New Zealand businesses have hit an AI wall. Datacom's 2026 State of AI Index shows 91 per cent of organisations now use AI - up from 87 per cent in 2025 and 66 per cent in 2024 - yet only 4 per cent say the technology has transformed their core operations. That figure has halved from 8 per cent a year ago, signalling a retreat from genuine business change even as adoption spreads.
"AI adoption has accelerated dramatically over the past two years, but widespread use isn't automatically translating into organisation-wide change," said Datacom New Zealand managing director Peter Nelson. "The data suggests organisations are finding it much easier to introduce AI for basic everyday use cases than to scale it across their business."
The leadership vacuum
The research points to a structural problem: no one owns AI. Only 22 per cent of businesses have a dedicated AI leadership role. Just 13 per cent employ a chief AI officer and 9 per cent have another full-time AI leadership position. More commonly, AI responsibility is tacked onto an existing executive's remit - 26 per cent assign it to the CIO, CTO or CDO - while 19 per cent spread it across several executives with no single point of accountability.
"For many organisations, AI is still treated as a technology initiative, with responsibility added onto an existing executive role. But AI now touches strategy, workforce capability, governance, risk and organisational change," said Datacom director of AI Lou Compagnone. "If organisations want to move beyond pilots and isolated use cases, they need clear ownership and accountability."
Eighty-one per cent of businesses remain in exploratory or implementation stages. Only 15 per cent have reached organisation-wide scaling, a modest gain from 12 per cent in 2025. The primary barriers are internal capability gaps (20 per cent), employee resistance or fear of job displacement (18 per cent), and implementation costs (17 per cent).
Investment rises, but strategy lags
Spending is not the constraint. Seventy-nine per cent of businesses increased AI investment over the past 12 months, and 73 per cent plan to invest more in the year ahead. Returns are beginning to materialise: 33 per cent say AI benefits have exceeded costs, while 30 per cent report costs and benefits are broadly balanced. Time savings and productivity gains deliver the most value at 59 per cent, followed by improved quality and accuracy (41 per cent) and operational efficiency (34 per cent).
Yet strategy remains patchy. Only 16 per cent of organisations have a clearly defined standalone AI strategy. Twenty-three per cent have embedded AI within a broader business or digital strategy, while another 23 per cent say their strategy is still high-level or not fully operationalised. For executives wrestling with these questions, the AI for Executives & Strategy resources address the governance and planning gaps the research exposes.
Cost management is another blind spot. One in five organisations has not addressed AI cost management at all, and only 20 per cent maintain a dedicated AI budget with clear cost tracking. Nelson framed the issue bluntly: "You wouldn't hire a 50-seater bus to transport two people from Hamilton to Wellington, so why use an expensive frontier AI model to improve an email or create basic content for a sales proposal?"
Tools versus transformation
General-purpose assistants - ChatGPT, Gemini, Claude - remain the most common AI technology at 68 per cent, followed by AI-enhanced productivity tools at 66 per cent. More advanced applications are rare: 31 per cent use AI embedded in business platforms, 26 per cent use custom-built solutions, and 13 per cent use agentic or autonomous AI systems.
Compagnone drew a sharp distinction between adoption and adaptation. "Using AI tools is one thing, but knowing what to shift from and to - from existing workflows, services and ways of working to new models designed around AI - is something else entirely, and that's where the real value will come from."
There are signs businesses recognise the capability gap. Fifty-nine per cent now employ or plan to employ dedicated AI talent, up 25 points from 2025. Sixty-six per cent have provided AI skills training in the past year, a 10-point increase. For CEOs and senior leaders building internal capability, the AI Learning Path for CEOs offers structured guidance on moving from experimentation to operational change.
Why this matters for executives and strategy leaders
The report makes clear that AI's next phase depends less on tool adoption and more on organisational redesign. The 4 per cent of businesses reporting core transformation are not necessarily the biggest spenders. Compagnone said they are "typically the ones focusing investment on specific business challenges and use cases where AI can deliver measurable outcomes." For executives, the task is shifting from treating AI as a technology project to owning it as a business transformation priority - with clear accountability, targeted investment, and processes rebuilt around what the technology makes possible.
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