Organisations in Australia and New Zealand are committing a larger portion of their technology budgets to generative artificial intelligence (AI) investments than their global counterparts, though they often encounter higher-than-expected staffing costs.
The "Radical ROI of Generative AI" report by Snowflake, conducted with the Enterprise Strategy Group, reviewed the AI engagement of 1,900 business and IT leaders from nine countries. The findings highlight that 32% of ANZ organisations are directing more than a quarter of their technology spending toward generative AI over the next year, compared to 25% globally.
Despite this higher investment level, ANZ's adoption of AI comes with some financial and strategic challenges. "Local organisations are funding gen AI at a rate above the global average which bodes well for the development and growth of AI in our region," said Theo Hourmouzis, Senior Regional Vice President, Australia and New Zealand and ASEAN at Snowflake. He added, "While there is a clear appetite and drive to be ahead of the AI curve, there are hurdles that local business and IT leaders are at pains to overcome – the two biggest challenges being talent and data."
The report indicates that ANZ organisations are prioritising customer satisfaction through AI initiatives, with 53% focusing on enhancing customer experiences compared to 43% globally. Consequently, 53% of ANZ respondents are emphasising customer-facing AI projects, whereas 47% are concentrating on initiatives that benefit employees internally, a reversal of global priorities.
Hourmouzis remarked, "Improving the customer experience is where local organisations are focusing their gen AI strategy and for many businesses this is providing clear benefits already. Major local customers across industries like retail, banking, aviation, and the public sector are using Snowflake to make better decisions quicker, and are already reaping the benefits of their customer-focused strategies."
Challenges manifesting from generative AI adoption include the unexpected costs, particularly related to staffing. ANZ organisations reported a 44% ROI from AI investments but acknowledged unexpected expenses in scaling staff needed for these innovations, with 63% facing higher costs than anticipated compared to 48% globally.
"It's important to note that the industry is still in the relative infancy of AI adoption," expressed Hourmouzis. "These challenges, including the talent issue, will look like a drop in the ocean 10, 20, and 30 years from now once AI evolves into a normal, everyday part of our business lives."
Data-related challenges are also prominent, with a higher percentage of ANZ organisations grappling with identifying suitable use cases for AI (71% compared to 54% globally) and facing difficulties due to data diversity, management, and silo barriers.
To overcome these pressing issues, Hourmouzis suggests, "The first step for local businesses is to address the data issue. Without an effective data strategy, they will struggle to have an effective AI strategy. Fix the foundations, and the rest will fall into place."
Amidst these challenges, the report identifies an opportunity for businesses to unlock potential by leveraging a unified data platform, potentially leading to more accurate and meaningful AI outcomes.
