Large language models have shaped the first wave of enterprise AI, but they are not the optimal choice for every application. Organisations are beginning to place greater emphasis on selecting models that align with the performance, cost, governance and deployment requirements of each workload.

This report authored by Ecosystm Principal Advisor Darian Bird  examines why small language models are becoming an important part of enterprise AI architectures. It explores the advances that have improved their capabilities, the economic and infrastructure drivers behind their adoption, the growing importance of AI sovereignty and edge deployment, and the practical considerations for building a portfolio of AI models that balances capability, efficiency and control.