AI adoption by small and medium-sized businesses holds the key to a significant economic boost

This was done to measure and understand the level of adoption and the economic opportunity to increase it, and found that while two-thirds of small and medium-sized businesses are using AI, only 5% of businesses using the technology surveyed are realizing its full potential benefits.

John O’Mahony, partner at Deloitte Access Economics, said small businesses contributed more than half of Australia’s private sector GDP and generated 60 per cent of corporate profits, yet they lag behind large companies in terms of productivity per hour worked.

“This productivity gap is holding back Australia’s broader economic performance. AI is a powerful tool to drive efficiency and economic growth if we can remove the barriers that prevent small and medium-sized businesses from adopting this technology and realizing its full value,” he said.

“One-third of companies not currently using AI say they don’t know where to start, while about half of companies using AI have only a moderate level of understanding. We can do better. The AI ​​implementation challenges faced by small and medium-sized businesses can be easily overcome with a little help. ”

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

Report modeling showed that when small businesses move from basic to intermediate use of AI, they can expect to see a 45% increase in profitability, while those that move from intermediate to effective use see a significant 111% increase in profitability.

In addition to this, Mr O’Mahony said that if just one in 10 small and medium-sized enterprises in both groups moved up the AI ​​adoption ladder, it could add $44 billion to GDP annually.

The report also found that small and medium-sized businesses are enthusiastic about AI, but face five common barriers to adoption.

These barriers include not knowing where to start, limitations in business systems and data quality, employee skills, funding and investment, AI governance and standards, and more.

“To overcome these barriers to AI adoption, the Australian Government should introduce a time-limited $1 billion AI investment stimulus package for small and medium-sized businesses through a 50% tax credit on investments in AI by businesses with annual revenues of less than $50 million,” Mr O’Mahony said.

“This deduction targets AI-specific products and services, such as certain skills training, AI products, services, business systems, and infrastructure that enable the adoption of AI, and could potentially enable $2 billion in investments in small and medium-sized businesses in the short term.”