Artificial Intelligence to double the rate of innovation in New Zealand by 2021
IDC study commissioned by Microsoft predicts Artificial Intelligence (AI) will double the rate of innovation
improvements and improve employee productivity gains by 1.5 times in New Zealand by 2021
New Zealand, 13 March 2019 – By 2021, Artificial Intelligence (AI) will allow the rate of innovation in New Zealand to double. Employee productivity
gains are also expected to increase 1.5 times, according to a new AI study released by Microsoft, in partnership with
IDC Asia/Pacific.
The research, “Future Ready Business: Assessing Asia Pacific’s Growth Potential Through AI*”, found more than three quarters of business leaders polled agreed AI is instrumental for their organisation’s
competitiveness. However only 51% of organisations in New Zealand have embarked on their AI journeys. Those companies
that have adopted AI expect it to increase their competitiveness by 2 times in 2021.
“Today, every company is a software company, and increasingly, every interaction is digital. To be successful in this
new world, organisations need to be a fast adopter of best-in-class technology. They also need to build their own unique
digital capabilities,” said Russell Craig, National Technology Officer, Microsoft New Zealand. “AI is the defining
technology of our time that significantly accelerates business transformation, enables innovation, boosts employee
productivity, and ensures further growth. Economies and businesses that have yet to embark on their AI journey run a
real risk of missing out on the competitive benefits that are enjoyed by leaders.”
Why adopt AI?
For the organisations that have implemented AI initiatives, the top five business drivers to adopt the technology were
(in priority order): Better customer engagement (46% of respondents named it as the number one driver); higher margins
(17%); higher competitiveness (13%); accelerated innovation (12%) and business intelligence (8%).
Louise Francis, IDC Research Director for Australia and New Zealand said: “Organisations that adopted AI last year saw
tangible improvements in those areas in the range of 19% to 26%. These organisations also forecast further improvements
of at least 1.7 times over a three-year horizon, with the biggest jumps expected in accelerated innovation, higher
competitiveness and better business intelligence.”
For Kotahi Logistics, a supply chain collaboration that works with exporters and importers, demand forecasting is
crucial to the success of its business. Until recently, Kotahi’s forecasting systems were largely manual and took up to
four days or more for the team to process. Microsoft worked with Kotahi to provide a solution and build automated
demand-forecasting tools that use AI technologies to analyse data and predict future demand and container capacity
requirements, shrinking the four days of manual forecasting time each month to 30 minutes.
“Forecasting supply chain needs is a challenge for most primary industry exporters, impacted not only by changing
markets but variables like climate and food system complexities. Being able to support our customers with faster, more
accurate container types and capacity allocations is improving their supply chains. Microsoft’s AI technology helps us
to create supply chain efficiencies, improve employee productivity and develop innovative customer-led solutions that
make exporting and importing easier for New Zealand businesses – and this is just the beginning,” said Kotahi’s Chief
Executive David Ross.
New Zealand needs to build on AI culture
The study evaluated six dimensions critical to ensuring the success of a nation’s AI journey. It uncovered that New
Zealand needs to build upon its culture, along with its capabilities and strategy to accelerate its AI journey.
“New Zealand is not yet fully prepared to take advantage of the opportunities presented by AI. To succeed in the AI
race, New Zealand must substantially improve its readiness for the technology. Organisations’ leadership need to make AI
a core part of their strategy and develop a learning agility culture. They have to continuously invest in this
transformative technology for the long-term success, and sometimes this will require forfeiting of expectation of
immediate returns,” Francis said. “There is also an urgent need for talents and tools to develop, deploy and monitor AI
models, along with the availability of a robust data estate with the adequate governance.”
Business leaders who are adopting AI face three top challenges: a lack of thought leadership and leadership commitment to invest in AI; lack of skills, resources and continuous
learning programs, and lack of knowledge on how to deploy and monitor AI solutions.
The study showed that to move ahead on their AI journeys businesses must create the right organisational culture. A significant majority of the business leaders and workers surveyed believe cultural traits that support AI journeys,
such as risk-taking, proactive innovation, as well as cross-function partnerships among teams, are not pervasive today.
“Overall, workers in New Zealand are more sceptical than business leaders about the cultural readiness of their
organisations,” addedFrancis.
“Business leaders must now embrace a new culture, where innovation and continuous learning are core components of the
organisational culture. It sets the stage for agility, adaptability and growth,” said Craig.
Organisations need to address skills challenge for an AI-enabled workforce
The study found that New Zealand’s business leaders and workers hold positive viewpoints about the AI’s impact on the
future of jobs. More than half (67% of business leaders and 55% of workers) believe that AI will either help to do their
existing jobs better or reduce repetitive tasks.
“When it comes to creating, replacing or eliminating jobs, 16% of business leaders believe that AI will create new jobs,
while 12% felt that the technology will replace workers. However, workers are overall slightly less convinced about the
impact of AI on job creation or replacement, with 8% expecting AI to replace jobs, and only 7% expect AI to create new
ones. At the same time, 30% of workers expect no impact to their jobs within the next three years,” said Francis.
The study also found workers are more willing to reskill than business leaders believe they are. Twenty per cent of
business leaders say it may be too difficult for workers to develop new skills, while only 4% of workers felt that it
was a challenge.
“Microsoft’s vision for AI is about people. AI technology cannot progress without them. This means millions will need to
transform themselves into skilled workers as well as learners that an AI future needs,” said Craig.
“It is heartening to see 87% of businesses prioritise skilling and reskilling of workers in the future. They plan to
invest as much, or even more, in human capital than in new technology. Even so, 67% of business leaders have yet to
implement plans to help their employees obtain the right skills, which is worrying in today’s context. They must have
the urgency to support the fundamental shift in training workers for the future.”
“The jobs of today will not be the jobs of tomorrow, and we have already seen demand for software engineering roles
expand rapidly beyond just the tech sector. However, building an AI-ready workforce does not necessarily mean an acute
need for technological skills,” added Craig.
The top three future skills required by business leaders in New Zealand include digital skills and critical thinking and
decision making, as well as quantitative, analytical and statistical skills. The demand for these skills is higher than
the existing supply.
The study also uncovered business leaders value soft skills more than workers expect. The biggest skills gaps identified
were in:
1. Leadership and managing others (11-pt difference between business leaders and workers)
2.Communication and negotiation skills (7-pt difference between business leaders and workers)
3. Literacy, numeracy and communication (5-pt difference between business leaders and workers)
AI Leaders: Robust strategy, capabilities and skills provide an edge
The study identified 6% of organisations which are AI Leaders in Asia Pacific. These organisations have already
incorporated AI into their core business strategy and nearly doubled their business benefits today as compared to other
organisations. Compared to the rest of the organisations in Asia Pacific:
For more information, visit https://news.microsoft.com/apac/features/artificial-intelligence/
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