Artificial Intelligence to double the rate of innovation in New Zealand by 2021

 |   Microsoft NZ News Centre

IDC Microsoft Panel

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

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,” added Francis.

“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:

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*About the study Future Ready Business: Assessing Asia’s Growth Potential Through AI

  • 1,605 business leaders and 1,585 workers participated in this study, including 101 business leaders and 100 workers in New Zealand
    • Business leaders: Business and IT leaders from organisations with more than 250 staff were polled. Respondents were decision makers involved in shaping their organisation’s business and digital strategy.
    • Workers: Respondents screened have understanding of Artificial Intelligence today, and do not play a role in decision making process within their organisation.
  • 15 Asia Pacific markets were involved: Australia, China, Hong Kong, Indonesia, India, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Sri Lanka, Taiwan, Thailand and Vietnam.

Industries polled included agriculture, automotive, education, financial services, government, healthcare, manufacturing, retail, services and telco/media.

Graph illustrating AI impact on Rates of Innovation
Fig 1: AI impact on rates of innovation and employee productivity improvements today and in three years


AI improves business today and in 3 years
Fig 2: AI improves business today and in three years


Fig 3: AI Readiness in New Zealand (Scale of 0.00 – 4.00)
Fig 3: AI Readiness in New Zealand (Scale of 0.00 – 4.00)


Fig 4: Cultural Traits in an Organisation to Support AI Journeys
Fig 4: Cultural Traits in an Organisation to Support AI Journeys


Fig 5: Perception of AI’s impact on jobs (Business Leaders and Workers)
Fig 5: Perception of AI’s impact on jobs (Business Leaders and Workers)


Fig 6: Traits of an AI Leader against Followers
Fig 6: Traits of an AI Leader against Followers

To review the full IDC/Microsoft Research please click here.

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