Are New Zealand SMEs too undisciplined for AI?

New Zealand SMEs are eagerly adopting AI, but many lack a clear strategy on how to effectively implement and utilise the technology and too many Kiwi businesses are still operating by the ‘seat of their pants’ says an online business consultant.

Mark Presnell, Managing Director at Convergence, an eCommerce tech integration firm in Auckland, says, “AI is a solution searching for a problem. Many SMEs buy into AI due to FOMO (fear of missing out), but they do not understand its value or how to integrate it effectively because most are still not doing the business basics properly.

“A disproportionate number of New Zealand small and medium businesses do not have a formal business plan or documented processes and procedures, and their technology solutions are not integrated—something we frequently see in retail; for example, the business eCommerce site is not connected to the accounting software.”

A recent study, “The Essential Guide to Understanding AI for SMB and Mid-Market Leaders in Australia and New Zealand,” found that AI adoption is booming among SMBs in the region, with nearly half indicating significant increases in AI investment. However, the same study highlights a critical issue: many businesses are not fully prepared to utilise AI effectively.

Presnell says this ad hoc approach to technology adoption can lead to wasted resources and missed opportunities.

“Operating ‘by the seat of your pants’ means that not only can you not take proper advantage of AI, but it is also fraught with risks in today’s complex business environment. Evidence shows that financial vulnerability, operational inefficiencies, and piecemeal technology adoption are common challenges – technology is often adopted without integration into a broader strategic plan.

“Without a clear understanding and structured approach, businesses risk falling behind in our rapidly evolving global market. The only way to find feasible and measurable AI use cases is to clearly understand your processes.

“A random approach makes it harder to find the usefulness of AI, yet research shows less than 20% of SMEs use data to inform decision-making.”

To effectively adopt AI, Presnell makes the following suggestions:

1. Document processes: Identify and document key business processes to develop use cases for AI automation. Understanding these processes is crucial for finding areas where AI can add value.
2. Research other industries: Look at how other industries successfully integrate AI. For example, retail businesses use AI for real-time customer engagement and stock management, while legal practices use AI for case law research.
3. Become data-driven: Prioritise data collection and analysis to inform decision-making. This foundation is essential for effectively leveraging AI.

“The days of the traditional Kiwi entrepreneur succeeding purely on hard work are over. In today’s digital age, consumers behave differently. They expect tech-savvy and data-driven interactions. However, SMEs can adapt by embracing best practices such as data-driven planning, process documentation, and strategic research.

“The risk of not evolving is stark. Traditional businesses that fail to integrate AI effectively may be overtaken by more agile competitors—the proverbial horse and cart caught on the side of the road while an automobile rushes past.”

Presnell urges New Zealand SMEs to move beyond taking each day as it comes and adopt structured business practices that strategically integrate AI if they want to successfully navigate the challenges of 2024 and beyond.