SME AI adoption holds key to crucial economic boost

This was done to measure and understand levels of adoption and the economic opportunity of increasing it, and found that while two-thirds of SMEs were using AI, only five per cent of those surveyed using the technology were fully enabled to realise its potential benefits.

John O’Mahony, Deloitte Access Economics partner, said small businesses contributed more than half of Australia’s private sector GDP and generated 60 per cent of company profits, yet they lagged larger enterprises in productivity per hour worked.

“This productivity gap drags on Australia’s broader economic performance. AI offers a powerful way for SMBs to increase efficiency and drive economic growth, if they can clear the barriers that prevent them from adopting the technology and unlocking its full value,” he said.

“One-third of the businesses not currently using AI say they don’t know where to start, while around half of those using the technology have only an intermediate level of understanding. We can do better - the AI adoption challenges confronting SMBs can be easily overcome with a little help.”

According to the report, an example of a fully AI-enabled business had an AI strategy embedded in core processes, provided training for its employees on AI use and maintained a fully centralised data system.

Report modelling indicated that small businesses moving from basic to intermediate AI use could expect a 45 per cent increase in profitability, which would jump significantly to 111 per cent for a business moving from intermediate to enabled use.

O’Mahony said in addition to this, if just one in 10 small businesses from both these groups advanced one rung on the AI adoption ladder, $44 billion could be added to GDP annually.

Small businesses were enthusiastic about AI, but faced five common barriers to adoption, the report also found.

These barriers included not knowing where to start, business systems and data quality limitations, workforce skills, funding and investment and AI governance and standards.

“To overcome these AI adoption roadblocks, the Australian government should introduce a time limited $1 billion AI investment boost for small businesses via a 50 per cent tax deduction for investment in AI by businesses with an annual turnover below $50 million,” O’Mahony said.

“This deduction, targeted towards AI-specific products and services like specific skills training, AI products, services, business systems and infrastructure that enable AI adoption, could unlock $2 billion of small business investment in the short term.”