Australian SMBs embrace AI but free tools heighten security risks
Australian small and medium-sized businesses (SMBs) are increasingly adopting artificial intelligence, but many are not fully utilising enterprise-grade solutions and are exposing themselves to potential security risks, according to new research commissioned by HP.
The study found that 58% of SMBs in Australia are currently using AI tools in their operations. While the majority of these businesses report positive outcomes such as time savings and increased productivity, a significant proportion are depending on free large language models (LLMs) instead of enterprise versions, resulting in heightened data security concerns.
According to the HP survey, less than half of SMBs that use AI have implemented enterprise versions of each tool. This raises concerns about the security of business and client data. The research also identified a low awareness of hardware needs among SMBs exploring AI adoption, which further compounds the risks associated with using consumer-grade solutions.
"AI is already delivering productivity and wellbeing benefits for Australian businesses. But too many are leaving value on the table and in some cases, exposing themselves to unnecessary risks by relying on free tools instead of enterprise-grade solutions," says Brad Pulford, Managing Director of HP Australia and New Zealand.
The research highlights that among SMBs exclusively using free AI tools, 81% report deploying these tools for tasks involving confidential data. Furthermore, one in ten of these SMBs admit to actively putting company data at risk of privacy breaches. This demonstrates a clear disconnect between AI usage and adequate security practices.
AI delivers benefits, but with caveats
A majority of AI users in the SMB sector indicated beneficial outcomes from implementing AI in their workflows. 82% believe that AI has saved them time, 74% report increased productivity, while 72% say it has allowed them to focus on higher-value work and improve overall work quality.
However, the survey suggests that businesses using enterprise-grade AI solutions experience greater advantages. These SMBs are more likely to agree that AI has improved their team's work-life balance (69% compared to 50% of those on free tools), and reduced stress and burnout for leaders and employees (68% versus 47%). Those using only free AI tools are also more likely to encounter challenges around complexity and integration, with 54% citing these as issues.
Awareness and adoption barriers
HP's research found that the hesitation to adopt more advanced AI tools is less about cost, and more related to capability and confidence. Just 15% of SMBs stated budget as a barrier to further AI adoption. Instead, gaps in skills, concerns over complexity, and fears about security are more prominent concerns for SMB decision makers.
"Where we see resistance to adopting better AI solutions, the issue is most likely to be fit, skills and confidence. These are not huge obstacles, and by addressing them SMBs could see tremendous benefits from the right technology," says Mr. Pulford.
The study, which surveyed 500 IT and business decision makers within organisations of 10 to 500 staff, also uncovered a very limited understanding of AI-supporting hardware. A total of 78% of SMBs admitted having either a limited understanding or no awareness of AI laptops and PCs. However, the data show that once SMBs are informed about the capabilities of AI PCs, they are more than twice as likely to consider upgrading their hardware.
Further qualitative research by HP found that misconceptions persist, with many business leaders assuming AI "lives online" and not fully grasping its hardware requirements or potential efficiency benefits.
Software updates and security complacency
The report also notes that many SMBs, particularly fast-growing ones, are slow to update their software and operating systems. Notably, 63% of fast-growing SMBs state they "prefer to update software only when necessary", higher than the 50% observed amongst lower-growth businesses.
Furthermore, 51% of this fast-growing segment express little concern over security threats from outdated software, compared to 33% in slower-growing firms.
Among those organisations still running predominantly on Windows 10 or earlier, only 56% are aware that the product's end-of-life status means an end to software updates, technical support, and security patches. Once informed, 89% indicate they plan to upgrade their systems.
"Keeping up to date is crucial both for operational efficiency and for security. We recommend SMBs upgrade at the first available opportunity so that they can experience all the new features and benefits of Windows 11, while minimising the risk of disruption that can come with using unsupported software," says Mr. Pulford.
Collaboration and secure solutions
Technology firms such as HP and Microsoft are working to expand awareness and access to secure AI tools geared towards Australian businesses. Dan Johnson, Windows Category Lead at Microsoft Australia & New Zealand, stated:
"Australian small businesses are poised to harness the power of AI, and with Microsoft Copilot, they can do so with the confidence of world-class security built in. Our collaboration with HP ensures SMBs have access to secure Copilot+ PCs running on Windows 11, which empower teams to work smarter and innovate boldly - while keeping people and growth at the centre of every decision."
