- In 2022, 31.4% of U.S. employer firms used cloud-based technology in their processes and 36.1% used specialized software, according to the Census Annual Business Survey.
- Cloud use climbs from 28.1% of firms with 1 to 4 employees to 47.2% at 50 to 99 employees and 60.7% at 500 or more.
- 43.1% of the smallest firms said cloud technology was not applicable to their business, against 11.9% of firms with 500 or more employees.
- Among firms that said cloud technology applied to them, use ranges from 74% of the smallest firms to 92% of the largest, a much smaller gap.
- Professional services (50.8% cloud) and finance (45.8%) lead service sectors; food service (19.2%) and repair and personal services (18.7%) trail.
How does technology adoption change with firm size?
Larger firms use more technology, and the step up is steady rather than sudden. The Census Bureau's Annual Business Survey (ABS) asked employer firms whether they used five technologies as part of their processes or methods in 2022: artificial intelligence, cloud-based technology, specialized software, robotics and specialized equipment.
Cloud-based technology was used by 28.1% of firms with 1 to 4 employees, 35.9% of firms with 10 to 19, 47.2% of firms with 50 to 99 and 60.7% of firms with 500 or more. Specialized software follows the same curve, from 32.2% of the smallest firms to 57.3% of the largest. AI was rare at every size in 2022, from 2.8% to 5.5% for firms under 500 employees and 9.6% for firms with 500 or more.
| Employees | Cloud-based technology | Specialized software | Specialized equipment | AI | Robotics |
|---|---|---|---|---|---|
| 1 to 4 | 28.1% | 32.2% | 11.1% | 3.4% | 0.9% |
| 5 to 9 | 31.8% | 38.4% | 17.2% | 2.9% | 1.4% |
| 10 to 19 | 35.9% | 41.6% | 19.3% | 2.8% | 1.9% |
| 20 to 49 | 40.2% | 44.7% | 20.4% | 2.9% | 2.8% |
| 50 to 99 | 47.2% | 51.3% | 23.9% | 3.6% | 4.2% |
| 100 to 249 | 53.6% | 55.5% | 28.3% | 4.1% | 7.4% |
| 250 to 499 | 55.4% | 56.6% | 27.3% | 5.5% | 10.1% |
| 500 or more | 60.7% | 57.3% | 27.0% | 9.6% | 13.5% |
| All employer firms | 31.4% | 36.1% | 14.4% | 3.3% | 1.5% |
Share of U.S. employer firms that used each technology as part of their processes or methods in 2022. Source: U.S. Census Bureau, 2023 Annual Business Survey, table AB2200MCB04 and AB2200MCB01.
Why do small firms use less cloud and specialized software?
Mostly because they say it does not apply. In the ABS, 43.1% of firms with 1 to 4 employees said cloud-based technology was not applicable to their business, against 22.4% of firms with 50 to 99 employees and 11.9% of firms with 500 or more. About one in five firms of every size answered 'don't know'.
When we look only at firms that said a technology applied to them and gave a yes or no answer, the size gap shrinks a lot. By our calculation, 73.8% of the smallest firms that saw cloud technology as relevant used it, compared with 80.7% at 50 to 99 employees and 91.7% at 500 or more. For specialized software the range is 78.7% to 93.5%.
That suggests the main divide is not small firms trying and failing to adopt tools. It is small firms not seeing how tools such as cloud scheduling, shared document storage or industry software fit their work. A five-person accounting office or a three-chair dental practice runs many of the same processes as a larger firm (booking, billing, records, client messages) and often has the most to gain from tools built for that work.
| Employees | Cloud: not applicable | Cloud: used, among firms where it applies | Software: not applicable | Software: used, among firms where it applies |
|---|---|---|---|---|
| 1 to 4 | 43.1% | 73.8% | 40.5% | 78.7% |
| 5 to 9 | 37.6% | 74.8% | 34.4% | 83.3% |
| 10 to 19 | 33.8% | 77.5% | 31.0% | 84.6% |
| 20 to 49 | 29.1% | 79.1% | 27.1% | 85.5% |
| 50 to 99 | 22.4% | 80.7% | 21.8% | 87.5% |
| 100 to 249 | 18.8% | 84.3% | 19.5% | 90.0% |
| 500 or more | 11.9% | 91.7% | 14.0% | 93.5% |
Used among firms where it applies = share used divided by (100% minus not applicable minus don't know). Source: Monvell calculation from U.S. Census Bureau, 2023 Annual Business Survey, table AB2200MCB04.
Which service sectors use the most technology?
Information-heavy sectors lead. In 2022, 55.3% of information firms, 50.8% of professional, scientific and technical firms and 45.8% of finance and insurance firms used cloud-based technology. Specialized software use was highest in the same sectors, plus health care at 46.5%, where practice management and records systems are common.
Hands-on service sectors used less. Cloud use was 19.2% in accommodation and food services and 18.7% in other services, the sector that includes auto repair, salons and personal care. Health care stands out for specialized equipment (26.9%), the highest of any service sector, reflecting clinical and diagnostic tools.
| Sector (NAICS) | Cloud-based | Specialized software | Specialized equipment | AI |
|---|---|---|---|---|
| Information (51) | 55.3% | 55.9% | 19.6% | 12.8% |
| Professional, scientific and technical (54) | 50.8% | 54.4% | 11.8% | 7.0% |
| Finance and insurance (52) | 45.8% | 50.1% | 4.0% | 4.4% |
| Real estate and rental (53) | 37.1% | 39.0% | 5.0% | 5.4% |
| Educational services (61) | 37.0% | 37.8% | 9.5% | 5.1% |
| Health care and social assistance (62) | 36.6% | 46.5% | 26.9% | 2.6% |
| Arts, entertainment and recreation (71) | 29.5% | 33.2% | 15.7% | 3.5% |
| Administrative and support (56) | 26.9% | 29.0% | 13.7% | 2.6% |
| Accommodation and food services (72) | 19.2% | 21.8% | 8.5% | 1.3% |
| Other services, incl. repair and personal care (81) | 18.7% | 28.5% | 19.6% | 1.5% |
Share of U.S. employer firms using each technology in their processes or methods, 2022. Source: U.S. Census Bureau, 2023 Annual Business Survey, table AB2200MCB01.
How do South Carolina businesses compare?
South Carolina firms look much like the nation. The ABS state estimates show 33.1% of South Carolina employer firms using cloud-based technology in 2022, 37.7% using specialized software and 3.7% using AI, against 31.4%, 36.1% and 3.3% nationally. The South Carolina figures carry standard errors of about 4 to 5 points, so the differences are within the margin of error.
By sector, South Carolina's professional services firms reported 49.9% cloud use and 58.4% specialized software use, and health care firms 39.8% and 48.3%. Finance and insurance firms in the state reported 50.2% cloud use. Food service (25.3%) and other services (20.1%) were the lowest, matching the national pattern.
Has anything changed since 2022?
AI has. The ABS figures describe 2022, before generative AI tools were widely available, and only 3.3% of firms reported using AI then. The Census Bureau's Business Trends and Outlook Survey, which asks a broader question about AI in any business function, found 24.6% of employer firms using AI in its October 2026 wave. The two surveys use different questions and are not directly comparable, but both show larger firms ahead.
The ABS also asked why firms adopted these tools. In a September 2025 summary, the Census Bureau reported that improving the quality or reliability of processes was the most cited motivation for cloud technology (51.8%), specialized software (49.8%) and AI (45.8%). For most firms, the reported effect on headcount was no overall change.
What this means for service businesses
If your firm has fewer than 20 employees, the data says your peers mostly do not use cloud or specialized tools, and many have decided those tools do not apply. Larger competitors have decided otherwise. The useful question is which of your processes are the same ones larger firms have already moved to software: scheduling, client records, billing, document sharing and customer messages.
A practical way to start is to list each process, note where the information lives today (paper, a spreadsheet, someone's inbox) and ask whether a tool built for your industry would remove re-entry or missed handoffs. A small property manager may find a tenant portal saves hours of phone calls. A small physical therapy clinic may find online intake and automated reminders reduce front desk work.
Monvell's Platform team sets up the core systems service businesses run on, such as CRM, booking and client portals, and our Consulting work helps decide which tools are worth adopting first.
- Inventory your recurring processes and where each one's information is stored.
- Mark which ones involve typing the same data into more than one place.
- Look for software built for your industry before choosing a general tool.
- Start with one process, measure the time saved, then expand.
How we did this
Dataset: U.S. Census Bureau Annual Business Survey (ABS), 2023 survey year (reference year 2022), module characteristics tables AB2200MCB04 (by employment size of firm, national) and AB2200MCB01 (by sector and state), downloaded from the Census ABS data directory. The ABS is a joint project of the Census Bureau and the National Center for Science and Engineering Statistics and covers employer firms. The 2024 survey (reference year 2023) did not repeat the technology module, so 2022 is the latest year available.
Question: business characteristic 'TECHADOPT' (question B70), which asks whether the firm used each technology as part of its processes or methods. We report the share of employer firms answering 'used as part of the processes or methods'. Other answer options were not applicable; applicable but did not test or use; tested but did not use; and don't know.
Method: published percentages are reported as is, for all firms (totals for sex, ethnicity, race and veteran status). The 'used among firms where it applies' figure is our own calculation: share used divided by 100% minus the not applicable and don't know shares. Sectors are 2022 NAICS. The firm size table omits the published row for firms with no employees during the mid-March pay period.
Limits: ABS estimates are survey-based; national size class estimates have standard errors under 1 point for small firms but up to 5 to 13 points for the largest classes, and state sector estimates are less precise. 'Use' does not measure how deeply a tool is used. The technology categories are broad, and firms may interpret 'specialized software' differently.
Sources
- Census Bureau's 2023 Annual Business Survey Provides Insight into Technology Adoption by Businesses, U.S. Census Bureau (2025)
- Annual Business Survey data files, reference year 2022 (AB2200MCB01 to MCB05), U.S. Census Bureau (2025)
- ABS Module Characteristics of Businesses by Employment Size of Firm: 2022 (AB2200MCB04), U.S. Census Bureau (2025)
- Annual Business Survey (ABS) program page, U.S. Census Bureau and National Center for Science and Engineering Statistics (2026)
- Business Trends and Outlook Survey: data downloads, U.S. Census Bureau (2026)