Artificial intelligence (AI) adoption is rapidly reshaping the global business landscape, and Australia and New Zealand (ANZ) are no exception.

In this episode of the #shifthappens podcast, Chandima “Chan” Kulathilake, Account Technology Strategist for ANZ Public Sector at Microsoft, shares valuable insights on AI adoption trends, challenges, and opportunities in the region. "We are at that tipping point… And I think that we're seeing some of the micro-level changes and the macro-level changes that's happening," says Chan.

Key Challenges in AI Adoption

While the potential of AI is immense, organizations face several challenges in its implementation. Chan identified some key hurdles in the region from Microsoft’s most recent Work Trend Index report:

• Skills gap: The report highlights that about 75% of leaders in ANZ believe they should hire individuals with AI skills. This indicates a significant skills gap in the current workforce.

• Leadership concerns: Approximately 70% of respondents worry about their organization's leadership when it comes to AI implementation, suggesting a need for more informed and proactive leadership in this area.

• Data quality and management: Digital skilling, maturity, and availability of quality data people can actually trust are crucial factors for successful AI adoption.

• Ethical and security considerations: Organizations must navigate challenges related to data management, accuracy, cybersecurity, and ethical use of AI.

Benefits and Opportunities of AI Adoption

Despite these challenges, Chan shared the potential benefits of AI adoption are substantial:

• Enhanced productivity: Chan shared his personal experience with Microsoft 365 Copilot: "It's been a game changer because I could start my week and kind of go in a single prompt, I can understand what my week is going to look like. And then I can get a summary of the meetings that I can't be at."

• Improved customer service: Chan explained businesses need to evolve and create value with the help of AI to provide better, faster, and more cost-effective service to customers.

• Democratization of technology: Make complex tasks more accessible. As Chan noted, some businesses are using AI to democratize software development, allowing them to serve more customers in meaningful ways.

• Career development: The LinkedIn Talent Report, which accompanied the Work Trend Index, revealed that helping employees develop their careers has risen to the fourth top priority for leaders in 2024, up from ninth place previously. Chan added that this shift is largely driven by employees' desire to learn about AI.

Leadership and Skill Development

One of the key themes that emerged from the discussion was the importance of leadership in driving AI adoption. Chan stressed the importance of creating an environment that encourages experimentation and learning. He shares the challenges faced leaders in navigating AI, "I guess the leaders acknowledge that the difficulty or the challenges they're having is identifying those use cases for AI and then obviously matching the right people to go and explore those use cases where AI would create value."

The conversation also touched on the growing demand for AI skills in the job market. Chan highlighted that about three-quarters of leaders in ANZ are looking to hire individuals with AI skills. He explained that these skills go beyond technical knowledge, "What we're seeing is that people are now starting to acquire the use of AI skills or how to use better prompt techniques, things like that."

As AI continues to reshape the business landscape, organizations must navigate the challenges and opportunities it presents. By fostering a culture of experimentation, investing in skill development, and staying attuned to regulatory developments, leaders can position their organizations to thrive in the AI-driven future.

The Regulatory Landscape in the Public Sector

In terms of the regulatory environment surrounding AI in ANZ. Chan noted that both countries are working on frameworks for the responsible and ethical use of AI in the public sector.

"Australia has done quite a bit of work around the regulatory side of things. And we're seeing that being talked about in frameworks for public sector on the responsible and ethical use of AI," he explained. "In New Zealand, I know that we've gone through a bit of challenges through changing government, but it's a priority for public sector to understand where they need to make changes or where do they need to influence those changes to come in."

While the regulatory process may not be moving as quickly as some might expect, Chan highlighted that progress is being made, and organizations are making conscious decisions about how and when to explore AI technologies within the existing frameworks.

Strategies for Embracing AI and Creating Value

Chan offers practical advice for leaders looking to maximize the opportunities presented by AI:

• Get hands-on experience: Start using AI to see whether you can actually apply it to solve a small use case before you move on to bigger projects.
• Learn from failures: Show a willingness to learn from your failures. You can't expect everything to be perfect on day one. You will fail and fail fast and then learn from it.
• Understand the problem and stakeholders: Look for areas in your work where AI can reduce friction or automate routine tasks. As Chan suggests, "Understand the data, who your stakeholders are, and most importantly for AI, understand who your subject matter experts are."
• Be open to experimentation: People do not fear change; they fear loss. Set the right mindset around the evolving technology and how you need to grow with it.
• Focus on high-value tasks: Use AI to automate routine tasks, allowing you to focus on more strategic, creative, and high-value activities. This not only increases productivity but also enhances job satisfaction and career growth.
• Embrace continuous learning: With AI rapidly evolving, continuous learning is crucial. Leverage online resources, workshops, and training programs to stay updated on AI developments and applications in your field.
• Develop AI-complementary skills: While technical AI skills are in demand, also focus on developing skills that complement AI, such as critical thinking, creativity, emotional intelligence, and complex problem-solving.
• Collaborate and share insights: Chan suggests creating "cohesive groups where you showcase to each other’s use cases - I use this to solve this problem, and this was the outcome." This collaborative approach can accelerate learning and adoption across teams and organizations.

Chan's insights offer a valuable roadmap for ANZ organizations and beyond, emphasizing the importance of practical experience, continuous learning, and a strategic approach to AI adoption. In embracing these changes and addressing the associated challenges head-on, organizations can harness the full potential of AI to drive innovation, improve efficiency, and create new value for their customers and stakeholders.