and crowded competition, innovation increasingly sets apart the high performers from those struggling to stand their ground.

A nimble approach has always been critical for SMBs to stay relevant with customers, especially when they lack the deep pockets and market muscle of large enterprises. Hungry to differentiate from their peers and build agility, leaders in the landscape are looking to adopt the latest developments in artificial intelligence (AI). Most recently, the potential of generative AI has captured the attention of the masses with promises of surging productivity, streamlined operations, and elevated customer experiences.

But swooping in on the rewards of AI solutions relies on building mature data foundations first. After all, an AI solution is only as good as the data it’s trained on. The evidence shows that putting a solid data strategy in place helps SMBs maximize performance and revenue. A recent study by S&P Market Intelligence, commissioned by Amazon Web Services (AWS), reveals just how much SMBs have to gain by becoming more data-driven.

Data Flows into Financial Returns

Aside from the need to drive competitive differentiation, businesses have had to navigate turbulent macroeconomic conditions for some time, not to mention constantly changing customer expectations. Building data maturity empowers SMBs to create financial stability in the face of these headwinds. In fact, 65% of highly data-driven SMBs benefit from a stronger financial performance than their peers. This is almost double that of those who aren’t prioritizing data (33%).

Data enables SMBs to get ahead and mitigate uncertainty by improving decision-making. When guided by evidence, organizations can be prepared for what’s coming and adapt business decisions accordingly – whether that’s being able to forecast accurately, detecting and preventing costly security threats, or anticipating customer needs. All these factors feed into profitability and resilience against market changes. 

The study shows that strong data foundations act as a platform for growth with wide-reaching business outcomes. Beyond revenue rises and cost reductions, highly data-driven companies saw a 32% uplift in customer satisfaction, a 34% improvement in marketing, 33% better process efficiency, and a 30% risk reduction compared to less data-driven competitors. 

Highly data-driven respondents in the survey also expected to see the benefits continue into the future – 65% anticipate a boost in marketing in the next two years, versus just 33% of SMBs with less of a data focus. Armed with data-driven decisions, they can better understand how customer behaviors will shift and where marketing investments will make the greatest impact. 

A Mature Data Strategy Gives SMBs the Edge

While the positive business outcomes of data flowing through an organization are clear to see, not all data foundations are built equal. Reaping greater value from data depends on the level of maturity. It also comes down to having a clear strategy in place for the technology, processes, people, and rules associated with data. 

Research backs up the value of investing in data maturity and a long-term vision for how data is collected, stored, shared, and used. 60 percent of organizations with a mature data strategy achieve a stronger financial performance than their competitors, compared to just 24% who are in the early phases of developing their strategy. 

The further SMBs are on their data maturity journey, the more likely they are to capitalize on its value. This is because they have more historical and high-quality data to hand to leverage for revenue-driving insights across everything from forecasting to customer segmentation. These organizations also have the building blocks of a data-driven culture that encourages effective cross-team collaboration. And with robust governance and compliance measures in place, they are better protected from risk too. 

Data-Driven SMBs Take a Greater Slice of the AI Pie 

As SMBs eye up the transformative opportunities of AI, the research reaffirms the power of laying their data groundwork before unleashing the benefits. Highly data-driven businesses adopt AI at twice the rate of less data-driven competitors – and they’re more likely to seize the benefits across different functions too. 

These SMBs are leading the charge with 48-57 percent seeing a moderate to high positive impact from AI engagement across process efficiency, marketing, market share, revenue, customer satisfaction, cost reduction, and risk. Their less data-driven peers are lagging behind, with just 21% claiming the same benefits.

The use cases are varied, with over half (52%) of highly data-driven SMBs deploying AI to keep threats at bay with automated detection and remediation of phishing attempts. Beyond IT operations and cybersecurity, they’re also harnessing AI more extensively across customer experience applications, content creation, and data analysis. For instance, 52% are using AI to accelerate the creation of social media posts, articles, and images. Additionally, 41% are using the technology as a key tactic for enhancing marketing and advertising through personalization. 

It’s Time to Make Data Your Differentiator

Accessible, up-to-date, and accurate data has long been considered the lifeblood of modern organizations, and it’s becoming increasingly apparent. The evidence points to a growing performance gap between SMBs who channel their energy into becoming data-driven and those who sideline the opportunity. Yet the majority are still missing out on the chance to carve out a competitive advantage –just 19% consider themselves highly data-driven despite the measurable impact on revenue, customer experiences, and process efficiencies. 

Meanwhile, generative AI remains high on the agenda for those seeking to stand out. However, jumping into implementation shouldn’t be the first port of call if a comprehensive data strategy isn’t embedded into a business’s culture. Gaining and sustaining a competitive edge also means assessing the real business challenges, as well as building the modern foundations to solve them. In doing so, SMBs will be primed to adopt new technologies purposefully.

In today’s crowded SMB landscape, getting ahead is about taking a step back first before being able to create long-term leaps in progress. And as cloud infrastructure and services become more accessible and affordable for smaller businesses, it’s never been a better time to build agility and resilience with the help of modern architecture.