Half of SMEs in Australia and NZ still NOT leveraging AI - Study reveals why

Despite the growing prominence of artificial intelligence (AI), recent data reveals that half of small-to-medium-sized enterprises (SMEs) in Australia and New Zealand have not yet integrated AI into their operations. 

These findings come from a global survey conducted by Peninsula Group in August 2024, which included participants from Australia, New Zealand, Canada, Ireland, and the United Kingdom.

Security risks were identified as the leading concern regarding AI, with approximately 24% of Australian respondents and 26% of New Zealand participants expressing apprehension. David Price, CEO of Peninsula ANZ and BrightHR ANZ, emphasised the cautious approach of SMEs, noting, "While AI offers immense potential to boost productivity and streamline processes, concerns about its risks are growing, especially in the wake of high-profile cyber breaches. Given Australia's vulnerability, it's no surprise that small businesses are wary of sharing data with third parties, which is a prerequisite for most AI tools."

The global survey revealed that security risk was cited by nearly half (47%) of the employers surveyed as the most significant concern about AI in the workplace. This marks a considerable rise from the 30% reported the previous year. Other notable concerns included reputational impact, potential legal breaches, loss of intellectual property, and implications for work quality and productivity.

While Australian and New Zealand SMEs expressed substantial concerns about security risks, they still demonstrated a higher likelihood of regularly using AI compared to their counterparts in Canada, Ireland, and the UK. Specifically, Australian employers were found to be twice as concerned about the loss of intellectual property compared to those in Ireland and the UK, and three times more worried than Canadian employers.

"It's clear that while small businesses are slowly dipping their toes into AI adoption, their concerns about the risks it carries are stopping them from diving in and implementing new technologies on a wider scale," noted Price.

Globally, the use of AI among SMEs remains relatively low. Despite a 50% year-on-year increase, only one in ten SMEs reported regularly using AI in their workplace. The survey highlighted that the most common application of AI among small businesses in Australia and New Zealand was for administrative tasks, with 18% of Australian businesses and 19% of New Zealand businesses employing AI for functions like creating meeting agendas, summarizing documents, and drafting emails.

Interestingly, about half of the survey participants from both countries—47% in Australia and 53% in New Zealand—asserted that people are irreplaceable in their businesses. However, nearly a quarter (22% in both countries) acknowledged the belief that AI could eventually replace some jobs within their companies.

"As the cost of doing business rises in 2024, employers are understandably assessing where they can decrease overheads, speed up processes, boost productivity, and ultimately, increase profits. It's no surprise to see SME owners voicing the prediction that some positions may become redundant as AI adoption increases," Price explained.

Approximately a third of respondents in both Australia and New Zealand (32% and 33%, respectively) recognized AI as having the potential to positively transform workplaces. New Zealand participants were more likely to believe that AI would be useful but would not replace traditional working methods, with 29% holding this view compared to 21% of Australians.

"While small businesses are not entirely opposed to using AI, they are seeking clarity and assurance regarding security, productivity, and output quality. Addressing these concerns will be crucial for AI developers aiming to enhance uptake among the global SME community," Price concluded.

As SMEs navigate the landscape of AI adoption, it’s clear that while there is potential for transformation, significant barriers remain. The balance between leveraging AI for operational efficiency and addressing security concerns will be pivotal in determining the pace and extent of AI integration in the sector.