Data, Trends, and Real-World Challenges

What is your view on the use of Artificial Intelligence (AI)?

• Optimism is high, but execution is uneven: Over 70% of SMB leaders hold a positive view of AI, believing it can boost efficiency and provide a competitive edge. However, many feel unprepared, citing a lack of internal expertise, data readiness, and a clear starting point for implementation.
• Demand is strongest in core operations: Australian businesses see the most potential for AI in core operational areas—specifically data analysis, content creation, marketing, and customer service. They are looking for practical solutions that solve immediate business challenges rather than simply following the latest trends.
• Results are not guaranteed: Nearly 40 per cent of respondents say they have not yet seen measurable results from their AI initiatives.
• Pressure is accelerating timelines: Persistent labour shortages and operational pressures are ramping up the need for efficient solutions. Industries such as manufacturing, field service, and distribution feel these constraints most acutely, viewing AI as a necessary strategy to remain competitive and resilient in a challenging economic environment.

Key findings

Our research reveals a clear and compelling story: Australian SMBs are leaning into the future of AI, but they are doing so with a healthy dose of realism. The data shows a strong sense of curiosity and optimism, balanced by significant practical hurdles that slow down adoption. Business leaders are looking for practical tools that solve real-world operational challenges.

This section breaks down the four most important takeaways from our survey:

1. SMBs are curious but cautious
2. Demand is strongest in core operations
3. The AI evolution
4. External pressure is accelerating timelines

SMBs are curious but cautious

The notion that SMBs are resistant to AI is a myth. Our research shows a strong appetite for the technology, with over 70% of business leaders holding a positive view of AI. Specifically, 33% feel “Very Positive” about its potential to enhance efficiency and drive growth, while another 37% are “Somewhat Positive,” recognising the benefits but maintaining some reservations.

This positive sentiment is supported by many businesses already experimenting with AI tools, particularly for content creation (40%), data analysis (37%), and marketing tasks (33%). However, this curiosity is tempered by considerable caution. Many leaders feel unprepared to move from small-scale trials to full-scale implementation. The main barriers cited include a lack of in-house expertise, concerns about data readiness and security, and general uncertainty about where to begin.

Demand is strongest in core operations

When it comes to AI, Australian SMBs are focused on substance over style. Their interest lies not in futuristic concepts but in practical applications that can improve the core functions of their business. The survey data shows the strongest demand for AI is concentrated in key operational workflows. The top areas where SMBs see potential for AI include:

• Data analysis and reporting: More than half (60%) of respondents currently using or planning to adopt AI are focused on data analysis and reporting. They see an opportunity to turn raw data into actionable business insights.
• Content creation and marketing: An average of 49% of businesses are using or exploring AI for creating social media content, writing marketing copy, and other marketing initiatives.
• Customer service: 42% of businesses are looking to AI to help manage customer feedback, answer common queries, and improve the overall customer experience.
• Inventory management: Around 34% of businesses are interested in using AI to optimise stock levels and reduce carrying costs. The distribution and hardware and building supplies industries top the list in this category.

This focus on operational fundamentals highlights a practical mindset. SMB leaders want AI that integrates into the work they already do and the tools they already use, enabling them to operate faster, smarter, and more efficiently.

The AI evolution

One of the most revealing findings is the disconnect between “automation” and true “artificial intelligence.” Many businesses believe they are using AI when, in fact, they are using advanced automation.

• Automation is a process based on preset rules.
• AI takes this to the next level, using data to learn, adapt, and make intelligent decisions without being explicitly programmed for every scenario.

For example, automatically sending an invoice reminder is an example of automation. Using historical payment data to predict which customers are likely to pay late and adjusting communication strategies accordingly is AI.

This distinction matters because it highlights a critical readiness gap. Many SMBs lack the clean, structured data and internal expertise needed to move beyond simple automation. Our survey found that nearly 40% of businesses “haven’t seen measurable results yet” from their AI experiments, likely because they are using basic tools that only scratch the surface of AI’s capabilities.

External pressure is accelerating timelines

The push towards AI isn’t happening in isolation. Broader economic trends are prompting business leaders to look for new ways to improve productivity and protect their bottom line. Two factors, in particular, are accelerating the need for smarter technology:

• Labour shortages: Finding and retaining skilled labour remains a top challenge for many Australian SMBs, especially in hands-on industries like manufacturing, field service, and construction. Many businesses want to grow but cannot recruit fast enough to support that growth. For them, AI offers a path to scale operations without taking on proportional costs. It empowers existing teams to do more with less by automating repetitive tasks, freeing them to focus on higher-value work.
• Operational pressures: Rising costs and tightening margins are putting immense pressure on business operations. Leaders are looking for any advantage they can find. The ability of AI to optimise schedules, manage inventory, and provide better forecasts is becoming a critical strategy for staying competitive in a challenging economic landscape.

Implementing AI: A Practical Roadmap for Australian SMBs

Implementing AI may seem daunting, but you don’t need a sweeping transformation to make progress. The most successful SMBs start with targeted, manageable projects, often using AI or automation to solve a single routine bottleneck or pain point. By zooming in on a specific workflow or operation, you can deliver a "quick win" that helps build trust and confidence for larger AI-driven changes further down the road.

It is also important to shift how we think about AI. It is not just a tool; it represents a fundamental change in how we learn and operate, much like the internet did in its early days. Embracing this mindset will help unlock its full potential.

1. Start simple and build confidence
Choose a single use case where AI can help your business save time or improve accuracy. Some proven starting points include:

• Automate reporting: Let AI handle repetitive data entry or reporting tasks so your team can focus on higher-value work.
• Enhance customer service: Use AI-powered support tools to speed up responses to common customer queries.

Streamline marketing: Experiment with AI for content generation, such as drafting marketing emails or social media posts.
Tackling a focused challenge allows you to measure impact, adapt quickly, and grow your knowledge without overwhelming your staff or budget.

2. Use AI that lives where your business data lives
Adopting AI should not require you to overhaul your entire technology ecosystem. Choose AI solutions built directly into your core systems, especially your ERP (Enterprise Resource Planning). When AI operates inside your main system of record, it has access to the full context of your operations, which makes its insights more practical and accurate.

3. Make training and support a priority
Investing in people is just as crucial as investing in platforms. AI works best when your team feels confident using it. Encourage experimentation and peer learning. Work with solution providers who offer comprehensive training and responsive support, ideally with specific experience in helping businesses within your industry.

4. Look for partners who know your industry
Sector-specific experience matters. A provider who understands your unique workflows and Australian regulations can offer tools and advice tailored to your real-world needs, rather than just generic promises.

5. Always protect your data and reputation
Data privacy and security are non-negotiable, particularly with the Privacy Act 1988 and Australian Privacy Principles (APPs). Before adopting any AI solution, confirm how your data is stored and protected. Choose partners who are transparent about their practices and hold themselves accountable for keeping your information safe.

Future outlook: AI for growing businesses

The adoption of artificial intelligence is a continuous journey. For small and medium-sized businesses, the road ahead is filled with opportunity. Our research shows that SMB leaders are moving past initial curiosity and are now focused on practical applications that drive real results. As technology matures and becomes more accessible, AI will evolve from a helpful tool for specific tasks into a core component of business strategy and operations.

Looking forward, several key trends will shape the future of AI for SMBs. This evolution will help businesses become smarter, more efficient, more resilient, and more competitive.

AI will become central to business decision-making 

Today, many businesses use AI to automate tasks and analyse data. Tomorrow, AI will become a trusted advisor in the decision-making process. As AI tools become deeply integrated with core business systems, such as your ERP, they will gain a comprehensive understanding of your operations. This will allow them to move beyond simple reporting and into predictive and prescriptive analytics.

Imagine an AI that can:

• Forecast cash flow with greater accuracy by analysing payment histories, project timelines, and supply chain data.
• Recommend optimal inventory levels by predicting demand based on seasonal trends, market conditions, and sales performance.
• Identify at-risk customers before they churn by monitoring engagement patterns and service histories.
• Automatically extract and organise Bill of Materials (BOM) data, saving hours of manual entry and reducing costly errors in workflows.
• Generate highly accurate business forecasts by blending historical sales trends and current market shifts, giving you confidence as you plan for what’s next.
• Streamline warranty requests through AI-driven triage, ensuring every customer issue is efficiently routed and resolved without bogging down your team.
• Deliver instant insights into top customers, buyer trends, and churn risks so your team can tailor marketing and retention efforts that drive results.
• Write detailed, SEO-friendly product descriptions at scale, helping you boost online visibility and turn more leads into buyers.

This level of insight puts you in the driver’s seat, empowering you to be proactive and strategic. Instead of chasing yesterday’s challenges, you can spot opportunities and risks early, act with confidence, and keep your business a step ahead.

Industry-specific AI will become the standard

Generic AI solutions have their place, but the greatest value comes from tools that understand the unique language and workflows of your industry. The future of AI for SMEs lies in specialised applications designed for the specific challenges of sectors like manufacturing, construction, field service, building supplies, office technology, and distribution.

As these tailored solutions become more common, SMBs will no longer have to adapt their processes to fit the technology. Instead, the technology will be built to fit their processes, leading to faster adoption and a more immediate return on investment.

Ethical and responsible AI will be non-negotiable 

As businesses hand more responsibility over to AI, the need for trust, transparency, and data security will only grow. SMB leaders are already expressing concerns about data privacy, which ranks as their number one AI-related worry. These concerns will become a primary factor in purchasing decisions.

The concept of “ethical AI” will move from a talking point to a core business requirement. This means that AI providers will need to be completely transparent about how their algorithms work and how they use your data. Key questions will include:

• How is our business data being protected from security threats and aligned with Privacy Act 1988?
• Is the AI making recommendations that are fair and unbiased?
• Who is accountable if the AI makes a mistake?

Successful AI providers will be those who can answer these questions clearly and demonstrate a firm commitment to responsible practices. For SMBs, partnering with these trustworthy vendors will be essential for mitigating risk and building a sustainable AI strategy.

The rise of the AI-powered workforce 

The fear that AI will replace jobs is understandable, but the more likely future is one where AI works hand-in-hand with people, enhancing their capabilities rather than replacing them. Successful businesses are already adopting a “human-in-the-loop” approach, recognising that real value comes from combining human judgement with the speed and scale of AI.

In this collaborative model, AI drafts outputs - such as preliminary quotes, bills of materials, or standard forms - quickly handling the heavy lifting of data analysis or document preparation. Then, human experts step in to review, refine, and approve these drafts before anything is finalised. This workflow keeps your team in charge of critical decisions, maintaining trust and accountability, especially when the stakes are high.

Keeping people actively involved ensures that while AI streamlines execution and analysis, your business never loses sight of the importance of sound judgement and customer experience. This model does not shrink the workforce; it empowers it. When AI takes on repetitive, data-heavy tasks, employees are free to focus on problem-solving, customer relationships, and strategic growth.

Of course, this new way of working will require investment in reskilling and upskilling, giving team members the confidence to use AI as a true partner. The payoff is seen in a more engaged, resilient, and productive workforce where technology enables people to deliver their best work, every day. The future is not people versus machines; it is about smart businesses putting people and machines together to drive measurable outcomes.

For SMBs, the future of AI is bright. By staying focused on practical challenges, prioritising partners with industry expertise, and committing to responsible adoption, you can unlock new levels of efficiency and growth for your business.
 

Research methodology

ECI Software Solutions, Inc. conducted a survey in November 2025 with a total of more than 550 small and medium-sized business leaders and decision-makers across the United States, Canada, and Australia.

Industries represented:

• Manufacturing: Discrete, job shop, and batch and process manufacturing.
• Office Technology: Providers of office equipment, managed print, 
  and workplace technology.

ECI’s Practical AI philosophy

At ECI, Practical AI isn’t about hype. It’s about making a genuine difference to your business. We design our AI to deliver measurable impact, not just impressive features. Our focus is on real-world results: simplifying daily tasks, reducing manual effort, and helping your team accomplish more without extra hassle.

With Practical AI, you don’t have to overhaul your operations or shoulder the burden of complicated setups. Our tools are seamlessly built into your ERP and day-to-day workflows, supporting you exactly where you need it. AI takes care of the repetitive, time-consuming work, so you and your team can focus on what drives your business forward.

You remain in control, deciding how much automation fits your needs, while we ensure the technology adapts to your processes, not the other way around. The goal is simple: put Practical AI to work for you, so you can put your energy into running and growing your business.

Discover more about Practical AI.