Small- and medium-sized business (SMB) leaders want to use the latest technology, but often hit a wall when it comes to making the right investment decision, according to a Tuesday report from Capterra. Choosing the right technology for business is the no. 1 challenge for SMB leaders, the report found.

“Small businesses are in a precarious position: They must find and deploy technology that will keep them competitive against their peers and large enterprises,” Lauren Maffeo, senior content analyst at Capterra, wrote in the report. “Companies that wait five to seven years to adopt a new technology may never catch up to competitors that started sooner. Yet, small businesses have minimal margin for error when choosing the best technologies for their business needs.”

Of the 700 SMB leaders surveyed across markets in the US, nearly half (47%) said they factor technology trends and advancements into their strategic planning. One-third of respondents said they are “solely responsible” for making technology purchasing decisions at their organizations, adding personal stakes in the decision.

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Despite potential benefits and consumer demand, SMBs are slow to adopt emerging technologies, according to the report. Nearly 65% of US millennials say they want to use chatbots when engaging with brands, but less than 30% of SMBs in sectors including retail, services, construction, and manufacturing are incorporating chatbots, the report found. Banking and financial services currently lead in chatbot implementation, with 35% of SMB leaders in those industries indicating they have deployed the technology. This presents a significant gap and potential lost business opportunity for those who do not invest, the report noted.

SMB leaders have also not jumped on the artificial intelligence (AI) bandwagon, the report found: Fewer than one in five SMBs use AI, though many more acknowledge that it is “critical” for their business. While 47% of leaders said they are currently using the Internet of Things (IoT), only 34% said that these technologies are necessary for them to do business.

Likely due to their smaller staff, SMBs also face several technology security challenges, the report found. Some 21% of leaders said business staff handles IT matters in their company, which likely includes IoT solutions. This increases security risks, as IoT leverages business and customer data.

“Before making any IoT investments, business leaders must establish plans for IoT governance, data ownership and ethics, security, and architecture,” the report stated. “Investments in the IoT will fail without a foundation to build on.”

The big takeaways for tech leaders:

  • 47% of SMB leaders said they factor technology trends and advancements into their strategic planning. — Capterra, 2018
  • Fewer than one in five SMBs use AI. — Capterra, 2018