If you're running a small or medium business in Cyprus or the EU, the AI conversation is probably already on your radar. But the jargon can be overwhelming — LLM, RAG, fine-tuning, agent. Here's a practical glossary focused on what actually matters for your website, online store, CRM, or mobile app.

LLM (Large Language Model)

A model trained on massive text datasets to generate human-like responses. Think GPT-4, Claude, or Llama. For your business, an LLM can power a customer support chatbot on your site or draft product descriptions in English, Russian, or Greek — just remember GDPR rules about data processing.

RAG (Retrieval-Augmented Generation)

A technique that combines an LLM with a search over your own data (e.g., your product catalog or FAQ). Instead of the model guessing, it retrieves relevant documents first and then answers. This is ideal for a Cyprus e-commerce store: the chatbot can pull real-time stock info without hallucinating.

Fine-tuning

Taking a pre-trained model and training it further on your specific data — like your past customer inquiries or industry terms. Example: a Limassol real estate agency could fine-tune a model to handle property descriptions in Greek and English. Cost varies: a small fine-tuning job might start around €200–€500 with local AI providers.

Agent / AI Agent

An autonomous system that can plan and execute multi-step tasks. For a CRM, an agent could automatically segment leads, send follow-up emails, and update deal stages — all without a human in the loop. Expect setup costs of €2,000–€5,000 for a custom integration on Cyprus.

Prompt engineering

The practice of designing input text to get accurate outputs. Poor prompts lead to vague answers. For a multilingual site (EN/RU/EL), you'll want precise prompts — e.g., “Reply in Cypriot Greek and keep it under 50 words.” This is a low-cost skill your team can learn in a few hours.

Temperature (in AI models)

A setting that controls randomness. Low temperature (0.1) = deterministic, safe answers; high (0.9) = creative but riskier. For a legal document summary on your site, use low temperature. For a marketing slogan, try higher.

Hallucination

When an AI generates convincing but false information. Example: a chatbot claiming your Limassol store is open on a public holiday when it's closed. Mitigation: combine AI with verified data (RAG) and always include a human review step — especially for anything customer-facing.

Embedding

A numerical representation of text that captures meaning. Used for search — for instance, on an e-commerce site, embeddings help find the right product even when the user types “red shoes for hiking” instead of the exact product name. AWS and Google Cloud offer embedding APIs with EU data residency options.

Vector database

A storage system designed for embeddings. It enables fast similarity search. If your website has 10,000+ products, a vector database like Pinecone or Weaviate (both available in EU regions) makes search instant — crucial for conversion in Cyprus online stores.

API (Application Programming Interface)

The way your software talks to an AI service. For example, integrating OpenAI's API into your CRM to auto-generate email replies. Standard pricing: pay-per-token (€0.01–€0.10 per 1,000 tokens). Local developers on Cyprus can handle this integration in 1–2 days.

Synthetic data

Artificially generated data used for training or testing — useful when you don't have enough real customer data (GDPR concerns). A Cyprus travel agency could generate synthetic booking queries to improve its AI booking assistant without exposing real traveler data.

This is not an exhaustive list, but it covers the terms that will actually appear in proposals, contracts, and discussions with your development team on the island. If you hear another term and want a plain-English explanation, drop us a message — we deal with this daily for clients in Limassol, Nicosia, and across the EU.