According to Business Standard's report on the CII–ISB study MSMEs in India: Challenges, Opportunities and the Road Ahead (sample of 2,919 confirmed MSMEs), 65.8% used AI tools, but only 21% used ERP or customised business software. AI use was mainly for business communication (34.9%), content creation (22.3%) and training (18.9%). The study notes the survey was voluntary and not probability-weighted, so treat the figures as directional for surveyed firms, not a census of all Indian MSMEs.
What the gap actually costs you
AI for drafts and replies sits on top of how work already happens. If orders live in WhatsApp, stock in spreadsheets and invoices in a separate accounting file, a better chat reply does not fix late dispatches, wrong stock counts or unpaid invoices.
Business software (ERP or a tailored operations system) is the layer that records and connects those flows: orders, inventory, production, billing and basic reporting. Without it, AI often becomes another place people copy and paste from.
A simple way to decide what to fix first
- Map where truth lives today. List the systems (or notebooks) that hold orders, stock, invoices and customer status. Note every hand-off that needs a person to retype data.
- Pick one painful loop. Examples: quote-to-invoice, sales-order-to-dispatch, or job-card-to-material issue. Choose the loop that causes the most rework or delayed cash.
- Standardise that loop in software first. Get a shared record, status and owner for each step. Only then add AI where it shortens a real task (drafting a follow-up, summarising a job note, suggesting the next action).
- Measure one outcome for 30 days. For example: time from order to invoice, stock mismatch incidents, or unpaid invoices older than 30 days. Drop tools that do not move that number.
Where AI helps once the backbone exists
AI is useful when it sits on clean, shared data:
- Drafting customer replies from the order record, not from memory.
- Flagging overdue follow-ups or stalled jobs.
- Summarising daily exceptions for a manager.
It is less useful when every team still maintains its own spreadsheet version of "the real numbers."
Trade-offs to expect
| Approach | Upside | Trade-off |
|---|---|---|
| More AI chat tools only | Fast to start, low cost | Data stays fragmented; hard to measure productivity |
| Off-the-shelf ERP | Structure and reporting | May force process changes; implementation still needs owners |
| Customised business software | Fits how you already work | Needs clearer requirements and a phased rollout |
The CII–ISB report itself argues that the next phase of support should convert technology adoption into measurable productivity, quality and growth — including technology adoption with implementation support, not tools alone.
What to do this month
- Stop adding AI apps until one core process has a single system of record.
- If you already use Tally (or similar) only for accounts, decide whether operations (orders, stock, jobs) need the same connected layer.
- Train people on the process in the system, then on any AI assistants that sit on top.
You may also find our earlier pieces on how AI changes SME operations, custom ERP vs SAP vs Tally for manufacturers and Dolibarr as an open-source ERP option useful.
Ascent24 builds custom software, business process automation and AI integration for SMEs — including manufacturing, retail and service businesses that need systems that match how they actually work, not another disconnected chat tool.
Want a practical check of which process to digitise first? Message us on WhatsApp, call +91 96558 70024 or email info@ascent24.io. We can map one workflow and outline a phased software plan.
Frequently asked questions
Does using ChatGPT count as "using AI" for an MSME?
In the CII–ISB survey framing summarised by Business Standard, AI tools included uses such as communication, content and training. That is different from running ERP or customised business software that manages operations.
Should every MSME buy an ERP now?
Not automatically. Start with the process that causes the most rework. Some firms need a full ERP; others need a smaller customised system for orders, inventory or production first.
Can AI replace business software?
No. AI can speed tasks that sit on top of reliable records. Without shared operational data, AI mostly speeds up copy-paste between disconnected tools.
Sources
- Business Standard, "Two-thirds of MSMEs use AI tools, but only 21% deploy biz software: Study" (13 Oct 2026), reporting the CII–ISB study MSMEs in India: Challenges, Opportunities and the Road Ahead: https://www.business-standard.com/economy/news/two-thirds-of-msmes-use-ai-but-only-21-deploy-business-software-study-126101301191_1.html
