Business Technology Report 2023: AI and cybersecurity

Garreth Hanley:

This is With Interest, a business, finance and accounting news podcast, brought to you by CPA Australia.

Simon Downes:

Hello and welcome to With Interest. I'm Simon Downes External Affairs Lead here at CPA Australia.

In November 2022, something called ChatGPT, or chat generative pre-trained transformer, suddenly entered the lexicon of business owners and managers all over the world, as well as anyone else interested in the latest tech.

ChatGPT has received unprecedented publicity, largely due to its potential to revolutionise how we communicate and analyse information. It's widely accessible and provides a mainstream glimpse into the future potential of AI. So approaching one year on, what impact is AI, as well as other forms of digital technology, having on the world of business? That's one of the questions that CPA Australia's Third Annual Business Technology report aimed to answer.

Joining me to discuss the main findings from this year's report is Senior Manager Business and Investment Policy here at CPA Australia, Gavan Ord. Hello Gavan.

Gavan Ord:

Hello, Simon, and thanks for having me on the podcast.

Simon Downes:

Gavan, I mentioned ChatGPT in the introduction, but in reality, that's at the more advanced end of AI products the businesses may be adopting. So has the uptake of AI services in general increased in the last year? Or not?

Gavan Ord:

Given the publicity surrounding ChatGPT, which you've mentioned Simon at the top of the podcast, it's a bit surprising to us that not more businesses have adopted AI in the past 12 months. Our survey found 55% of respondents said their business used AI in the past 12 months, and that was actually the same result as 2022.

And hopefully during the course of this podcast, we'll maybe get to some of the reasons why business are not necessarily adopting ChatGPT and other AI technology as quickly as individuals are.

Simon Downes:

It's still a healthy number that are using AI in some form. So what kind of AI products are accounting and finance professionals actually using?

Gavan Ord:

Well, obviously we know that many members, many accountants, are actually using ChatGPT or at least experimenting with it. Maybe they're not necessarily using it in a business sense, because we discourage people from putting in confidential information into ChatGPT, but we know they're using ChatGPT.

Most accounting software has AI built in, or people can purchase an AI bolt-on for their accounting software. So I think most accounting professionals are using the AI products already built into their accounting software.

Simon Downes:

What is your view on what's holding more businesses back?

Gavan Ord:

So I think obviously large numbers of people have experimented with ChatGPT since November 2022, but I think what's holding businesses back from using more AI, in particular ChatGPT, is that it's not really the right product in a business environment. You shouldn't be putting confidential business information into ChatGPT. So for this reason, ChatGPT is probably not the right AI tool for many businesses.

Now, that doesn't mean that those businesses are digital laggards or AI laggards, many of them are just looking for a more secure, business friendly AI tool. But also at the smaller end of businesses, at the micro and small end of the business spectrum, we know from other research that we do such as a small business survey that a combination of factors means that many small businesses don't use new tech, and that's really to do with time, resources and knowledge. So many micro and small business owners are just not looking at new tech because they just don't have the time to.

Simon Downes:

The business technology survey that we've just recently published surveyed almost 700 respondents from across the Asia Pacific region. What did the report tell us, Gavan, about how technologies are used differently across those different markets?

Gavan Ord:

That's a good question, because there were different results between markets. So we did find that respondents in China in particular were more likely to say their business used AI. So I think it was around about 68% of businesses used AI in China, compared to 41% in Australia. So there is a higher uptake in China than there is in Australia and New Zealand.

Simon Downes:

Is there a view amongst businesses, do you think, that AI is really just a bit of a fad that they don't really need to dive into, and the fuss will pass in time?

Gavan Ord:

Yeah, I think that's also a really good question. And I know that there will be people out there that have seen other tech fads come and go, and they're probably thinking ChatGPT and AI is another one of those fads. However, AI has been around for some time. So this is actually not new, it's just ChatGPT is actually new. And also another survey data shows that those that are using AI are finding the benefits for their business.

And also that some of the world's largest tech companies are pouring billions, and I mean billions, into the development of AI tools. So AI will only get better, and its ability to improve business will only grow, so it's here to stay, and it's not a fad. It will get bigger, and it will become more and more a normal part of business.

Simon Downes:

Well, it's interesting to hear your experience there of the amount of money businesses are investing. Obviously the key thing here is how a business would make AI profitable. How does it affect their bottom line? And you're saying that generally those that adopt the new technologies are proving more profitable.

Gavan Ord:

Our surveys showed that 64% of businesses using AI reported their profitability increased in the past 12 months. And of those of not using AI, 52% reported their profitability increase. So there definitely is a difference between those using and not using AI, and how that impacts profitability.

Simon Downes:

And of course a business's ability to adopt these kinds of new technologies will be dependent on lots of factors. Their resourcing, how they would integrate it into their existing systems, what's your advice to a business that might be fearing being left behind by what's going on?

Gavan Ord:

So I think there's a few things here. First of all, they should be looking at developing and implementing a digital transformation strategy. And that's really about how they'll move from their current technology state to where they want to get to. And if they don't know how to do that, there will be external advisors that can help set up that strategy.

Secondly, I think identify areas where AI can enhance your operational efficiency, lower costs and improve the customer experience. And I mentioned those three specifically, because the survey results show that they are the three biggest drivers of technology adoption. So if you can identify where it improves efficiency and lowers costs and improves the customer experience, you're more likely to get an investment into AI, or the board to agree to that.

But also you need to be conscious of the risks that AI has. The data can sometimes be misleading. There can be inherent bias within AI, and there is obviously ethical challenges around AI. Also, we do know that there is obviously a shortage of technology talent out there. So I would be looking where possible to try and upskill your existing employees in technology, particularly the technology you've got at the moment. And wrapping this all up, you really just still need to focus on cybersecurity. There's no use to make a big investment in digital technology and not make the commensurate investment in cybersecurity.

Simon Downes:

We may come onto cyber a bit more in a moment, because the technology report focused on a lot more than just AI. We're interested in which technology initiatives are proving most popular amongst businesses overall. So what did you find?

Gavan Ord:

So I mentioned a digital transformation strategy just before. So 69% of businesses told us that they have a digital transformation strategy, and that if you do have a digital transformation strategy, you actually are more likely to be profitable. In terms of the most popular technology initiatives in 2023, the top one is improving cybersecurity protections, that comes out on top, number two is increasing technology investment, and number three is upskilling technology capabilities of existing employees.

Simon Downes:

And how does the use of technologies differ between businesses large and small? I imagine that there is quite a difference.

Gavan Ord:

Yeah, this is a really interesting finding of this research and other research we have done, that smaller businesses are less likely to be undertaking technology initiatives and having a digital transformation strategy, their tech uptake is lower than large business. So you might ask why might that be the case? You might think smaller businesses are more agile and can adapt quickly. Well, the fact is that smaller businesses don't have the resources, don't necessarily have the skills or the knowledge to look at emerging tech and work out how best to apply it in their business.

But on the other hand, it's not to say that large businesses always get it right. Large businesses do struggle with technology adoption and our survey results show that they really do struggle with replacing complex legacy systems. So that's the struggle for large business. For small business, it's around the resourcing, the skills, the knowledge of the technology.

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Simon Downes:

A lot of small businesses may consider themselves to be less at risk of cyber attacks. We know it's an area of priority for many, but not all. Maybe they struggle with the resources to prioritise the threat, but they can of course still be at risk. So what advice can we offer those businesses?

Gavan Ord:

Yeah, so I'll give three bits of advice. Number one, all businesses are at risk of being cyber attacked. Number two, all businesses are at risk of being cyber attacked. Number three, same again, all businesses are at risk of being cyber attacked. So just remember that being small doesn't make you a lesser target. Cyber criminals, just like other criminals, are opportunistic. They're looking for targets of least resistance. And if you think your business is small and will be ignored, I think you are very much wrong. So you need to allocate resources not only to the technology around cybersecurity, but you also need to allocate resources to raise your employees' cybersecurity awareness.

Many cybersecurity attacks are not because of a technology deficiency, but a humanware, a people deficiency. In terms of what measures you can implement, particularly if you're a smaller business, governments around the world have a lot of good guidance around how to mitigate cyber risks. In Australia, the organisation called the Australian Cyber Security Centre, they have released something called the Essential Eight, and any listeners out there who are just worried about their cybersecurity, have a look at this Essential Eight. And obviously, if uncertain, go and seek professional advice.

Simon Downes:

As I mentioned, this is the third year of our business technology report, and we previously reported on a skills shortage in the area of new technology. Well, what did this year's report tell us about what employers are doing to combat the shortage, Gavan?

Gavan Ord:

So I think there's a few things here. First of all, it's a global skill shortage and it continues. And the overwhelming majority of respondents told us that they are experiencing a shortage of technology talent. But what was positive is that only a very small percentage of businesses paused or cancelled projects because they didn't have sufficient technology talent.

Instead, the data showed us what businesses are doing to overcome this shortage is they're one, upskilling or reskilling existing employees to help them overcome the situation, two, they're outsourcing to third parties which might have the talent, and three, and this is interesting, they're increasing their investment in automation. So they're using more technology, automated technology, to help them overcome the shortage of tech talent, and that automated technology can assist them in areas where they might traditionally have used a person.

Simon Downes:

Gavan, I'm going to ask you to get your crystal ball out for a moment, and thinking ahead to this time next year, do you expect we'll see a step change in the use of AI in business, and will it be a significant change?

Gavan Ord:

I think our listeners can maybe type that question into ChatGPT and see what they get. But I think yes, there will be a step change, maybe not in the next 12 months, but at least in the next three years. And that's because there are more AI tools coming onto the market, and those AI tools are more private, so they're more business friendly, they're more powerful, and they're becoming more accessible. And so we'll see businesses that are already using AI, and as we've discussed, most businesses are already using AI, those businesses will increase the use of technology, and those that are not using AI will probably feel more safe to use AI.

And our data shows that the three top drivers of tech adoption, and I mentioned this before, is number one, improving operational efficiency, number two, improving customer experience, and number three, cost savings. AI actually has the potential to tick all three boxes, hence the business case for increasing AI adoption is strong. And that's why we're going to see a step change in AI adoption in the near future.

Simon Downes:

I think on an individual level, one of the things that people may be wondering is what impact will AI have on them personally? So do you expect AI to have a significant impact on finance and accounting jobs themselves?

Gavan Ord:

Potentially, and mostly in a positive way. So some people are worried, but other people I speak to are actually quite excited, because AI and other technology like robotic process automation actually offers the opportunity to remove those repetitive mundane tasks many accountants or finance professionals do, and that then frees them up to do more value adding tasks.

In terms of AI in particular, it also offers the opportunity to provide deeper and quicker insights into data, so to extract more information and more trends from that data, and this allows accountants to provide more actionable advice to management and clients.

To me, it's in a sense AI will allow accountants to become better financial storytellers. But it's obviously not without risk. Accountants in using AI need to maintain their professional judgement and professional scepticism. Just because AI tells you something doesn't necessarily mean it's correct. So always keep questioning it and understand that little black box, that algorithm that sits behind AI, and why it's giving you a particular answer.

Simon Downes:

Whatever technologies might we see businesses focusing on or prioritising in the next 12 months, do you think?

Gavan Ord:

Our surveys show the top three technologies businesses are looking to focus in on the next 12 months is data analytics, business intelligence software and cybersecurity software. So they're obviously looking to try and sweep their data, get more information from their data, and use that to improve their operational efficiency. And given the state of the economy, businesses are obviously looking to improve their efficiency, and looking at opportunities to reduce costs.

Simon Downes:

The Business Technology Report is something that we are very proud of here at CPA Australia, and that we put a lot of time and effort into. It's given us some really great insights, Gavan. Is there any final messages you might give to any business owners and managers, particularly small business owners and managers listening about the key takeouts for them, what they should be taking out from the report?

Gavan Ord:

I think the key takeouts are that using emerging technology can improve the profitability of their business. If you are looking to improve your business, emerging technology offers that opportunity. It's not without risks, and if you're not too certain about which way to go, I think go and seek professional advice. They will be able to help you build that strategy, that digital strategy, which can take your business to that next step.

Simon Downes:

Well, that's all we've got time for today. Thanks very much to our guest expert, Gavan Ord, Senior Manager Business and Investment Policy here at CPA Australia. A link to this year's Business Technology Report is included in the show notes. So from all of us here at CPA Australia, thanks for listening.

Garreth Hanley:

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