Deloitte Access Economics Partner John O’Mahony “Small businesses contribute more than half of Australia’s private sector GDP and generate 60% of corporate profits. However, they are also less productive than large businesses per hour worked.”
“This productivity gap is holding back Australia’s broader economic performance. Artificial intelligence (AI) offers a powerful way to improve efficiency and drive economic growth if we can remove the barriers that prevent small and medium-sized businesses from adopting technology and realizing its full value.”
“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. ”
This report shows that small and medium-sized businesses are enthusiastic about AI but face five common barriers to adoption.
To overcome these barriers to AI adoption, the Australian Government should introduce a time-limited $1 billion AI investment incentive for small and medium-sized businesses through a 50% tax credit on AI investments by businesses with annual sales of less than $50 million.
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 investments in small and medium-sized businesses of $2 billion in the short term.
5 common barriers to SMB AI adoption
#1 I don’t know where to start
Companies across all industries cite a lack of awareness about AI and how it can be used for business as a key barrier. Conversely, a key enabling factor for AI adoption was the team’s ability to identify how best to use AI and incorporate it to improve operational efficiency.
#2 Business systems and data quality limitations
Without the right business systems and data, small businesses’ ability to scale up their AI solutions will be hampered. The small and medium-sized enterprises surveyed generally rely on less complex types of data (such as financial records or customer records) to support their AI solutions, so they don’t necessarily need sophisticated systems to enable AI improvements. This is often caused by a lack of technical knowledge.
#3 Employee skills
Most small and medium-sized businesses believe that their employees are largely unprepared for AI and require more formal training. More than half of SMB employees have basic or entry-level knowledge of AI, but only 10% have advanced AI skill levels.
It’s clear that there aren’t enough opportunities for employees in small and medium-sized businesses to improve their AI skills. This highlights the importance of making AI education and training more readily available to increase AI literacy across the workforce.
#4 Fundraising and Investment
Many small and medium-sized enterprises operate in highly competitive markets and face relatively high unit costs compared to larger enterprises. Tight budgets often limit the ability to make large capital and technology investments without a clear return on investment. Nevertheless, SMBs are willing to spend heavily on AI solutions if necessary.
#5 AI Governance and Standards
The small businesses surveyed highlighted the need for further AI guidance as well as industry guidelines for using AI in an ethical and responsible manner. However, if the regulatory burden associated with the use of AI is too great, some small businesses may avoid such technology altogether.
