NZ firms lift tech spend as AI shifts from trials to scale

New Zealand business leaders expect economic conditions to improve in 2026 and plan larger technology budgets, with artificial intelligence and data projects high on the agenda, according to new research from Datacom.

The survey of 200 senior leaders at organisations with more than 100 employees found that 65% expect the economy to improve over the next 12 months. The study reported that 82% of businesses intend to increase investment in technology.

Datacom New Zealand Managing Director Peter Nelson said the findings align with sentiment among the company's customers.

"We're seeing clear early signs of confidence across the business community. After a period of uncertainty, leaders are signalling that they're ready to invest and innovate. This renewed optimism is a positive sign for the economy and for the role technology will play in driving growth. While the imperative to drive efficiency and carefully manage costs has not diminished, there's renewed interest in investments aimed at stimulating growth," said Peter Nelson, Managing Director, Datacom New Zealand.

Nelson said modernisation of ageing systems is a central theme in current customer discussions. He said many organisations struggle with legacy technology when they attempt to apply newer tools such as AI.

"One of the conversations we're having again and again with New Zealand organisations is the challenge of legacy technology and how hard it can be to modernise and make the most of technologies like AI and set the platform for growth. Our AI-driven approach to app modernisation, where AI agents work alongside people in development teams, is helping address some of the core obstacles to modernisation with several significant projects underway," said Nelson.

AI plans broaden

Half of respondents identified AI adoption and implementation as the biggest technology opportunity in 2026. Data optimisation followed at 40%, with automation cited by 30% of leaders.

Among organisations prioritising AI, 31% are focusing on integrating and scaling AI into core operations. These leaders pointed to areas such as workflow optimisation and customer service and support.

Datacom said this reflects a shift away from small trials and towards organisation-wide use. The company contrasted the results with its State of AI Index in late 2025, which found that 46% of businesses then remained stuck in exploratory work.

Datacom's Director of AI, Louise Compagnone, said conversations with customers are changing.

"Organisations are starting to be more strategic about their deployment of AI. Initially, we saw a lot of organisations deploying AI tools in an ad hoc way in specific areas of their business, but the net effect is that they get stuck in pilot mode and they can't achieve the enterprise-wide impact businesses are looking for.

"It's encouraging to see the conversation shift from 'if businesses should adopt AI' to 'how they can effectively scale it', and at Datacom, we work with our customers to pinpoint the right opportunities within their business. Whether that's improving customer service or enabling faster, data-driven decisions, every company is different, and the ways they can benefit from AI will vary," said Datacom's Director of AI, Louise Compagnone.

Growth and risk

Growth emerged as the leading business priority for the year ahead, cited by 35% of respondents. At the same time, two in three senior leaders named economic uncertainty as the top perceived threat.

Cybersecurity ranked as the second biggest perceived risk at 24%, followed by concerns about the future workforce at 19%. Just under half of businesses, 48%, reported a cyber attack in the past 12 months, which Datacom said represented a 13 percentage point rise on the previous year.

Only one in four leaders listed cybersecurity as a top threat for 2026 despite this increase in incidents. Datacom said it sees signs of fatigue in how some organisations regard cyber risk.

"This drop in the perceived threat possibly reflects a bit of cybersecurity fatigue but it is vital that New Zealand organisations don't lose focus - cyber-attacks present a huge risk and organisations need to be investing in cybersecurity and ensure they have business recovery plans."

Respondents cited budget constraints as the biggest challenge to successful adoption of new technology, at 31%. A lack of skilled workforce followed closely at 30%, with data quality also mentioned as a brake on projects.

Concerns about the so-called brain drain remain high. Nearly half of leaders, 42%, said the outflow of talent continues to weigh on their organisations and identified engineering skills as particularly at risk.

"A lot of the projects we're going to see rolled out over the next 12 months will be reliant on highly skilled engineers paired with the smart use of AI. At Datacom, our software engineers are integral to our ability to innovate and, as we push to ensure AI produces the benefits and productivity gains that organisations are looking for, our engineers are critical to ensuring we can build solutions that enable us to harness and scale AI."

Public sector expectations

The survey also examined business views of government performance. It found that 43% of leaders believe the government has done a good job of supporting local businesses.

Most respondents, 71%, said the government needs more time to deliver on its promises. A majority of 58% would like more focus on modernising how services reach citizens.

Business leaders still see economic growth as the top focus for government. They said improving public services was the primary route, with 43% citing this as the key area of attention.

Nelson said there is scope for further use of digital systems in public services.

"Technology has the ability to deliver the 'better, faster and more reliable public services' that New Zealanders are looking for. What's needed to underpin this is truly modern, integrated platforms that can support a single digital front door for citizens, reducing duplication across agencies and deploying AI to speed up core services; the opportunity is significant."

Nelson pointed to uptake of Datacom's Datascape software among local councils as an example of this trend.

"Our Datascape platform is a great example of this and is being utilised by 75% of councils around the country," said Nelson. "It takes an AI-enabled platform to transform community engagement for local councils, by delivering timely, location-based alerts and two-way communication for modern, citizen-focused services."