Australian bosses bet on AI despite patchy pay-offs

Australian C-suite leaders are putting AI and automation at the centre of cost-cutting plans, even as many report limited satisfaction with results and rising pressure from rapid technology change, according to research from Argon & Co.

The consultancy's Operations Outlook 2026 study surveyed more than 800 C-suite leaders globally. In Australia, half of respondents said technology changes, including AI and automation, ranked as their most significant business challenge. The same proportion said AI and automation also formed their main cost reduction strategy.

The findings point to a gap between intent and outcomes. In Australia, 16% of respondents said they were "very satisfied" with the impact AI had delivered to their organisation. Argon & Co said this was around half the rate reported by global peers. At the same time, 81% of Australian respondents said they held a favourable view of AI.

Skills and spend

Australian leaders also reported capability constraints. The research found 38% cited people capability as an internal barrier to building operational resilience. A further 35% pointed to budgetary and resource constraints.

Paul Eastwood, who is based in Sydney, linked the pressure from technological change to higher levels of investment and the complications that follow.

"Australian leaders may be feeling the strain of technological change with greater intensity because they've had more budget to deploy," said Paul Eastwood, Partner ANZ, Argon & Co. "It's broadly understood that IT budgets increased in Australia and across APAC in 2025. Greater investment often brings greater complexity, and legacy systems or data quality issues can quickly become bottlenecks."

The survey results also put Australia ahead of several comparable markets on the scale of concern about pace of change. In Australia, 50% of operations leaders cited rapid technological change as their biggest business challenge in the last year. The figures stood at 34% in Canada, 38% in the UK, and 43% in the US.

Supply chain focus

Supply chains ranked as a central area for resilience initiatives and AI deployment. In Australia, 50% of executives said operations and supply chain represented the most successful area for AI deployment.

Argon & Co also reported a lower level of extensive AI deployment in supply chains in Australia than the global average. In Australia, 16% of executives said they had deployed AI "extensively" in supply chains. The global average stood at 27%.

Eastwood said organisations needed a broader approach to automation efforts across functions.

"Automation delivers the greatest impact when it is implemented cross-functionally, but most teams optimise for their own KPIs, not for the good of the wider business. But automation only delivers meaningful impact when everyone from finance to marketing and product development understands the same core levers. When those insights are shared, automation can move from delivering isolated efficiencies to enabling long-term, structural resilience across the organisation," said Eastwood.

Alongside AI and automation, Australian leaders also reported other measures for strengthening resilience. The survey found 43% were establishing contingency plans. It found 40% were improving collaboration with supply partners. It found 39% were improving supply chain transparency.

Digital tools

Across the global sample, leaders pointed to advanced digital tools as a significant opportunity in manufacturing and logistics over the next five years. The survey found 49% of global operations leaders said digital twins, AI, and predictive analytics presented the greatest opportunity for resilience in manufacturing and logistics. It found 39% pointed to automation and Industry 4.0 technologies as essential for improving resilience, enhancing workforce productivity, and reducing reliance on manual intervention in industries facing labour shortages.

Eastwood described disruption as an operational constant and pointed to scenario modelling as a priority area.

"These days, disruption can hit operations in a flick of a switch. To stay ahead, businesses need a clear view of where their operations are most exposed and how different disruption scenarios could play out," said Eastwood. "Digital twins will be a major enabler of this in 2026 and beyond, allowing firms to run 'what-if' scenarios, test response plans under pressure, and build contingencies before trouble hits."

He also cautioned against treating technology as a standalone answer to resilience pressures.

"While technology is useful, it cannot build resilience on its own and mustn't be treated as a quick fix for underlying challenges. The strongest results come from a cross-functional approach - aligning people, processes, and technology - so organisations can respond faster and more effectively when conditions change," said Eastwood.