By DC member Jane Enny van Lambalgen, CEO Planet Industrial Excellence

Many SMEs are light years away from a corporate strategy for the introduction of artificial intelligence. In fact, there are many SMEs that have only made necessary replacement investments over the years and hardly any modernization investments. Many companies have simply lacked the financial resources to do so.

In project assignments, we regularly come across ERP installations that are over 20 years old. Nevertheless, there are individual office workers in almost every company who use ChatGPT or Gemini to make their work easier, regardless of any company strategy. With this "shadow AI", however, data protection and data security regularly fall by the wayside.

Three reasons for AI abstinence

There are three main reasons for AI abstinence in SMEs: the tunnel vision caused by the economic "fight for survival", a lack of vision for the future combined with the excessive demands of reacting to the ever faster pace of change, and an overload of bureaucracy and hierarchy that consumes an excessive amount of time and money.

Nobody says so, but it is obvious that many company owners only invest when it is unavoidable in order to keep the business going. As long as the company makes enough profit, many medium-sized entrepreneurs are unwilling to leave their comfort zone. Added to this is the ignorance of current developments outside of day-to-day business caused by the notorious tunnel vision.

Bureaucracy as an obstacle to innovation

In addition to a lack of forward-looking thinking, in many cases the excessive bureaucracy is proving to be an obstacle to innovation for numerous SMEs. One example: If even minimal changes are made to a building, for example in the warehouse, this virtually calls a flood of authorities onto the scene, all of whom check according to their regulations and often demand changes. Sometimes the requirements even contradict each other, but in any case they usually involve a lot of effort.

In many cases, it is not even necessary to make changes to the company, but new requirements are simply added that have to be met retrospectively. There are manufacturing companies that have invested over the last 20 years primarily to comply with ever stricter fire protection regulations and constantly increasing safety requirements, without gaining any operational advantages as a result.

More important construction sites than AI

Most SMEs currently have more important construction sites than artificial intelligence. These include improving operational processes, adapting production to the state of the art, expanding sales channels, modernizing IT infrastructure, optimizing online activities, taking measures to increase customer loyalty and strengthening resilience, particularly in supply chains.

Of course, AI can help with some of these tasks, for example in operational processes such as purchasing, in the online area and in customer communication. However, the use of AI for technical applications, evaluations or the creation of dashboards and KPIs is complex. Processing information from older ERP systems is also a challenge that is usually costly. The focus must be on achieving operational goals. Artificial intelligence should currently only be introduced if it will benefit the company in the short term. In addition, many companies simply lack the expertise to introduce AI.

* Jane Enny van Lambalgen is Founding Partner and Managing Director of Planet Industrial Excellence and a member of United Interim, the leading community for interim managers in German-speaking countries, and the Diplomatic Council, a global think tank with consultative status at the United Nations (UN). She works for companies as an interim manager for strategy, operational excellence, turnaround, supply chain management and digital transformation. As a temporary manager, she takes on positions as CEO, Managing Director, COO, Delegate of the Board of Directors, Supervisory Board and Advisory Board in medium-sized companies. Her work focuses on international operations assignments with a focus on production, supply chain and logistics.