As small businesses increasingly harness the power of artificial intelligence (AI), a recent report from Cisco highlights the urgent need for effective monitoring and control over these digital agents. The Splunk State of Observability 2026 underscores a critical disconnect: while nearly 90% of organizations prioritize monitoring AI, over half struggle to measure key performance parameters. The report points to significant challenges in managing AI costs and achieving stability, presenting both opportunities and potential pitfalls for small business owners looking to integrate AI into their operations.

According to the report, 83% of the surveyed organizations express concern about the unintended consequences of AI systems, emphasizing that effective observability is crucial for ensuring both fiscal predictability and operational efficiency. Cisco’s President and Chief Product Officer, Jeetu Patel, noted, “Most companies will soon have far more agents at work than people. Managing agents at scale requires reimagining both security and observability.” This fundamental shift means that small business owners need to rethink their monitoring strategies and invest in tools that bring clarity to AI operations.

One of the key takeaways for small businesses is the urgent requirement for “agent observability,” which refers to the ability to monitor AI agents effectively. The report shows that the need for this capability is particularly pressing as incorrect actions by AI agents can lead to substantial operational failures. Despite recognizing the importance of monitoring agent performance, 54% of respondents indicated that they do not have clear metrics tied to business outcomes.

The complexities of managing AI costs pose another significant hurdle. Cisco’s report reveals that 55% of organizations are unable to rein in AI expenditure, and in many cases, unanticipated billing spikes cause more operational strain than anticipated base costs. This financial unpredictability could be especially acute for small businesses, where budgets are often tighter and managing expenses is paramount. Kamal Hathi, SVP and GM of Splunk at Cisco, pointed out, “We believe observability is the essential bridge to restoring predictability and confidence to the agentic AI era.” This highlights the importance of establishing a robust observability framework to ensure that AI investments translate into real business value.

For small business owners considering the implementation of AI agents, effective data-sharing practices between observability and security teams are becoming increasingly essential. The report indicates that over three-quarters of businesses report greater collaboration with security teams when monitoring AI, which not only helps in troubleshooting but also in building trust in AI systems. As AI agents gain more access to operational systems, fostering this collaboration can enhance overall security and trust in AI functionalities.

While the benefits of observability and effective AI monitoring are clear, small business owners should remain cognizant of the challenges involved. The report points to several areas where companies lag, such as measuring AI workload metrics like response quality. This gap suggests that small businesses may need to invest in additional training or resources to maximize the effectiveness of their AI operations and avoid pitfalls that could lead to operational failures.

The convergence of observability and security practices is a promising development for small business owners aiming to integrate AI into their workflows. As organizations increasingly recognize the links between their AI practices and overall business performance, those who effectively connect AI signals to strategic business impacts will gain a competitive edge. Advanced organizations in the study are far better at attributing AI costs and reporting significant returns on their observability investments compared to those following less rigorous practices.

In terms of practical steps, small business leaders can look to emulate the best practices of industry frontrunners. These include routinely leveraging AI agents for preventative troubleshooting, closely monitoring the various factors influencing AI performance and expenses, and ensuring that telemetry data informs strategic decision-making. Those who implement these strategies may not only enhance their operational efficiency but also drive significant revenue growth in the long run.

Overall, as small businesses delve deeper into the AI landscape, the findings from the Splunk State of Observability 2026 report provide valuable insights into the critical necessity of robust monitoring and observability practices. For more details, the complete report can be viewed at Cisco’s Newsroom.

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This article, “AI Costs Soar as Organizations Struggle with Agent Monitoring, Report Finds” was first published on Small Business Trends