As the engine room of the Australian economy, mid-market businesses are key drivers of national productivity growth. Current productivity levels remain stagnant, with mid-market businesses scarcely more productive today than they were a decade earlier.
Effectively implementing AI can offer increased productivity for all businesses, but the mid-market is often lagging on these cutting-edge innovations, putting their competitive position at risk. Many feel the pressure to innovate, but at the same time, are wary of wasted investment.
Darren Covington, lead partner - technology, applications & systems integration, enterprise - KPMG Australia.
KPMG Australia’s latest Mid-Market Pulse Check found that cost and margin pressure remains a major concern for mid-market businesses, with navigating complex regulations, as well as growing cyber threats also among the key issues.
Aside from the cost barrier, one of the biggest challenges mid-market enterprises face in their adoption of digital technologies is lack of capable talent. Meanwhile implementing AI can be met with competing priorities.
Perhaps the CEO wants measurable outcomes, while the CTO is cautious of complexity and cost. These perspectives can pull in different directions, or they can be aligned to a strategy that delivers tangible long-term value to businesses and shareholders.
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Recently, KPMG in collaboration with The University of Melbourne, released Trust, attitudes and use of Artificial Intelligence: A global study. The report found that with AI, employees reported increased efficiency, effectiveness, access to information and innovation.
Two thirds (65 per cent) of Australians said their employer uses AI, and 49 per cent of employees said they are intentionally using AI on a regular basis. But the use of AI at work was creating complex risks for organisations.
Almost half of employees (48 per cent) admitted to using AI in ways that contravene company policies, including uploading sensitive company information into free public AI tools like ChatGPT.
We’re now seeing mid-market businesses start to implement systems that communicate, collate and adapt in real time, as they work through some of these challenges. And when done effectively, the pros of implementing AI solutions can outweigh the cons.
Organisations making AI-driven productivity gains are curating their approach to fit their risk appetite and business strategy, with a clear focus on:
Data as a strategic asset. Organisations that win in the decade ahead will use data to power real-time decision-making. The rise in sensors and cloud technology has created vast amounts of data. The major challenge for organisations today is how to distil all the data they are collecting to drive real-time, informed decisions for better customer experience.
AI to build trust, empower labour, and accelerate productivity. Organisations that responsibly embrace AI can unlock labour productivity. In a tight labour market, sourcing the right talent and uplifting skills will be a strategic mid-market differentiator.
Cloud and data management as a core foundation. Organisations that are effective at digital transformation and have strong cloud and data foundations are seeing the highest return on investment.
Security and privacy. Cyber security teams are under pressure to keep up with evolving threats. With the vast amounts of data and sophistication of threat agents, the mid-market must have the right security and identity foundations to help mitigate against cyber risks.
For Australian mid-market businesses, strategically adopting AI can present a major opportunity. As they work towards closing the productivity gap, mid-market leaders must recognise AI as more than an innovation – it’s a framework for success.
Darren Covington is lead partner - technology, applications & systems integration, enterprise - KPMG Australia and Shane Lyell is partner - data, platforms & engineering, enterprise - KPMG Australia.
