Why technology is key to lifting small business productivity

The article is relevant to members in Australia and was current at the time of publication.

Australia’s small business sector is stuck in a cycle of weak productivity, low innovation and sluggish technology adoption, even as counterparts across Asia-Pacific race ahead.

CPA Australia’s latest Asia-Pacific Small Business Survey, which included more than 4100 SMEs across the region, shows that Australian SMEs rank near the bottom of the region on measures such as growth, digital adoption, innovation and business confidence.

“For more than a decade, our survey has told the same story — Australia’s small businesses are consistently lagging their Asia-Pacific counterparts, and the gap is not closing,” says CPA Australia Business and Investment Lead Gavan Ord.

“When small businesses underperform year after year, it becomes a national economic problem, not just a sector issue.”

The survey found just 46 per cent of Australian SMEs reported growth in 2025, compared with a regional average of 63 per cent, and only 53 per cent expected growth in 2026, which is well below the Asia-Pacific average of 70 per cent.

John Zerella FCPA, Founder and Managing Director of AFM Services, says the construction and hospitality sectors, as well as the broader economy, are showing signs of significant strain. 
“But when we see poor growth across the board, the answer is not one thing but a lot of little things,” he says.

The innovation gap

According to the survey, high growth businesses were more likely to invest in technology, use social media to sell products and services and promote their business, and focus strongly on improving business strategy as well as management and customer satisfaction.

They were also significantly more likely to invest in artificial intelligence (AI), digital payments, online sales and customer analytics, and to seek external expertise and actively pursue innovation.

Australian SMEs ranked among the weakest performers for digital capability, the survey noted. Only 15 per cent identified AI as their main technology investment during 2025, compared with 32 per cent across the region. Just 32 per cent said their technology investments improved profitability, which is less than half the Asia-Pacific average.

But Zerella believes older business owners are increasingly frustrated by both unrealistic social media narratives about the realities of running a business and by the rapid pace of digital disruption.  

Sarah Lawrance CPA, Founder and CEO of advisory firm Hot Toast, agrees. “While many of our clients recognise the potential productivity gains, particularly around workflow automation, they remain overwhelmed by the pace of technological change.

“There’s appetite at founder and director level, but then there’s the whole other piece of work around creating the vision, planning the roadmap and getting buy-in from teams.”

Poor data quality is another major barrier for Australian businesses looking to compete technologically, Lawrance says. “It’s a case of rubbish in, rubbish out. There’s foundational work that needs to happen first, along with governance and guardrails around AI use.” 

The advisory opportunity for practitioners

Ord believes accountants and advisers have a critical role to play in lifting SME productivity.

This is crucial given that the May Budget added uncertainty for small businesses in an already uncertain environment, he says. CPA Australia is also disappointed that no targeted measures have been added to encourage small businesses to adopt new technologies.

“Without stronger incentives for innovation, skills development and younger Australians becoming business owners, productivity will remain weak.”

High-growth SMEs are more likely to seek professional advice, invest in technology and improve management capability, he says. 

Lawrance believes practitioners are uniquely positioned to help SMEs navigate the next phase of digital transformation, including redesigning workflows around automation and becoming more competitive globally.

“At our own firm, we’ve been able to substitute technology into a lot of transactional work and completely reimagine our tax workflow processes,” she says. “Our employees have shifted into review, analytical and critical thinking roles. Error rates are decreasing, and we’ve been able to spend more time strengthening client relationships.

“This sits directly within the value-add services accounting firms can offer.”

She warns, however, that Australia risks developing a “two-speed economy” between businesses willing to innovate and those unable to overcome internal resistance. 

At AFM, technology has also reduced compliance workloads, allowing the firm to focus heavily on business challenges and growth.

“Becoming less consumed with historical data means practitioners can provide real value to the client with advisory services,” says Zerella. “That should include digging deep into business strategy and, in the face of pressure to innovate, ensuring that SMEs are not shortcutting something else essential — client experience.”

CPA Australia is calling for urgent government action to address the widening productivity gap. The organisation wants policymakers to reduce compliance complexity, incentivise technology adoption, strengthen digital capability and encourage younger Australians into business ownership.