AI uptake subdued as companies look to data first

Published on the 30/01/2024 | Written by Heather Wright

But Australia punches above weight for AI effectiveness…

Forget AI, Kiwi companies are placing their trust in data driven insights and workforce enablement – along with a more business-friendly government – to deliver the biggest opportunities for business in the year ahead.

The Datacom survey of 200 senior business leaders was carried out at the end of 2023 post-election and shows data-driven insights to support decision making is the key opportunity identified by businesses, at 33 percent. Workforce enablement tools (23 percent) follows, with digital skills training and generative AI each garnering 20 percent.

“This more cautious approach is nonetheless yielding business value.”

When it comes to each organisation’s own top IT priorities – where companies could choose up to three priorities – it’s data (34 percent), automation (31 percent) and cybersecurity (25 percent) that are leading the charge.

A whopping 87 percent of companies said no to AI being a top priority with MDs and senior managers viewing it least favourably. Just 13 percent of companies with 100-199 employees were making AI a priority, with 14 percent of those with more than 200 employees planning to do so.

Data from the survey also shows the majority (70 percent) of companies are confident they can safely digitise at pace and are well positioned to keep up with technology advancements.

Datacom’s results come as a Forsyth Barr report also shows modest adoption and investment in AI for Kiwi companies. The New Zealand Corporate AI Survey shows many corporates are ‘stuck in first gear’, with little change in companies AI stance in the past two years.

Also adding to the glut of AI-focused reports is Infosys. Its research arm, the Infosys Knowledge Institute,  says genAI spending growth in A/NZ is among the highest in the Apac region and globally, though it lags Europe and North American spend.

It says Australian companies will spend $159 million on genAI this year, up 150 percent on last year, with nearly a third of Australian companies saying they were either implementing or had implemented genAI solutions. In New Zealand, growth is forecast to hit 125 percent but off a much lower base, taking the 2024 spend to $9 million.

The report points to the global shortage of GPUs, which drive AI computing power, as a factor in the lower AI spend in Australia and New Zealand and says that could play well for local companies.

“Coming later to the technology, Apac countries are arguably well poised to benefit from the lessons learned from other regions that have been more enthusiastic in their approach,” the report says.

“For instance, our analysis shows that A/NZ companies generally spend more effectively on AI and create more business value than most countries in Asia, Europe and North America.

The Infosys Generative AI Radar, drawn from a study of 300 Australian and 100 Kiwi respondents, gives Australia an effectiveness rating of 17.4, saying Australian companies are putting their spend to good use and punching above their weight to demonstrate higher effectiveness countries elsewhere, relative to the amount they are spending as a proportion of their GDP. The score means that increasing spend on generative AI by 0.01 percent of GDP would increase the proportion of companies creating business value in Australia by around 17 percentage points.

Australia’s ranking puts it well ahead of North America, which garnered a rating of 11.3 and Europe on 6.4. New Zealand too, is tracking ahead of North America and Europe on 11.6.

But even Australia’s effectiveness score pales in comparison to that for China, which is on 37 percent.

“The region as a whole spends its money more effectively and creates more business value from its initiatives,” the report says.

“Although Australia and New Zealand are progressing more slowly with generative AI, the effectiveness scores suggest that this more cautious approach is nonetheless yielding business value. This is perhaps due to early support for AI from their governments to build AI maturity.”

The Australian government has put money behind AI, with its Digital Economy Strategy including an AU$124.1 million AI Action Plan. Launched in 2021 it has a goal of positioning in the country as a global leader in AI by 2030.

“Data [in 2021] suggested that most Australian businesses were at an initial ‘thinking about it’ phase, whereas our new research has found that 44 percent have been at least experimenting with generative AI and defining proofs of concept over the past 12 months.”

Nearly a third said they were implementing or had implemented generative AI or had established use cases that create business value.

In New Zealand, the report notes adoption has been slower, with more than half of respondents saying they were experimenting with genAI or defining proofs of concept, and just two percent deriving business value.

In another example of A/NZ companies forging their own paths, midsize local companies are the leading adopters – bucking the trend seen in North America and Europe where it’s the big guns leading the charge.

“As a result, APAC has the smallest proportion of companies expected to spend more than $10 billion on generative AI in the next 12 months.”

Interestingly, just 13 percent of New Zealand companies say they’re concerned about ethics, bias and fairness when it comes to generative AI. In comparison, 29 percent of Australian companies say they’re concerned about those areas.

Data privacy and security, however is the top concern across A/NZ.

Australia has proposed amendments to existing legislation that would require transparency around targeting, algorithms and profiling, among other things.

Across A/NZ 10 percent of leaders are bracing for the genAI initiatives to negatively affect their reputations – well ahead of the three and five percent in North America and Europe, respectively.

Concerns are also running high locally over potential impact on business models.

Moving away from AI, Kiwi businesses are expressing optimism over the future of the local tech sector, with the Datacom report showing 69 percent of respondents believe that the incoming government’s policies will boost the tech sector.

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