AI at a Crossroads: What it means for small and medium businesses in Australia

Artificial intelligence has become the new battleground for productivity, innovation, and competitive advantage. Yet for many small and medium-sized businesses (SMBs) in Australia, AI is still more of a question mark than a playbook. While large enterprises forge ahead with in-house data science teams and expansive digital transformation programs, SMBs face a different set of constraints—and, if played right, a different set of advantages.

As Australia’s economy continues its pivot toward knowledge work and services, SMBs—making up over 99% of all Australian businesses—sit at the heart of national growth. But when it comes to AI, their path is neither linear nor assured.

The resource gap: Talent, tools, and time

The most obvious challenge facing Australian SMBs is access. Our 2025 State of AI at Work: Australia report reveals that just 11% of small businesses have integrated AI tools across their operations. This slow rollout isn't from lack of interest—it stems from practical constraints: tight budgets, limited technical expertise in-house, and confusion about where to begin, with only 14% of workers at SMBs reporting that their organisation has established an AI usage policy to guide employees.

"Small businesses are curious about the latest AI capabilities, and many are actively exploring them while also asking questions about where it can best add value to their business," notes James Bergin, Xero's EGM of Tech Research & Advocacy. "These are not abstract concerns.  Without a clear understanding of their business processes and where AI can really assist, it runs the risk of becoming another technology that is over-hyped and under-delivers against expectations."

Hiring AI talent is costly—often prohibitively so for companies with lean teams. And while off-the-shelf tools offer a way in, many SMBs are unsure how to integrate these tools into workflows in a way that delivers real ROI.

What’s missing is the connective tissue: a way to embed AI into day-to-day work without needing to rearchitect how work gets done. By layering AI into the existing systems people already use to plan, track, and execute work, vendors can help SMBs operationalise AI—without needing to hire new roles or build custom infrastructure. It bridges the gap between intention and impact, turning AI from a buzzword into a business enabler.

The paradox of scale

One of the lesser-discussed advantages of AI for SMBs is their ability to move fast. Unlike large corporations, SMBs aren’t burdened with layers of bureaucracy or legacy IT systems. This agility makes it possible to experiment, iterate, and implement new technologies quickly.

For example, a regional marketing firm in Brisbane used AI to streamline campaign reporting—automating data pulls, summarising performance, and even drafting client emails. What previously took three hours per client now takes under 20 minutes. The firm didn’t hire a team of engineers. They simply empowered a curious team member to prototype with a few SaaS AI tools.  

“AI is at its best when it disappears into the flow of work—it’s less about the tech, more about how it removes friction,” adds Bergin.

The lesson? You don’t need to build AI. You just need to build with it.

Trust and transparency matter more for the little guys

Consumer trust is a significant differentiator for smaller businesses, especially those operating in niche or community-driven markets. This means AI adoption must be thoughtful. Automated decision-making—especially in hiring, pricing, or customer service—raises ethical questions. Transparency is not just a compliance checkbox but a trust-building opportunity.

SMBs have a chance to lead by example. A Melbourne-based recruitment agency, for instance, successfully integrated AI into their screening process while maintaining trust by:

• Implementing a rule-based workflow that automatically screens applications based on clear criteria

• Ensuring all AI-screened applications receive human review before decisions

• Communicating openly with candidates about how automation supports (but doesn't replace) human decision-making

This transparency about data usage and decision-making actually improved candidate satisfaction scores while streamlining their hiring process.

The opportunity ahead

In order for AI to truly deliver on its promise for smaller businesses, vendors must go beyond generic solutions. They need to create offerings that reflect the realities of SMBs: limited technical staff, tighter budgets, and a desire for fast time-to-value. That means bundled services, intuitive no-code tools, and platforms designed for real-world adoption—not just enterprise-scale complexity.

That’s exactly where solutions like Asana’s AI Studio come in. Rather than requiring businesses to choose between buying or building, AI Studio offers a third path: customising AI in a way that aligns with existing workflows, without heavy engineering lift. It's a sandbox for experimentation—making it easier for SMB teams to test ideas, automate repetitive tasks, and scale what works.

To capitalise on this opportunity, SMB leaders need to shift the question from “What is AI?” to “Where can AI remove friction in my business today?” As Bergin puts it, “AI should make work feel simpler, not more complex. The key is designing with empathy for how small businesses actually operate.”

Three steps to move forward

1. Start with a problem, not a tool. Identify the most repetitive, manual, or time-consuming parts of running your business, and explore whether AI solutions could assist.

2. Build a culture of experimentation. Start with low-stakes applications where mistakes won't matter. Encourage your team to try AI for drafting emails, summarising research, or generating first drafts of content - tasks where human review naturally follows.

3. Prioritise transparency and governance early on. Clear guidelines prevent problems before they begin. Create straightforward rules about data privacy, content verification, and appropriate AI use cases - even a one-page policy is better than none.

The bottom line

AI is not just for tech giants. For Australian SMBs, the question is no longer if AI will reshape the way they work—it’s how quickly and thoughtfully they can adapt. With the right mindset, these businesses have the potential not just to keep up, but to lead in ways that are more nimble, human-centered, and locally grounded.