What tech worries keep executives up at night? Technology Users Association of NZ (Tuanz) head Craig Young interviewed 36 chief information officers and other senior leaders at big organisations like Foodstuffs, Woolworths, AA Insurance, Transpower,
Turners and Zespri for his organisation’s report Digital Priorities in 2024.

Concern about recruitment, immigration settings and supply chains are out and a focus on emerging technologies like AI and worries about budget squeezes are in, according to Tuanz’s Digital Priorities in 2024 report, released this morning.

One of 2023′s top priorities, “a carbon-free future” has also slipped off the list at a time of “resource constraints”.

Tuanz chief executive Craig Young found chief information officers (CIOs) and other decision-makers had outward-looking concerns over a lack of Government leadership, from the new challenge of artificial technology to long-standing concerns like cyber security and closing the digital divide.

The concerns come at a time when two global surveys (noted in Tuanz’s report) found NZ slipping in digital competitiveness – and by Young and others’ analysis, Budget 2024 had little for the sector. In fact, some programmes were trimmed.

“With many organisations facing budget or funding constraints, it is likely that more resources in 2024 will be allocated to ‘keeping the lights on’ and a heavy operational focus rather than investment in new projects,” the report says.

AI becomes dining-room conversation

All the CIOs were keenly aware of the rise of AI.

But overall, “the budget for innovation and implementation of new types of services is really slim”, Young told the Herald.

Many of those surveyed have had machine learning and other AI-related initiatives in place for two decades. But as one of the CIOs told Young, “The difference last year was it became a dining-room table conversation.”

With the rise of ChatGPT and its peers, the focus has shifted from using machine learning for behind-the-scenes tasks to staff wanting to use generative AI.

Now there was “pressure on CIOs from staff and boards and execs saying, ‘When are we getting AI and what can we do with it?’” Young says.

“And the CIOs are trying to figure out what those use-cases are. They’ve personally tried the technology, but they really haven’t worked out the major use-cases. They’re obviously being sold to, and AI is turning up in the products they’re buying anyway. So if you’re a Google shop, you’re getting Gemini popping up everywhere, and if you’re a Microsoft shop, Copilot is creeping in.”

Generative AI was seen as “a multiplier, not a subtractor”. It was unlikely to make any roles redundant – at least over the next two to three years.

The general consensus among CIOs was “AI is more likely to augment human workers, significantly reshape some roles, increase throughput, free up human workers to focus on higher-level and higher value tasks, and introduce the need for new skill sets and ways of thinking”.

Big demand for AI, smaller budgets for innovation

CIOs see AI as a technology that “can’t be ignored”, but it has also arrived at a time when many are still in the midst of migrating systems to the cloud and the economic slowdown is crunching budgets across the board.

“It’s a particularly difficult time for organisations to face up to what’s quite a disruptive technology, and also to look at transforming their core systems, because we are going through a time when resources are tight and budgets are tight,” Young says.

“We did get a sense in the report that CIOs are getting budget for IT – but it’s mainly about keeping the lights on. The budget for innovation and implementation of new types of services is really slim,” Young says.

NZ slipping in digital competitiveness rankings

New Zealand’s overall digital competitiveness ranking in the Portulans Network Readiness Index fell from 19th to 23rd over the past year, while the IMD World Digital Competitiveness report had NZ 25th out of 64 countries for 2023.

In terms of AI or cybersecurity, “New Zealand has no legislation or regulation beyond the Privacy Act which concerns our digital leaders. Our low NRI rankings in cybersecurity, privacy protection, and regulation of emerging tech also suggest this should be a top priority”, the Tuanz report says.

NRI had NZ 33rd for regulating emerging tech, 56th for cyber security and 65th for privacy protection.

While businesses don’t love red tape, they also know some form of regulation is coming in areas of AI – though whether it will be along the lines of the EU’s AI Act or the US’ more liberal presidential directives is unclear. And in the meantime, Buddle Findlay special counsel Damien Steel-Baker says they don’t want to invest in systems that may or may not be outlawed by future rules. That stifles innovation.

AI amplifies cybersecurity features

Cybersecurity remains a huge concern – particularly AI’s capacity to facilitate more sophisticated hacks and scams.

Last year, Zuru’s chief financial officer was targeted by a deepfake AI video purporting to be his boss Nick Mowbray during a Teams call, the Tuanz report notes.

While that attack was ultimately thwarted, the report notes “already this year a finance worker in Hong Kong was misled by deepfake technology, paying out NZ$42.1 million after believing he was talking to his company’s chief financial officer”.

“For the firms or the companies that have already got targets on their backs, it’s going to make it a lot easier to attack them,” Chapman Tripp chief digital officer Sean Bishop told Young during his interviews for the report.

Education and awareness will play a central role in protecting against these attacks, the report says.

Outward worries

“The other interesting thing we found with the CIOs is they weren’t just worried about themselves. They’re worried about their customers and clients. They’re also concerned about leadership from Government; they don’t see a national approach to security at the Government level, which would then give them some leadership in their space.”

Digital equity was another concern – and the divide between the digital haves and have-nots appeared to widen with Budget 2024, Young says.

“The Budget was pretty uninspiring when it came to technology and innovation, with significant cuts across the board or just programmes that have been ceased or have not been provided funding. There are some really important projects that I think will suffer.

“We’re seeing things like the programme within the Ministry of Education to provide free broadband access to low socio-economic homes and students that will end.

“[The] Digital Boost programme [for small to medium business tech literacy and skills] looks like it’s got a budget problem because there was nothing in there this year.”

Young adds, “While [CIOs] are not so concerned this year about immigration settings, they’re still concerned about getting the right people into the right places. They’re concerned this Government has stopped work on the Industry Transformation Plans that were looking at skills [ITPs were halted in December] and they’re worried about the pipeline of young people to flow into technology roles – and that includes Māori, Pasifika and women as well.”

Young says more inclusivity is a social good in itself, but that there are also more blunt financial reasons for more diversity and helping low-income households access broadband, from increasing our skills base before the next tech talent crunch inevitability hits to digitising more Government and private-sector services.

Where to from here?

The Digital Priorities recommendations include:

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.