“The first step is to change the conversation. Companies need to start thinking about AI not just as a tool, but as a new way of operating. Instead of asking how to optimize existing processes, they should ask how they would design their business from the ground up if AI had existed in the first place,” says Ryan Walsh, chief strategy officer at Pax8.
AI adoption is gaining ground among small and medium-sized businesses, but new research from Pax8 reveals that many customers still need an MSP to turn experiments into real business impact.
The Denver-based cloud marketplace’s study, “The Agentic Workforce Economy,” found that even as AI moves from experimentation to expectation, most SMBs remain stuck in what Pax8 calls a “messy middle ground,” or deploying AI tools without integrating them into core operations.
“Adoption alone doesn’t create value. Integration creates value,” Ryan Walsh, channel chief and chief strategy officer at Pax8, told CRN. “Small and medium-sized businesses understand the importance of AI and are beginning to adopt it, but most have yet to incorporate AI into the way they actually operate.”
This disconnect is preventing many companies from making the most of their AI investments, he said. The survey also found that while small and medium-sized enterprises are increasingly seeing AI as a competitive advantage, they lack expertise, governance frameworks, and operational changes.
Walsh argued that MSPs are trusted advisors guiding clients through the next stage of AI maturity.
“We found there was a huge gap between adoption and integration,” he said. “And moving from experimentation to integration creates a completely different level of business impact. That’s why we believe organizations not only need new tools, but new operating models.”
CRN spoke further with Walsh about the report, SMB AI adoption, and how MSPs can further help their clients integrate technology to enhance their businesses.
Why did Pax8 conduct this report? What did we hope to learn?
We have always believed in the importance of validating our assumptions against what is happening in the external market. We may have a vision of where things are heading, but if the market is moving in a different direction, we need to recognize that and react to it. Therefore, we have always focused on external signals. Because if we’re going to help our partner community take advantage of what’s happening now and what’s coming next, we need external signals to inform our decisions. We wanted to understand how this new technology would impact the SMB market, so we intentionally combined feedback from our own partners with external research.
Ultimately, we wanted to answer some important questions. What is really happening with AI adoption? What does it mean for partners? And what should they do about it? This report helps answer these questions, but also provides information about the program we are building. Much of what we announce in this research is directly tied to what our partners and their customers need.
Why are you convinced that implementing AI will be an immediate business change for small and medium-sized businesses?
We track where the money is being spent and how many small businesses are adopting the technology. A few years ago, the adoption rate was around 25%. After that, it approached 50%. We’ve been paying attention to that trend, but recently we’ve noticed something even more important happening. Small and medium-sized businesses increasingly see AI as a way to compete with larger organizations. In our proprietary SMB Pulse survey, three-quarters of respondents said they believe AI will help them improve their competitiveness. That belief drove adoption, but problems were found. While companies were implementing AI, few had fully integrated it. One of the report’s statistics is that 92 percent have started implementing AI, but only 10 percent have integrated it. We started calling this the “messy middle.”
Companies were stuck, moving beyond experimentation and pilots, but didn’t know how to optimize their technology or drive real business results. Even if time was saved, the value was not necessarily reflected in revenue or profits. The MIT study we referenced was very interesting. They found that while 95% didn’t make a huge profit, the 5% that were successful generated millions of dollars. So we asked ourselves, “What’s the difference between these two groups?”
Another statistic that stands out is trust. Only 6 percent of small businesses say they currently trust their agents, but 88 percent are willing to spend more money on technology. It taught us something important. They know they need AI, but they don’t fully trust it yet. MSPs are already in a position of trust with their customers, so there is a huge opportunity there.
So what makes the top 5% of performers different?
The biggest difference is complete integration. They’re not just using AI tools here and there. They are incorporating AI into the way they operate their businesses. They redesigned their processes, redesigned their workflows, and fundamentally changed their operating model. This integration combines governance, security, and monitoring.
On the other hand, many organizations are hesitant because governance is not in place. They do not fully understand the security implications and are not integrated deeply enough to realize meaningful benefits.
We also found that security challenges are increasing. AI-related breaches are becoming more costly for small and medium-sized businesses. Currently, fewer than half of small businesses have acceptable AI usage policies in place. These findings strengthen our belief that MSP has an important role to play. So if companies want to be in the 5% of successes, they need to act with confidence, but they also need to act safely.
What surprised you most about the report?
The biggest surprise was that organizations barely took advantage of the time saved. We’ve seen evidence that functional leaders are using AI and realizing immediate productivity gains. Depending on the study, people were saving anywhere from 1 to 3 hours per day. For small businesses, that makes sense.
But what surprised me was how few organizations actually reallocated that time to new growth opportunities. If you’re resource constrained and always short on time, you’d think you’d quickly put that time to work on something else. We think part of what’s happening is an issue of trust. Leaders worry about security, sensitive information leaks, and risks they don’t fully understand. What we consistently hear from our early adopter partners is that this is not primarily a technology conversation. It’s a change management conversation. It’s governance. It’s security. It’s a policy. It’s an organizational change. Customers often think they’re buying a button, but what they’re actually doing is redesigning the way their business operates.
So if mindset is the biggest obstacle, how can MSPs help their customers overcome it?
The first step is to change the conversation. Companies need to start thinking about AI not just as a tool, but as a new way of operating. Instead of asking how to optimize existing processes, we should be asking how we would design our business from the ground up if AI had existed from the beginning.
One partner told me that they start every conversation by asking their customers what they think about AI and what concerns them most. This is a great place to start because it immediately turns the discussion into a conversation about change management.
What practical actions should MSPs take now?
First and foremost is commitment…AI cannot be treated as a side project. This report makes clear that being AI-first and being AI-adjacent are fundamentally different. Second, dedicate someone in your organization full-time to AI. This requires ownership, not simply adding another responsibility to someone’s existing workload.
Third, evaluate where you are right now. Even if you’re confident, assess your readiness and understand your strengths and weaknesses before you start building customer-facing services. And immediately start a conversation with your customer. Don’t wait until you have mastered everything. The most important thing is to understand the business problems your customers are trying to solve and where they are struggling.
Why does Pax8 believe MSPs should play a central role in navigating AI?
MSPs need an infrastructure that allows them to act with confidence. That’s why we’re investing in things like Agent Store and broader AI-enabled capabilities. If partners can deliver their first AI agents to customers in a secure, controlled, and supported way, that’s extremely powerful.
So what should all MSPs do now?
Dedicate resources to focus on AI full-time. Then educate yourself. Understand what’s happening in the market, understand what your customers are struggling with, and assess your readiness. And finally, start delivering the results of your AI to your customers. Don’t wait. As AI adoption continues to accelerate, organizations that move now and establish a trusted position will reap significant benefits.
