TORONTO, ON – June 25, 2025 – Microsoft’s fifth annual Small and Medium-Sized Business (SMB) Report reveals a significant shift: artificial intelligence (AI) adoption among SMBs has surged, with 71% now using AI and/or generative AI (GenAI) in their operations, and 90% adoption among digital-native firms. This signals a transformative moment in Canada’s economic evolution, as SMBs increasingly harness AI to drive innovation, enhance productivity, and build resilience in a dynamic market landscape.  

The data signals a turning point: AI is no longer being piloted, it’s being operationalized. The survey found that SMBs are embedding AI into core business functions to improve efficiency, reduce repetitive workloads, and stay competitive. Common applications include customer service chatbots, automated document translation, and task automation. GenAI is playing a major role in accelerating content creation and removing process bottlenecks. 

“Small and medium-sized businesses are vital to the Canadian economy,” said Kree Govender, SMB Canada Area Lead at Microsoft. “This research confirms that AI isn’t just for large enterprises anymore. SMBs are using AI to tackle real-world constraints—tight margins, hiring limitations, and the speed of technological change. Microsoft is committed to supporting them with trusted tools, flexible support, and partnerships that make responsible AI adoption achievable.” 

“The more businesses of all sizes and sectors that adopt AI, the faster we can close Canada’s productivity gap,” said Ulrike Bahr-Gedalia, Senior Director, Digital Economy, Technology & Innovation at the Canadian Chamber of Commerce. “Private-public partnership will be essential to increasing the adoption rate as small businesses, compared to their larger counterparts, struggle with acquiring financial resources that enable them to invest in new technologies like AI.” 

AI Investment on the Rise, Despite Barriers 

The study found that nearly 75% of small and mid-sized businesses in Canada plan to increase AI investments, with 63% prioritizing generative AI. This aligns with a recent forecast by Gartner, Inc. around rising GenAI spending, which projects global spending could reach $644 billion in 2025, a 76.4% rise from 2024. Despite this strong AI momentum, 27% of businesses cite concerns around data privacy, cybersecurity and employee training, alongside ongoing uncertainty around regulatory and governance standards.  

While concerns remain, the study reveals promising outcomes. Seventy percent of SMBs report improved efficiency and productivity due to AI adoption. AI is also streamlining recruitment by automating elements of the hiring process. In total, 86% of decision-makers say their AI experience has been positive, and 58% have already implemented internal policies to guide its use. 

SMBs Shift from Pilots to Strategy 

Canadian SMBs are evolving from experimentation to structured execution. Notably, 60% now have a formal AI strategy, and nearly half are in active rollout phases. Sixty percent report that their existing tech infrastructure is ready to support AI, and 67% are collaborating with third-party providers with Microsoft being the most cited partner. However, half of respondents believe organizational culture must shift to fully realize AI’s potential. 

AI priorities also vary by scale: micro-businesses (fewer than 10 employees) focus on reducing costs and acquiring new clients; small businesses (50-99 employees) leverage AI for marketing and content; and medium-sized firms (100-250 employees) are advancing cybersecurity, talent acquisition, and digital transformation. Notably, mid-sized businesses show greater AI maturity, with 81% investing in traditional AI and 71% in generative AI. 

Microsoft is collaborating with Canadian SMBs, public-sector leaders, and industry stakeholders to help shape a secure, inclusive, and responsible AI ecosystem – one that drives innovation while upholding trust and accountability.  This includes broadening access to digital skills training to ensure all Canadians can thrive in an AI-driven economy, building clear and transparent AI governance frameworks, and investing in the infrastructure needed to modernize industries nationwide.  

Learn More and Get Started 

To access Microsoft’s dedicated AI resources for Canadian SMBs—including tools, case studies, and training programs—visit: aiskillsnavigator.microsoft.com. 

Methodology 

The research was conducted by Edelman via an online quantitative survey from January 10 to 24, 2025, prior to the announcement of new tariff measures that could impact SMB operations. The study surveyed 300 Canadians decision-makers—including owners, partners, managers, and directors—at small and medium-sized businesses (1–250 employees) to examine adoption and perceptions of Artificial Intelligence (AI). It explored AI utilization, key drivers and barriers, and the technology’s impact on productivity, cybersecurity, and workforce upskilling. Results also provide year-over-year comparisons to 2023 digital transformation benchmarks. Respondents were sourced through a validated panel provider, with sampling controls applied to ensure balanced representation across company sizes and industries. 

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About Microsoft Canada  
Established in 1985, Microsoft Canada Inc. is the Canadian subsidiary of Microsoft Corporation (Nasdaq “MSFT”) the worldwide leader in software, services and solutions that help people and businesses realize their full potential. Microsoft Canada provides nationwide sales, marketing, consulting and local support services in both French and English. For more information on Microsoft Canada, please visit www.microsoft.com/en-ca/about/. 

Media Contact: 
Derek Kirk 
Senior Communications Manager  
[email protected] 

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