Nearly half of Aussie small businesses now using artificial intelligence

Artificial intelligence is rapidly transforming the Australian business landscape, with 41 per cent of small and medium-sized enterprises (SMEs) now adopting AI technologies. This marks a five per cent increase compared to the previous quarter, highlighting growing confidence and interest in AI tools to drive productivity and innovation.

The findings come from the AI Adoption Tracker, developed by the Department of Industry, Science and Resources’ National AI Centre in partnership with research firm Fifth Quadrant. The tracker provides real-time insights into how SMEs across Australia are using and viewing AI. It also informs the development of the National AI Capability Plan by capturing the challenges businesses face, the applications they are investing in, and the benefits they’re experiencing.

Image: Minister for Industry and Innovation Tim Ayres (Source: Facebook)

Minister for Industry and Innovation Tim Ayres said in a statement that the increased uptake of AI technology was encouraging, especially as more businesses begin to understand its potential.

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“AI is being used by more Australian businesses than ever before, with 41% of small and medium enterprises currently adopting AI,” said Ayres.

“The tracker helps us to capture a real-time picture of Australia’s AI landscape and develop our National AI Capability Plan.”

The AI Adoption Tracker surveys over 400 businesses monthly, with the latest figures reflecting responses gathered between October and December 2024.

The data shows a steady rise in AI usage across various sectors, with SMEs demonstrating a clearer understanding of the technology and its business value. Notably, the percentage of businesses not aware of how to use AI dropped by two per cent to 21 per cent. In micro-businesses—those with up to four employees—AI adoption surged from 25 to 34 per cent. The share of SMEs not intending to implement AI in the next 12 months also fell by four per cent to 38 per cent.

While the data reveals that businesses increasingly see AI as offering a competitive edge, they still face significant hurdles. These include skills gaps, funding limitations, and the fast-evolving nature of the technology. Nonetheless, SMEs are reporting growing confidence in managing AI-related regulatory, compliance, and governance challenges. Cybersecurity readiness and responsible AI implementation remain areas needing improvement.

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Businesses are also turning to specific AI tools to streamline operations. The most commonly adopted applications are generative AI assistants, data entry and document processing, fraud detection, marketing automation, and customer support chatbots. Generative AI assistants have moved to the top of the list, with sectors such as services, hospitality, distribution and retail leading this uptake. Retail and hospitality also lead in marketing automation. Businesses looking to introduce AI in the near future are primarily interested in data processing and fraud prevention applications.

More SMEs now believe AI is delivering tangible outcomes. Twenty-two per cent of businesses reported faster access to accurate data to inform decision-making, while 18 per cent saw improvements in customer engagement and experience. Another 18 per cent reported better security, data protection and fraud detection. However, not all businesses are convinced of AI’s broader benefits. Many remain sceptical about its impact on employee engagement, with 43 per cent doubting its effectiveness in this area. Similarly, 42 per cent of businesses do not believe AI will help increase revenue or cash flow.

Minister Ayres said the findings would shape Australia’s National AI Capability Plan and ensure local businesses are equipped to benefit from emerging technologies. “Australia needs to make the most of the opportunities that artificial intelligence and other emerging technologies like robotics and quantum provide. If we get the balance right, it will mean higher living standards for all Australians.

“Globally the AI industry is growing rapidly. As a key driver of productivity, digital technologies have the potential to lift wages, improve services, and improve living standards for all Australians.”

Image: Executive Director of the National AI Centre Lee Hickin (Source: LinkedIn)

Executive Director of the National AI Centre Lee Hickin expressed enthusiasm about the country’s direction, “I couldn’t be more excited as I step into the role of steering the National AI Centre.”

“This tracker makes clear the appetite for Australia to be a leader in AI adoption is growing and I look forward to supporting business and industry on this journey.”

Image: Paul Foster, Chief Executive of George Weston Foods (Source: LinkedIn)

Some businesses are already seeing concrete benefits. Paul Foster, Chief Executive of George Weston Foods, noted,

“AI is adding real value across our operations at George Weston Foods from ensuring compliance to forecasting stock needs and supplier demands. It’s helping us respond faster and deliver more reliably for our customers.”

The AI Adoption Tracker is part of a broader strategy to ensure that Australia builds a strong, competitive AI industry. It supports initiatives such as the launch of a network of AI Adopt Centres to upskill SMEs and the delivery of a free micro-skills course, ‘Introduction to Artificial Intelligence’, through TAFE NSW.

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