Most are trapped in ‘the shallow end of AI adoption’
Budget and security concerns rank as the top barriers to the adoption of AI among Australian SMEs, but three-quarters are racing into it without a formal strategy, reveals new research from the only ASX-listed AI engine, Decidr.
The National AI Readiness Index Report 2025 shows 76% of SMEs have failed to develop a clear AI strategy and roadmap, yet 83% think AI will significantly impact their business within 12 months and 44% rate it as an urgent priority.
The research, conducted with the strategic insights consultancy Nature, concludes the most SMEs are trapped in “the shallow end” of AI adoption, using point solution tools (AI agents) that help people work faster rather than agentic AI systems that can transform business performance and generate revenue growth.
The report may be viewed in full here.
Decidr Executive Director, David Brudenell, said: “Almost 70% of SME decision makers believe they understand the AI capabilities required to develop or maintain a competitive advantage, but this data shows actual choices being made reflect a fundamental misunderstanding of how value can be delivered from AI.”
The study shows widespread AI tool usage among SMEs – with 92% of businesses using ChatGPT, Microsoft Copilot and similar platforms – but highlights that only 19% have adopted the advanced AI systems that drive real business outcomes.
Budget constraints (28%) and security concerns (29%) are forcing businesses into poor AI choices focused on cost-cutting rather than competitive advantage, with 57% are prioritising efficiency compared to just 25% that are focused on using AI to grow revenue.
Other key findings from Decidr’s study include:
- Marketing and customer support tied as the top areas expected to benefit from AI (46% each)
- Only 39% of SMEs feel confident implementing AI across their business despite widespread usage
- Human resources ranks lowest for expected AI benefits (27%), indicating missed workforce opportunities
- Tech and professional services show highest urgency to adopt AI (52%) but still struggle with implementation complexity
While 46% of businesses identify marketing as the top area to “benefit” from AI, Decidr’s research makes it clear that SMEs are approaching this from a cost-cutting and efficiency mentality, rather than growth or efficacy.
Marketing ranks as the top area perceived to benefit from AI (tied with customer service), but actually improving customer experience ranks three positions lower than efficiency and cost cutting as a driver for adopting AI in the first place.
Mr Brudenell continued: “Too many businesses are treating AI as an expense to manage rather than an engine for growth.
“When three-quarters of SMEs are making urgent AI investments without a roadmap, many run the risk of not seeing the forest for the trees when it comes to long term, sustainable and secure adoption of AI that gives them a competitive advantage. Instead, they are rushing to meet immediate needs.
“What’s most alarming is that only 25% cite competitive pressure as an AI driver at all. Many businesses don’t realise their competitors might already be pulling ahead through smarter AI strategies.”
The research divides SMEs into four distinct groups:
- Trailblazers (17%): Front-runners with clear strategies focused on growth and competitive advantage
- White knucklers (24%): Businesses caught between urgent need and implementation complexity
- Tinkerers (36%): Mid-market companies experimenting without leadership coordination
- Sleepwalkers (23%): Traditional businesses with minimal AI exposure, concentrated in natural resources and public services
When presented with a concept for integrated AI that works with existing business systems, 48% of Trailblazers and 39% of White knucklers said they would implement it immediately, indicating strong appetite for strategic AI solutions.
“The market is absolutely ready for transformative AI, but budget and security concerns are pushing businesses toward basic tools that don’t deliver competitive returns,” Mr Brudenell said.
“This creates a dangerous cycle where SMEs invest in AI but don’t see real advantages, making them hesitant to pursue the strategic solutions they actually need.”
About the research
The National AI Readiness Index Report 2025 was conducted by research firm Nature from 19 May to 4 June 2025, surveying 1,042 key decision-makers in Australian businesses with 20 to 500 employees and revenue exceeding $200,000. Results were weighted to reflect Australian Bureau of Statistics data on business size, industry and location.
View the full report
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