New Zealand small businesses adopt AI as hold-outs shrink

AI adoption among New Zealand small businesses rose in early 2026, according to research commissioned by Prospa. The share of businesses using no AI fell to 36% from 45% in March.

The survey found that 59% of small and medium-sized enterprises in New Zealand now use AI in some form, up from 50% six months earlier. Of that group, 33% use AI in specific business functions, 19% are experimenting with it, and 7% say it is integrated across multiple functions and is strategically important to the business.

The figures come from the Prospa SME Sentiment Tracker, which surveyed 501 SME decision-makers in New Zealand through independent research firm Clarity Insight. Respondents came from businesses with fewer than 50 full-time staff and less than AUD $20 million in annual revenue, and the sample was weighted to reflect industry distribution across the SME sector.

Barriers shift

Among businesses yet to adopt AI, the main obstacles appear to be decision-making rather than budgets. The biggest barrier was uncertainty about return on investment, cited by 34% of non-users, followed by not knowing which tools suited their needs, at 32%.

Cost ranked well below those concerns. Upfront expense was the sixth most cited barrier at 12%, while the staff time needed to learn new tools ranked seventh at 11%.

That pattern suggests a shift in the debate around AI uptake among smaller firms. Earlier discussions often focused on affordability, especially for businesses with limited technology budgets. The latest findings indicate that many hold-outs are instead struggling to assess value, compare products, and decide where AI fits into daily operations.

New Zealand SMEs appear to be adopting AI in stages rather than through whole-of-business overhauls. The largest group of users said they had applied AI in particular functions rather than across the organisation, suggesting many are starting with defined use cases instead of broad implementation programmes.

Experimentation also remains a sizeable category. Nearly one in five respondents said they were testing AI tools rather than using them in an established way, indicating that many firms are still in the trial phase and may be weighing practical results before committing further.

Knowledge gap

Adrienne Begbie, Managing Director, New Zealand, at Prospa, said the results showed that the number of businesses outside the AI market was shrinking.

"The hold-outs are shrinking fast. What's stopping the rest isn't the price tag. It's that nobody has shown them which tool actually solves a problem they have," Begbie said.

The survey also suggests some businesses remain unconvinced about measurable benefits.

"When a third of the businesses still outside AI say they can't see the return, that's not scepticism. That's a gap in the advice they're getting," she said.

The distinction matters for lenders, advisers, and software providers targeting the small business market. If adoption is increasingly constrained by uncertainty rather than funding, companies selling AI-related products and services may face pressure to simplify product selection and provide clearer evidence of outcomes.

For small businesses, the challenge is often practical. Owners and managers typically make technology decisions without large internal IT teams, and many need tools that solve immediate problems in areas such as administration, customer communications, or workflow management. In that context, a crowded AI market can create friction even when entry-level products are relatively affordable.

Despite the rise in use, non-adoption remains significant. More than a third of SMEs still report no AI use at all, meaning a large part of the market has yet to move beyond observation or informal consideration.

At the same time, the drop from 45% to 36% in the share of non-users over six months marks a notable shift in behaviour. Combined with the rise in businesses using AI in defined parts of the business, it suggests adoption is moving from a fringe activity towards a more common feature of small business operations in New Zealand.

The previous wave of the tracker surveyed 512 SME decision-makers, providing the comparison point for the March results. In the latest poll, 7% of respondents said AI was integrated across multiple functions and held strategic importance within their business.