James Bergin | Executive General Manager | Technology Research & Advocacy | Xero | mail me |
As new and emerging technologies, such as Artificial Intelligence (AI), continue to reshape the business world, change is inevitable. We are calling on Small and Medium Enterprises (SMEs) to look beyond the hype. They should focus on harnessing AI as a genuine catalyst for operational improvement and enhanced customer engagement.
SMEs account for over 90% of the formal business sector and contribute significantly to employment and GDP. As such, SMEs must embrace AI not just as a trend, but as a strategic lever for growth in South Africa’s evolving economy.
Impact over hype
The real opportunity for SMEs is not in chasing trends but in thoughtfully applying emerging tools to unlock productivity and create meaningful change.
Technology is already delivering value for businesses, automating repetitive tasks, providing sharper business insights and improving interactions with customers. However, true innovation lies in how these tools are used to address specific business goals, especially those that are unique to the South African context.
I point to the Gartner Hype Cycle, which highlights how excitement around new technologies often outpaces real-world implementation. It is important that SMEs embrace AI by focusing on substance over sensation. The most important question is whether a particular tool will help them work more efficiently, reach new customers or scale their businesses in new ways.
Following the hype can be quite the roller coaster ride. Generative AI can be heading towards the so-called ‘trough of disillusionment’, while agentic AI could be nearing the ‘peak of inflated expectations’ at the same time. It’s important to note that Gartner’s work on the hype cycle isn’t tracking the maturity of the technology. It’s tracking the hype. So, even with fast-moving tech, the maturity and implementation rarely move as quickly as the hype might suggest.
The key is to look at the problems you are trying to solve. Then you can look at the capabilities that technologies like AI are bringing to the table. Focus on whether that new capability is going to help you unlock new ways of doing things. That way, you’re not looking at the hype so much as you’re looking at how the tech can practically help.
Working backwards from the goal
I recommend taking an experimental approach to implementing AI to solve business problems. This could mean testing the ability to help with automating elements of tax compliance and digitising inventory for spaza shops. It could also mean using AI chatbots to handle customer queries in local languages. These are tangible use cases that can drive real value and help businesses in South Africa leapfrog traditional barriers to growth.
To get to a place where technology is adding value, small business owners are advised to work backward from their goal. It requires being thoughtful and orienting the technology to solve the problems you know will truly unlock productivity. This approach ensures that SMEs must embrace AI with a clear sense of purpose rather than experimentation for its own sake.
Leveraging AI in existing tools to solve unique problems
What stands out in the South African landscape is how AI is often combined with other innovations to tackle uniquely local challenges. Mobile-first fintech platforms are leveraging AI to transform the way entrepreneurs manage finances and access capital.
In agriculture, farmers are using drones with AI capabilities to maximise crop yields. Meanwhile, advances in AI and blockchain technology are enabling secure transactions in industries as diverse as logistics and informal trade.
A pertinent question that we need to ask ourselves is what technology will combine with next, and what that unlocks. When you combine with other technologies, be it wearable tech, drones or even quantum computing, you unlock entirely new possibilities. Technology is really a catalyst for innovation and this is particularly true for South African businesses navigating a rapidly changing landscape.
Cultivating digital literacy and sustainable growth for the future
Our 2025 State of Small Business Report reflects that the sector is eager to harness AI, with 39% of SMEs looking to develop skills in new technologies, and 33% planning to invest in emerging tech in the coming year. This momentum is being further supported by local incubators, government-driven digital programmes and partnerships with universities, all of which are helping to build the digital literacy that will drive sustainable growth for businesses.
SMEs are incredibly resourceful. They’re not waiting for perfect conditions. They are finding ways to innovate, digitise and move forward. However, we must understand that AI’s role is to augment and empower, not overwhelm. The focus is on offering solutions that are accessible, secure and continuously evolving to meet the needs of local businesses and support their journey toward growth.
Ultimately, SMEs must embrace AI to accelerate the changes they want to make. They approach each new solution with a willingness to experiment and learn. True innovation is reflected in the positive outcomes that businesses achieve, not in the tools themselves, but in the ways those tools are put to work.
