New Zealand SMEs embrace AI but want clearer rules

Xero has published research on how New Zealand small and medium-sized businesses are adopting artificial intelligence, finding that 61% are already using AI tools proactively.

Nearly half of respondents (45%) said AI could be the most significant opportunity for their business since the rise of the internet. At the same time, the findings highlight a gap between interest in the technology and confidence in using it.

Many business owners are not outright resisting AI. Still, they are struggling with practical barriers, including limited time, concerns about privacy and data protection, and a lack of clarity on how to introduce the technology into day-to-day operations.

Xero divided respondents into four groups based on attitudes and behaviour around AI adoption. The largest segment was Explorers, representing 44% of small and medium-sized businesses. Sceptics made up 26%, while Trailblazers and Pragmatists each accounted for 15%.

Explorers are businesses already using AI for specific tasks and largely teaching themselves how to use the tools. Among them, 99% said they use AI in some form, while 57% reported a good working knowledge of the technology and 39% reported a basic understanding.

Most Explorers said their main motivation was to save time and make work easier. The research also found that 58% expect to increase their use of AI over the next year, suggesting experimentation is likely to continue even if adoption remains focused on individual tasks rather than broader operational change.

Sceptics made up just over a quarter of the businesses surveyed and were marked by low perceived relevance and high levels of concern. Within that group, 44% said AI was not relevant to their business, while 47% cited worries about data privacy and security, and 46% raised concerns about the accuracy of AI-generated outputs.

That caution has translated into limited spending plans. Among Sceptics, 89% do not intend to invest in AI in the near term, although a smaller share said the technology could still be useful for simple automation if used carefully.

Trailblazers were the most committed adopters in the study. Of that group, 83% said they use AI tools extensively, and 65% said the technology could transform how their business operates.

They were also the most likely to report measurable benefits. The findings show that 76% cited higher productivity, 71% pointed to time savings, and 47% said AI had improved decision-making in their business. A large majority, 91%, plan to increase their use of AI tools over the next year.

Pragmatists showed a different pattern. While 78% said they had started exploring AI tools or planned to do so within the next year, they were the most likely to say lack of time was preventing wider use, with 55% identifying time as the main barrier.

This group appeared less motivated by competitive advantage than by immediate operational relief. Pragmatists were more focused on reducing stress and improving work-life balance than on using AI to get ahead of rivals.

Policy concerns

The study also examined what business owners want from government and other institutions as AI becomes more widely used. The strongest demand was for clearer rules and stronger safeguards.

When asked what role the Government should play in encouraging adoption, 57% said it should set clear regulations and accountability standards. A further 55% said stronger data protections and standards were needed, while one in three wanted education and training resources.

Businesses also pointed to the support they believe would make them more comfortable using AI in practice. Practical training and workshops were selected by 47% of respondents, while 46% wanted access to trusted, vetted tools designed for small and medium-sized firms. Another 43% said real-world case studies would help build confidence.

Training push

Alongside the research, Xero has partnered with ASB to offer a fully funded 12-week online AI bootcamp for New Zealand small and medium-sized businesses. The programme will be delivered by academyEX and is intended to help owners apply AI tools to everyday business processes.

The move reflects a broader theme in the findings: many smaller businesses do not need persuading that AI could be useful, but they do want clearer guidance on how to use it safely and effectively. That combination of interest and caution suggests the next phase of adoption may depend less on enthusiasm and more on practical support, training and trust.

For many business owners, the issue is no longer whether AI matters, but how to use it with confidence.