Artificial intelligence is no longer a futuristic buzzword reserved for multinational corporations. Across Southeast Asia, small and medium-sized enterprises (SMEs) are beginning to view AI adoption as a real driver of growth and competitiveness. Yet, despite the hype, many business owners remain hesitant, unsure of where to begin and concerned about risks.
Alvin Toh, Co-Founder of Straits Interactive, has worked closely with SMEs to demystify AI and guide them towards responsible, sustainable adoption. In an interview with e27, he aims to shed light on both the opportunities and pitfalls awaiting SMEs in the region.
According to Toh, one of the biggest misconceptions among SMEs is that AI is an expensive luxury reserved for larger enterprises. “In reality, the rise of no-code and low-code tools, like Capabara, has levelled the playing field,” he explains.
These platforms allow SMEs to run pilots in days rather than months and at a fraction of the cost once thought necessary. However, many SMEs are still in a “watch-and-wait” mode, hoping to see measurable ROI from bigger players before committing resources.
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Toh and his team at Straits Interactive address this hesitation with a three-part approach:
Hands-on skills
Practical Gen AI workshops with SMU Academy train non-technical staff to apply AI tools directly in their daily tasks.
Small wins first
SMEs are encouraged to start with quick pilot projects that deliver measurable value, building confidence and internal momentum.
Governance confidence
By framing AI as a safeguarded business tool rather than a job threat, SMEs are empowered to innovate responsibly.
This structured approach helps businesses move from passive curiosity to confident AI adoption without stretching budgets or manpower.
The governance gap: why responsible AI matters
While SMEs are eager to experiment with AI, governance is often overlooked. Toh warns that rushing into adoption without safeguards can create more liabilities than benefits.
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In order to prevent that, Straits Interactive recommends the framework of Value, Risk, and Constraints to help SMEs evaluate AI tools:
Value
Jumping on every free or low-cost tool often creates a “tool zoo,” with overlapping functions, poor scalability, and unclear ROI.
Risk
Many popular tools fail basic due diligence checks, with privacy policies that do not align with actual data handling practices. This exposes SMEs to potential data leaks, violations of PDPA/GDPR, and reputational harm.
Constraints
With smaller budgets and teams, SMEs cannot afford costly mistakes, making governance a strategic necessity.
To address these challenges, Straits Interactive builds a Digital Transformation Package, equipping SMEs to deploy AI safely, integrate tools within existing compliance frameworks, and strengthen customer trust.
“AI adoption without governance is not innovation — it’s a liability,” Toh emphasises.
In doing their work, Straits Interactive has guided SMEs across law, education, and marketing to balance innovation with compliance. There are different ways companies in these industries can adopt AI in their organisation’s experience:
Law firm
A generative AI knowledge engine was trained on more than 8,000 legal documents, only after personal and sensitive data was cleansed. Domain experts tested outputs extensively to correct hallucinations, cutting legal research times from two hours to minutes.
Private school
AI tutors powered by Capabara supported lesson planning. Teachers were trained to integrate materials without infringing copyright or breaching PDPA.
Marketing agency
AI assistants streamlined campaign ideation and client outreach, with teams learning privacy-safe prompting and workflows.
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From these cases, Toh highlights that the first step for SMEs is to conduct a thorough audit of their data before deploying AI tools, ensuring that sensitive or personal information is identified and removed. Equally important is embedding compliance considerations at the very start of the adoption journey, rather than treating governance as an afterthought. By weaving in privacy, copyright, and ethical safeguards early, SMEs can avoid regulatory pitfalls and build trust.
Toh also stresses the importance of rigorous testing to validate AI outputs for accuracy, bias, and safety before they are integrated into daily operations. This process helps uncover weaknesses and ensures the technology serves its intended purpose. Finally, staff training is essential. By equipping employees with the skills to use AI effectively and safely, SMEs can create a culture of confident, responsible adoption that supports both innovation and compliance.
For SMEs ready to begin, Toh recommends a two-step pathway:
Pilot with purpose
Start with a single, well-defined business challenge, such as improving customer response times or automating reports. Test a plug-and-play tool on a small scale and measure the results.
Build capabilities around responsible AI
Invest in training, governance, and the right technology. Upskill compliance staff in Gen AI risks, adopt secure no-code platforms, and redesign workflows to integrate AI responsibly.
By embedding these elements early, SMEs can avoid costly missteps while positioning themselves for long-term growth.
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Image Credit: Umar Al Farouq on Unsplash
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