Financing gaps, weak data systems slowing MSME shift to AI, IBM says

MICRO, small and medium enterprises (MSME) are increasingly becoming interested in using artificial intelligence (AI) but continue to face hurdles such as financing constraints and poor data quality, IBM Philippines said.

“MSMEs cater to smaller end-clients, so absorbing and organizing data is quite challenging,” IBM Philippines Technical Sales Lead Felicisimo S. Torres, Jr. told reporters on the sidelines of an event on Tuesday.

He added that adoption is more complex for small firms because many still rely on manual processes and lack integrated systems.

Only 14.9% of Philippine companies use AI tools, according to a recent study by the Philippine Institute for Development Studies, underscoring how far most businesses are from automation.

To address cost pressures, Mr. Torres said MSMEs could start with subscription-based AI tools rather than large upfront investments.

He added that cultural barriers remain a concern, with some workers and business owners reluctant to adopt tech due to fears of job displacement or added operational complexity.

A study by the IBM Institute for Business Value found that 64% of business leaders globally think AI success depends more on people’s willingness to adopt it than the technology itself.

The report also showed that 85% of executives expect AI to enable fresh business models, though many admit there is still a wide gap between their ambitions and what they have implemented.

Mr. Torres said interest among MSMEs is rising, noting that IBM recently closed a deal with a Cebu-based medium enterprise looking to integrate the company’s AI solutions into its operations. “The complexity is there, but it’s not impossible,” he said.

Globally, organizations are directing 64% of their AI investments into their core operations, according to the IBM study.

MSMEs account for more than 99% of Philippine businesses and contribute about 40% of economic output. — Beatriz Marie D. Cruz