AI Readiness Grapple with Challenges in New Zealand Amid Rapid Market Evolution and Anticipated Impact

News Summary:

Reality sets in for companies in New Zealand on their AI readiness, with only 19% in the country found to be fully ready to capture AI’s potential.

Organisations are investing heavily in AI, with 42% of companies allocating 10-30% of their current IT budget to AI deployment, however, returns are not yet meeting expectations.

There is a relentless sense of urgency with more than half (58%) of companies saying they have a maximum of a year to get their AI strategies right or face potential negative impacts

Cisco, the worldwide leader in networking and security, today announced findings from the Cisco AI Readiness Index in New Zealand. The index reveals that only 19% of organisations in New Zealand are fully prepared to deploy and leverage AI-powered technologies. This decline underscores the challenges companies face in adopting, deploying, and fully leveraging AI. Given the rapid market evolution and the significant impact AI is anticipated to have on business operations, this readiness gap is especially critical.

The Index is based on a double-blind survey of 3,660 senior business leaders from organisations with 500 or more employees across 14 markets in APJC. These leaders are responsible for AI integration and deployment within their organisations. The AI readiness index is measured across six pillars: strategy, infrastructure, data, governance, talent, and culture.

Acting with Urgency

AI has become a cornerstone for business strategy, and there is increasing urgency among companies to adopt  and deploy AI technologies. In New Zealand, 97% reported an increased urgency to deploy AI in the past year, driven primarily by the CEO and leadership team. Additionally, companies are committing a significant amount of resources towards AI, with 42% reporting that as much as 10% to 30% of their IT budget is being allocated to AI deployments.

Despite significant AI investments in strategic areas like cybersecurity, IT infrastructure, and data analytics and management, many companies report that returns on these investments are not meeting their expectations.

“As companies accelerate their AI journeys, it’s critical they adopt a comprehensive approach to implementation and connect the dots to link AI ambition with readiness. The AI Readiness Index reveals that to fully leverage the potential of AI, companies need a modern digital infrastructure capable of meeting evolving power needs and network latency requirements from growing AI. This must be supported with the right visibility to achieve their business objectives,”

Cisco New Zealand Country Manager, Jessica Mcfadden

“Whilst it’s great to see New Zealand leap ahead in some ways related to AI Readiness, overall we’re still significantly at risk when you consider that only 19% of respondents are found to be fully ready to capture AI’s potential. We must continue our innovation, uptake and growth of AI to remain in the top position.”

Key Findings

AI Readiness declined across multiple pillars, with infrastructure identified as a pain point: Companies are tackling with gaps in compute, data center network performance, and cybersecurity, amongst other areas.

Companies are investing, but gains fall short of expectations: Over the past year, AI has been a priority spend for organisations in New Zealand, with 42% allocating 10-30% of their IT budgets to AI projects. AI investments have focused on three strategic areas IT infrastructure (35% of companies are at full/advanced deployment), Cybersecurity (33%), and data management (29%). The top three outcomes they aim to achieve include improving efficiency of systems, processes, operations, and profitability; improving risk management and decreasing business risk; and growing revenue and market share for the business.

Despite increased investments, on average almost half of companies said they have either seen no gains or the gains have fallen short of their expectations, in augmenting, assisting, or automating current processes or operations.

Relentless pressure to succeed: There is mounting pressure and urgency from top leadership to implement AI technologies. Over half (52%) of companies report that the CEO and the leadership team are driving AI deployment, closely followed by board of directors (36%), and investors and shareholders (30%). As the clock ticks, businesses in New Zealand are accelerating efforts and increasing investments to overcome barriers and embrace AI-driven transformation. Notably, 36% of organisations plan to allocate more than 40% of their IT budget to AI investments in the next four to five years, a steep climb from 5% of companies who said they are allocating a similar portion of their IT budget to AI currently.

Companies recognise they need to do more to be better prepared to leverage AI. Across New Zealand, 53% rated improving scalability, flexibility, and manageability of their IT infrastructure as their top priorities, highlighting an awareness of the gaps that that must be addressed to improve overall AI readiness.

Addressing Skills and Talent Gaps

Despite unique challenges within each pillar, there is a common theme that has emerged across the board – that of lack of skilled talent. Companies highlighted this as the top challenge across infrastructure, data, and governance underscoring the critical need for skilled professionals to drive AI initiatives.

“As the race to adopt AI picks up pace, talent will be a key differentiator for companies. There is already a shortage of skilled talent across various aspects of AI. This means companies will need to invest in their existing talent pool to meet the growing demand. At the same time, it is crucial that all stakeholders – the private and public sectors, educational institutions, and governments – work together to develop local talent so that the entire ecosystem can benefit from the immense potential that AI offers,” says McFadden.

Additional Resources

NZ Report

AI Readiness – Global site

Take the AI Readiness Assessment

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