The promise of artificial intelligence (AI) has never been greater. Across the globe, businesses are transforming how they operate by integrating AI to automate processes, improve decision-making, and deliver personalised customer experiences. Yet, despite its revolutionary potential, many small and medium-sized enterprises (SMEs) in Australia are slow to adopt this technology. At a time when AI could provide a critical competitive edge, Australian SMEs risk being left behind.
Three major concerns for SMES
1. Lack of understanding and digital maturity
A major factor behind the slow adoption of AI is the lack of digital literacy among businesses, especially with AI. Some business owners view AI as an advanced technology reserved for large corporations with deep pockets and vast technical resources. This perception often stems from the digital maturity gap that exists among Australian SMEs, with many still heavily reliant on manual processes and outdated systems. According to Forbes Australia, over 81 per cent of businesses still use spreadsheets and paper documents, making it harder for them to integrate AI effectively into their operations.
This disconnect is amplified by the absence of centralised data systems. AI relies on well-organised, accurate data to deliver insights and automate tasks. Without proper data management, the effectiveness of AI solutions is limited. Many Australian SMEs are simply not ready to invest in the digital infrastructure necessary to support AI.
2. Fear of costs and complexity
SMEs are also often concerned about the costs associated with AI adoption. According to MYOB, 80 per cent of Australian SMEs express concerns about the expenses involved in implementing AI technologies. This fear is exacerbated by the complexity of AI systems, which many SMEs believe they lack the expertise to manage. The idea of training staff, upgrading existing infrastructure, and maintaining AI solutions can feel overwhelming for small businesses. As a result, many are hesitant to adopt AI, focusing instead on immediate, short-term financial pressures rather than the long-term cost-saving potential AI offers.
Data privacy and cybersecurity are critical concerns for Australian SMEs, particularly when it comes to adopting AI. AI systems often require large amounts of data to function effectively, and many businesses worry about how this data will be handled as business owners are cautious about exposing sensitive information to AI platforms.
The concern isn’t unfounded either, recent trends in cybersecurity show that Australian businesses have faced increasing risks of data breaches. A 2024 study by Small Business Connections revealed that 42 per cent of SMEs in Australia identified data and security concerns as the primary hurdles to AI adoption. Until businesses feel confident that AI platforms offer robust security measures, many will be reluctant to adopt the technology.
Missed opportunities for growth
Despite these valid concerns, Australian SMEs risk missing out on the significant growth opportunities that AI presents. Research from the University of Adelaide indicates that greater AI utilisation could add $200 billion annually to Australia’s economy, creating over 150,000 new jobs by 2030.
This holiday period has seen businesses face heightened customer demands, supply chain pressures, and increased vulnerability to cyber threats. AI-driven solutions can help manage these challenges by streamlining operations, improving inventory management, and detecting fraudulent transactions in real time. For SMEs in retail, AI can also personalise customer experiences, leading to higher sales and better customer retention during the busiest time of the year. Failing to adopt AI now means missing out on the potential to thrive in a rapidly evolving digital marketplace.
To overcome these barriers, education and accessibility will be crucial. Australian SMEs need greater awareness of how AI can be applied practically and ethically. However, greater support from government and industry bodies will be essential in creating a smoother path to AI adoption.
