Eighty-seven per cent of respondents said boosting the economy should be the Government’s top priority, compared to 72% last year.

The second priority on the list for Government this year is export opportunities – with 49% of respondents identifying it as a top focus area, compared to 10% last year.

“Broadly, people are saying it’s more challenging than it was 12 months ago,” Datacom’s New Zealand managing director Justin Gray said. “There’s a focus on how do we get back to growth.”

The turning labour market has affected the top concerns list, too. “Retention was number one during the Covid years by a long way, now it’s fallen way down the list,” Gray said.

This year’s survey found “recruitment and staff retention” the top concern for 8% of respondents. Climate change (16%) fell from third to sixth in the top concerns list.

Government report card mixed

Overall, 49% said the National-led Government had done a good job supporting businesses during its first year in power, while 34% said it had not. The balance was unsure.

Sixty-five per cent of respondents from businesses with 200 or more staff thought the Government had done a good job, compared to 44% from those at firms with 100 to 199 staff.

Will economic conditions improve?

There was a similar split over economic expectations for the next 12 months.

Among the 200+ employee club, 82% expected conditions to improve, while 10% did not.

In the 100 to 199 crowd, 72% saw the economy improving, while 22% did not.

Majority plan to restart paused projects

Sixty-two per cent of respondents delayed strategic investments last year because of the economic conditions.

“But looking forward, 60% of businesses are saying they’re going to restart paused or halted projects [this year],” Gray said.

“In terms of investment, we’re seeing the focus from a technology perspective on AI [artificial intelligence] and automation. Business is looking forward with some optimism.”

He added: “The challenges haven’t entirely gone away. Thirty-four per cent of respondents rated budget-constraint as their top concern. But we’re seeing investment plans starting to loosen up to some degree.”

As New Zealand’s largest home-grown IT services company, Datacom (55% owned by the Holdsworth family, 45% by the New Zealand Superannuation Fund) has more of a handle than most on the size and shape of local AI adoption.

“Our AI research last year [the firm’s separate State of AI Index survey], found 80% of businesses who were doing something with AI said they were seeing some improvement in terms of operations. I think there is definitely a sense of growing sense of opportunity around AI having productivity gains – and we all know productivity has been stalled. for some time. The AI opportunity is around that core productivity improvement that we desperately need.”

He added: “Businesses have mostly doing experimentation off to the side, rather than putting AI into core parts of their business – and you actually need to drive it at some scale to get the benefit.”

“But we are seeing more organisations who are getting confidence based on what they’ve been doing with POC [proof-of-concept] experimentation and now they’re saying, ‘There’s some opportunity here. Let’s get on with it’.”

“While we’ve seen some great initiatives announced or launched over the past year, for example, the Government’s AI Activator, it’s important that, as a country, we are really focused on not being left behind with our AI adoption. If our global counterparts and competitors reap the gains that AI has to offer and we don’t, it will be incredibly difficult to stay competitive,” Gray said.

Selected results

Reflecting on the past 12 months, do you believe the Government has done a good job of supporting New Zealand businesses?

Respondents from companies with 200+ staff

Respondents from companies with 100-199 staff

Will economic conditions improve over the coming year (2025)?

Respondents from companies with 200+ staff

Respondents from companies with 100-199 staff

What do you believe are the biggest technology opportunities for your organisation in 2025?

1. AI 46%

2. Automation 41%

3. Data optimisation 40%

4. Skilled workforce 39%

5. Future workforce 19%

6. Cloud optimisation 18%

7. Cyber security 16%

Going into 2025, what do you see as the biggest threats to your organisation over the next 12 months?

1. Economic uncertainty 77%

2. Cyber security 29%

3. People (current) 28%

4. Lack of budget 26%

5. People (future) 25%

6. Customer experience 20%

7. Geopolitical climate 19%

8. Ability to adopt 16%

9. AI uncertainty 12%

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.