SMEs to tap open source AI, reveals Red Hat study

54% find open source enabling cost effectiveness and low licensing costs a good opportunity for them to focus on their AI adoption, according to findings from a Red Hat study on Malaysian SMEs.

While SMEs are just as excited about AI as every other organization, the biggest challenge they face in adopting the technology is the lack of skills as well as the cost needed to deploy the technology. This was among the findings revealed from a study released by Red Hat conducted by independent research firm Ecosystem and in collaboration with the Malaysian National AI Office (NAIO).

The “Accelerating SME AI Adoption Through Open Source in Malaysia’s Digital Future” study surveyed 133 SMEs across industries in Malaysia, focusing on AI adoption trends, challenges and future plans. The 133 SMEs were within the Malaysia Digital Economy Corporation’s (MDEC) network and complemented in-depth interviews with NAIO stakeholders and working groups members.

On the positive findings of the research, 44% of Malaysian SMEs expect AI to fuel business growth without increasing costs, underscoring their confidence in AI’s potential despite economic pressures. However, what’s concerning is that many businesses remain in the early stages of adoption. While 36% are piloting AI projects, only 21% have scaled beyond pilots to deliver measurable results.

According to the study, SMEs in Malaysia are still not sure where to start and are concerned with governance and risks that are involved in using AI. Specifically, the study revealed that 60% of the SMEs surveyed lack technical skills and in-house expertise in working with AI while 52% state high cost of implementation and maintenance. 34% have concerns about data privacy and security, with another 34% having uncertainties on ROI and 32% have integration challenges with existing systems and infrastructure.

As such, 61% of SMEs in Malaysia require training and skilling while 57% need support in integrating AI into their business. Awareness and education on AI is still a concern with more than half (53%) needing it and 52% would also like to have a platform for industry collaboration and networking. Another 49% would like tools to assess AI’s impact and uncover business opportunities.

Open source AI

Tech vendors in Malaysia have been offering services to SMEs in the country to embark on their AI journey. But with cost, skills and ROI uncertainties still a challenge, taking the open source approach may just be the more flexible option for them.

54% find open source enabling cost effectiveness and low licensing costs a good opportunity for them to focus on their AI adoption. 51% also see the flexibility and easier customization in open source AI beneficial for them and 43% see faster innovation cycle in AI.

For Tammy Tan, Red Hat Malaysia Country Manager, SMEs want to us AI but not all of them can afford it. This is concerning in countries like Malaysia where 97% of the businesses in the country are SMEs.

Echoing her remarks is Sash Mukherjee, VP Industry Insights at Ecosystm, who believes that SMEs are actually the last mile for AI as they will be able to bring AI to every little corner in the country. She also believes that there will be a digital divide unless SMEs began adopting AI in their businesses.

Looking at the innovation with open source AI, Albert Chai, General Manager, Rest of Southeast Asia (RoSEA), Red Hat explained that open source AI models have caught up in the past few quarters.

“There are now improved performance and quality as some of the larger proprietary AI models. So everywhere we believe in the power of open but also the power of small language models. These small language models are cheaper, faster to customize, and train. They run on low cost computing, they require less data and of course they consume less power. And all this means SMEs can build and train and deploy AI at a much lower cost point than what we launched AI offerings from the entities that has been leaving the market,” he said.

Chai also pointed out that Red Hat recently launched an open source tool called InstructLab. InstructLab enables any organization, big or small, to fine tune and customize AI model without the need for technical expertise like data scientists and data engineers.

“The tool itself is obviously built on a community of developers, researchers and businesses coming together to build on each other's innovation. It effectively makes these tools a lot more customizable and also cheaper and more transparent for SMEs. So, all in all, SMEs today are spoilt with open source options that they can tap into,” he added.

The role of NAIO

Given the findings of the report, the role of NAIO becomes even more important in bridging the gap SMEs are facing in their AI adoption. During the media briefing session, Shamsul Izhan, Head of NAIO explained that the establishment of the NAIO was to pretty much drive the AI ecosystem and become a focal point of AI conversations.

“We collaborate with every party in the private sector and also in the public sector. And when it comes to collaboration, fortunately the topic of AI has been the front and centre question mark in everybody's head. And everybody is looking for some sort of a connection, some sort of an insight and NAIO has been positioned to give that kind of insight,” said Izhan.

He explained that Malaysia has 288 sectors and the NAIO collaborates with all of them, in particular to bring up the National AI Action Plan, which is at the tail end and will be presented to the government for approval soon. The National AI Action Plan is the forefront of AI across all the sectors of government and the public sector.

“So it's echoing the AI nation values, which is number one, to raise the ceiling. Make sure that all of us have more capability, AI augmenting our know-how, our capability and capacity. The second one is to raise the floor, so that no one is left behind and hence the topic of today, SME getting access to open source, fits right into the raising the floor. Because otherwise AI could only be accessed by those that have capabilities and have resources,” he added.

“But open source is something that more SMEs should appreciate because it lowers the barrier to entry into the AI domain. And the third portion of AI nation is good governance, which means that as we put AI into all forms of life, we are also putting in governance, better practices, policy and even standards into how AI is being implemented,” explained Izhan.

For Izhan, open source has been a prominent vehicle since the glory days of IT in Malaysia some three decades ago. And now, he believes the opportunity is there again with AI.

“For a SME to get up to speed, having the same capability as any other larger organization, open source is one of the major opportunities. The AI action plan does have a few insights and directions for SMEs to go forward, but we do need another piece of content and this white paper fits exactly into it,” concluded Izhan.