Productivity is increasingly the difference between standing still and staying competitive for New Zealand businesses.
Right now, the pressure is mounting. Across key measures, New Zealand’s productivity has slipped, with declines in labour productivity, capital productivity, and GDP per capita – creating a tougher environment for businesses to grow. For SMEs especially, this creates a tough operating environment where margins are tighter and growth is harder won.
The latest Productivity Propelled report, commissioned by 2degrees and prepared by Deloitte Access Economics, shows that AI adoption is translating into real business performance. The research demonstrates that SMEs using AI are earning, on average, around 4.3 percent more revenue annually than comparable non-adopters.
AI adoption is already here, but uneven
AI is no longer a future concept for Kiwi businesses. In fact, 82 percent of New Zealand businesses report using AI in some form, and those that are embracing it are already seeing measurable gains.
As 2degrees Chief Business Officer Andrew Fairgray puts it, “The research shows that AI is no longer theoretical. It actually gives us some practical levers that we can use to lift productivity, if we adopt it and we adopt it properly.”
However, for most SMEs, adoption is still in its early stages. The majority are using AI features embedded in tools they already have rather than deploying more advanced, standalone AI solutions. This approach makes sense, as it’s low-cost, low-risk, and easy to implement. But it also means many businesses are only scratching the surface of what AI can deliver.
Where SMEs are seeing value right now
For SMEs, the biggest wins from AI are practical and immediate. The research shows smaller businesses are prioritising operational efficiency – streamlining processes, reducing manual work, and freeing up time for higher-value tasks. Common use cases include automating customer enquiries, generating marketing content, analysing data, and supporting day-to-day admin.
These are not radical transformations, but they compound. AI is helping businesses increase output without increasing headcount – improving responsiveness, enabling better decisions, and freeing up time to reinvest into growth.
“They’re already using it,” Fairgray says. “The data is saying that AI is part of everyday business. But it’s now about how that intent turns into actual real growth.”
“If you could get even 10 percent of that uplift, I think any business would be delighted,” he adds.
From experimentation to impact
While adoption is high, many SMEs are still in experimentation mode, trying tools, testing use cases, but not yet embedding AI into how the business runs.
For SMEs looking to unlock more value, the next step is practical – integrating AI into everyday work:
Focus on where time is being lost. Look at repetitive admin, customer response times, reporting, or content creation. AI delivers the most immediate value when applied to real bottlenecks.
Get more out of the tools you already use. Many SMEs already have AI built into their existing software – from CRMs to accounting and marketing platforms – but are only using a fraction of the functionality.
Make it part of daily workflows. The biggest gains come when AI is used consistently, not occasionally. Embedding it into everyday tasks is what turns small efficiencies into measurable impact.
Build confidence across the team. You don’t need specialists to get started, but teams do need a baseline understanding. Small gains in capability can unlock disproportionate value.
Lean on partners to accelerate progress. Building AI capability from scratch can be costly and complex. Many SMEs are moving faster by working with trusted technology partners who can provide the tools, expertise, and infrastructure needed.
Businesses that move from occasional use to embedded workflows are the ones starting to see meaningful returns. As Fairgray puts it: “Don’t just use it. Redesign how you’re using it and transform how you’re thinking about the business.”
What’s holding businesses back
Skills and capability gaps remain a key challenge, with many teams lacking the expertise to move beyond basic AI use. Cost constraints can limit investment in more advanced tools, while concerns around data privacy and trust continue to create hesitation. For some, the biggest challenge is simply knowing where to start — or how to turn early experimentation into meaningful value.
These barriers explain the cautious approach many SMEs are taking. But they also highlight where the focus needs to be. Progress depends on building mindset, systems, and skills in tandem by using what already exists more effectively. When these come together, businesses are far better placed to turn AI into real productivity gains.
A growing gap – and a growing opportunity
AI won’t solve productivity challenges on its own. But it is one of the most immediate and practical levers available to Kiwi businesses today. The benefits depend on how effectively organisations adopt it, integrate it, and build the capability to use it well.
Businesses that are incorporating AI into their workstreams effectively are starting to pull ahead. Those that aren’t risk falling further behind. For SMEs, AI represents a rare opportunity to level the playing field, by accessing capabilities that were once limited to much larger organisations.
For SMEs, opportunity doesn’t lie in becoming AI experts overnight. Rather, it’s about taking a thoughtful approach, moving from experimentation to meaningful use. The businesses that do this, will be the ones shaping the next phase of growth in New Zealand.
