Embracing AI proven to unlock major productivity gains for small businesses

Australian small and medium-sized enterprises (SME) risk missing out on significant economic gains unless they accelerate their adoption of artificial intelligence, according to industry leaders and new regional research.

A report launched last week revealed that SMEs that transition from zero AI integration to broad operational use can unlock up to 136,000 Australian dollars in annual productivity gains.

The findings formed the centerpiece of an inaugural leadership forum featuring federal Member of Parliament Allegra Spender, Tech Council of Australia CEO Kate Cornick, National AI Centre executive Lee Hickin, and Employment Hero co-founder and CEO Ben Thompson. The discussion focused on equipping smaller firms with practical AI tools and skills.

“Research like this gives us a steer on what we really need to do to have the most impact,” Thompson said. “That might mean working with local governments on legislation for small businesses, building products and features for the many businesses on our platforms, or simply having an open dialogue with other leaders in the field.”

According to the report, titled “Accelerating AI Impact For Small and Medium Enterprises,” 94 per cent of SMEs currently utilizing AI reported productivity improvements, while 54 per cent of employees at those firms reported higher job satisfaction.

Researchers noted that artificial intelligence helps free up “cognitive bandwidth,” allowing business owners and staff to spend less time on routine administrative tasks and more time on strategic and creative priorities. Key operational areas benefiting from automation include payroll and rostering in hospitality, as well as staff recruitment in retail.

The uptake of AI remains uneven across sectors. While media and technology firms are among the earliest adopters,sectors such as construction, hospitality, and retail lag behind larger competitors.

Survey respondents pointed to five primary barriers slowing adoption:

• Doubt over whether initial financial investments will yield returns
• Uncertainty regarding how the technology applies to their specific business
• Internal workforce skills gaps
• Low organizational risk appetite and trust
• Insufficient technical infrastructure

Tech Council of Australia CEO Kate Cornick described small businesses as the “heart of the economy,” emphasizing that boosting productivity among smaller firms carries national economic implications.

“Small businesses employ almost two-thirds of Australia’s private-sector workforce. Improving their productivity matters to the whole economy, and this research shows just how substantial the opportunity from AI could be,” Cornick said.

“Only around one in four is using the technology today, and very few have adopted it broadly across their business,” she added. “There is a significant gap between what AI could deliver and what small businesses are currently getting from it.”

Rapidly expanding businesses are already demonstrating the practical utility of the technology. Chicken shop El Jannah, known affectionately to some customers as the “Chargrill Charlies of the West”, is opening one new location each week and onboarding 60 to 80 employees per venue, has used automated applicant screening, candidate interviews, and applicant rankings to scale operations.

“As we grew to 50 restaurants and more than 2,800 employees, the scale of hiring began to stretch our restaurant managers and risk the consistency we pride ourselves on,” El Jannah Senior HR Business Partner Michael Oliverio said. 

Cornick noted that targeted intervention is essential, as regional businesses and specific manual industries face much wider adoption divides than metropolitan enterprises.

“For a business owner already dealing with rising costs and staffing pressures, even reducing the time spent on routine administration can make a difference,” Cornick said. “Government and industry can build on existing programs to help more small businesses put AI to use.”