australian SMEs: AI adoption trends

Advances in AI technology and adoption trends are reshaping how Australian businesses evaluate their digital futures. Our latest research conducted for the National AI Centre (NAIC) highlights how small and medium enterprises (SMEs) are responding to this shift, revealing distinct patterns of AI adoption across sectors, regions, and business sizes. Drawing from data collected between July and September 2024, these findings, which include insights into AI adoption trends, have been published by NAIC on the Department of Industry, Science and Resources website. 

SME AI adoption: current state of play

The July to September quarterly data, based on online surveys of over 400 SME decision-makers per month, shows that 35% of businesses are currently adopting AI, while 42% have no plans to implement it. Perhaps most notably, 23% remain unaware of AI’s potential applications for their business. This ‘awareness gap’ presents a significant opportunity for education and outreach initiatives. 
 
The adoption landscape varies significantly by industry. Health, education and manufacturing lead the charge with 45% adoption rates, while agriculture lags at just 6%.  

There is also a clear divide between regional and metro areas in AI adoption. Regional SMEs are 11% less likely to implement AI, with over a quarter unaware of its potential business application, compared to19% of Metro SMEs. 

This regional disparity likely stems from multiple factors: more limited access to AI expertise and technical talent in regional areas, fewer local AI solution providers and consultants to support implementation, and potentially lower exposure to AI success stories from peer businesses. The gap suggests a need for targeted initiatives to improve AI awareness and support in regional business communities. 

Drivers of AI Adoption 

For the July-September 2024 quarter, AI Adopters are focusing on: 

•             Data entry and document processing automation 

•             Fraud detection systems 

•             Generative AI assistants 

•             Marketing automation tools 

•             Sales forecasting and predictive analytics 

Notably, businesses planning their first AI implementations are prioritising fraud detection and data processing capabilities, suggesting these are viewed as lower-risk entry points for AI adoption. This pattern indicates a preference for proven use cases with clear ROI over more experimental applications. 

Barriers to Implementation 

While regulatory compliance appears well-understood, many SMEs struggle with: 

•             Skills gaps in AI implementation and management, particularly in regional areas 

•             Funding constraints for AI initiatives, especially among smaller businesses 

•             Keeping pace with rapid technological evolution 

•             Cybersecurity readiness and risk management 

•             Responsible AI implementation frameworks 

•             Integration with existing systems and processes 

Looking Ahead 

The data suggests we’re at a crucial juncture in AI adoption among Australian SMEs. While the technology’s potential is increasingly recognised, many businesses need targeted support to bridge the implementation gap. The regional divide in particular requires attention, with focused initiatives needed to ensure AI benefits are distributed equitably across the country. 

Through our ongoing partnership with NAIC, we’re committed to tracking these trends and helping shape initiatives that support AI adoption across all sectors and regions. The goal isn’t just to increase adoption rates, but to ensure AI implementation delivers genuine business value for Australian SMEs while promoting responsible and ethical use of the technology. 

Fifth Quadrant’s AI Implementation Experience 

At Fifth Quadrant, as a small business, we are trialling and using AI in various ways including: 

• Natural language processing to analyse open-ended survey responses, reducing manual analysis time and enabling deeper sentiment analysis 
• Automated reporting systems that generate initial findings reports, freeing our analysts to focus on deeper insights 
• Generative AI to assist in questionnaire design and optimisation, improving respondent engagement and data quality 

The path ahead is filled with opportunity, and we’re committed to adapting, evolving, and thriving in this dynamic AI landscape. 

Tools and Resources for SMEs 

With the right tools and guidance, SMEs can confidently navigate AI adoption and unlock its full potential. Below are some valuable resources from Fifth Quadrant and NAIC to support businesses in their AI journey: 

• Responsible AI Index 2024: 
  The Responsible AI Index 2024 offers insights and benchmarks to help SMEs assess their progress in adopting ethical and responsible AI practices. 
• AI Adopt Centres: 
  A nationwide network of centres designed to help SMEs explore, trial, and implement AI solutions tailored to their needs: Learn more. 
• Introduction to Artificial Intelligence Training: 
  A foundational training course that equips SMEs with the knowledge and skills needed to understand and implement AI.  

Curious about AI Adoption Trends?  

For detailed insights on AI adoption trends or to learn how this data could inform your business strategy, contact Fifth Quadrant.