1 00:00:03,900 --> 00:00:07,500 Jennifer Duke: Welcome to the Fear & Greed business interview. I'm Jennifer Duke. 2 00:00:07,830 --> 00:00:11,250 Jennifer Duke: Despite all the talk around AI and ChatGPT, it seems 3 00:00:11,250 --> 00:00:15,179 Jennifer Duke: that uptake of the technology might have actually stalled. CPA 4 00:00:15,179 --> 00:00:18,750 Jennifer Duke: Australia, the country's leading professional accounting body, has released its 5 00:00:18,809 --> 00:00:22,020 Jennifer Duke: annual business technology report. They're looking at the use of 6 00:00:22,020 --> 00:00:25,440 Jennifer Duke: technology within businesses across the region and there are some 7 00:00:25,440 --> 00:00:28,620 Jennifer Duke: real concerns over the safe and secure use of AI. 8 00:00:29,010 --> 00:00:31,710 Jennifer Duke: Gavan Ord is the Senior Manager of Business and Investment 9 00:00:31,710 --> 00:00:34,860 Jennifer Duke: Policy for CPA Australia. Gavin, welcome back to Fear and Greed. 10 00:00:35,460 --> 00:00:37,199 Gavan Ord: Thanks, Jen, and thanks for having me back on. 11 00:00:37,920 --> 00:00:39,900 Jennifer Duke: So were you surprised at all that the uptake of 12 00:00:39,900 --> 00:00:41,668 Jennifer Duke: AI has stalled in your report? 13 00:00:42,450 --> 00:00:46,708 Gavan Ord: Well, given the publicity that AI has had, particularly since 14 00:00:46,710 --> 00:00:51,210 Gavan Ord: ChatGPT was launched in November last year, we are surprised. 15 00:00:51,479 --> 00:00:56,820 Gavan Ord: The survey showed that 55% of businesses used AI in 16 00:00:56,820 --> 00:00:59,910 Gavan Ord: the last 12 months. That's actually the same result as 17 00:00:59,910 --> 00:01:04,709 Gavan Ord: in 2022. So we would've thought, yes, the result would 18 00:01:04,709 --> 00:01:08,730 Gavan Ord: be higher. But then, when we talk to members, we 19 00:01:08,730 --> 00:01:13,860 Gavan Ord: find that, yes, individually people are experimenting with ChatGPT, but 20 00:01:13,860 --> 00:01:20,010 Gavan Ord: some businesses are more cautious about the technology. 21 00:01:20,970 --> 00:01:23,190 Jennifer Duke: And is that caution behind the stall, do you think? Are there 22 00:01:23,670 --> 00:01:26,190 Jennifer Duke: some other factors there that are slowing down the uptake? 23 00:01:27,089 --> 00:01:29,369 Gavan Ord: So I think there's three things. From a business point 24 00:01:29,369 --> 00:01:33,930 Gavan Ord: of view, it's definitely caution about the open source nature 25 00:01:33,930 --> 00:01:37,230 Gavan Ord: of ChatGPT, that you should not be using it to 26 00:01:37,230 --> 00:01:41,219 Gavan Ord: put in confidential information. So that's the primary one, and 27 00:01:41,219 --> 00:01:43,950 Gavan Ord: businesses are trying to work out how to use it 28 00:01:43,950 --> 00:01:49,409 Gavan Ord: safely and securely. Two, I think businesses are still working 29 00:01:49,530 --> 00:01:52,170 Gavan Ord: out what are the right AI tools for their business. 30 00:01:52,710 --> 00:01:55,950 Gavan Ord: And I think, for businesses, ChatGPT is not necessarily the 31 00:01:55,950 --> 00:02:00,480 Gavan Ord: right tool. And three, we know that at the micro 32 00:02:00,480 --> 00:02:03,630 Gavan Ord: end, the very small business end of the market, they 33 00:02:03,630 --> 00:02:06,509 Gavan Ord: just don't have the time to consider how to use 34 00:02:06,840 --> 00:02:07,890 Gavan Ord: AI appropriately. 35 00:02:08,970 --> 00:02:10,950 Jennifer Duke: And people who are listening might not be aware, but 36 00:02:10,950 --> 00:02:13,710 Jennifer Duke: we've actually worked together before because I used to work 37 00:02:13,710 --> 00:02:16,020 Jennifer Duke: for CPA. And one of the things that we always 38 00:02:16,020 --> 00:02:19,739 Jennifer Duke: talked about all the time was digital transformation strategies, getting 39 00:02:19,740 --> 00:02:22,919 Jennifer Duke: businesses to grasp that digital innovation. So what does a 40 00:02:23,609 --> 00:02:27,419 Jennifer Duke: transformation strategy look like? Why is it important? And why 41 00:02:27,419 --> 00:02:29,070 Jennifer Duke: are they less common for small businesses? 42 00:02:29,940 --> 00:02:33,660 Gavan Ord: So, first of all, digital transformation strategy, we find that 43 00:02:34,110 --> 00:02:37,829 Gavan Ord: most businesses have one. And we find that businesses that 44 00:02:37,830 --> 00:02:40,260 Gavan Ord: do have one are actually more likely to be profitable. 45 00:02:40,260 --> 00:02:44,910 Gavan Ord: So a digital transformation strategy is something which just sets 46 00:02:44,910 --> 00:02:47,700 Gavan Ord: out how the business is going to move from its 47 00:02:47,700 --> 00:02:53,040 Gavan Ord: current technology state to a new technology state. So it's 48 00:02:53,040 --> 00:02:56,700 Gavan Ord: not necessarily that complicated, but if you are thinking about 49 00:02:56,700 --> 00:02:59,759 Gavan Ord: how to implement a strategy, you're not certain, obviously go 50 00:02:59,760 --> 00:03:03,600 Gavan Ord: and seek advice of a professional. But the main thing is, 51 00:03:03,600 --> 00:03:05,130 Gavan Ord: it sets out how you're going to move from where 52 00:03:05,130 --> 00:03:07,560 Gavan Ord: you are to where you want to be. And as 53 00:03:07,560 --> 00:03:10,918 Gavan Ord: I said before, those who do it are more likely to be profitable. 54 00:03:11,550 --> 00:03:13,710 Gavan Ord: At the small scale, going back to your question... And 55 00:03:13,710 --> 00:03:16,019 Gavan Ord: as you said, we've worked a lot on the small 56 00:03:16,020 --> 00:03:21,090 Gavan Ord: business side of things. For small businesses, they're just very 57 00:03:21,090 --> 00:03:24,690 Gavan Ord: time poor. They're resource poor. They don't necessarily have all 58 00:03:24,690 --> 00:03:28,200 Gavan Ord: the knowledge of what's going on. So many of them 59 00:03:28,200 --> 00:03:30,480 Gavan Ord: don't even have a strategic plan, let alone a digital 60 00:03:30,480 --> 00:03:34,109 Gavan Ord: transformation plan. That doesn't mean they're not tech- savvy, it 61 00:03:34,109 --> 00:03:36,630 Gavan Ord: just means they haven't got a plan to move from 62 00:03:36,630 --> 00:03:38,040 Gavan Ord: where they are to where they want to go. 63 00:03:38,790 --> 00:03:41,400 Jennifer Duke: Gavan, is there a role for government here to help 64 00:03:41,400 --> 00:03:44,940 Jennifer Duke: smaller businesses get a plan, figure it out, use AI, 65 00:03:44,940 --> 00:03:45,630 Jennifer Duke: things like that? 66 00:03:46,679 --> 00:03:49,860 Gavan Ord: I think there's some role. There's no need for large 67 00:03:49,860 --> 00:03:53,880 Gavan Ord: scale government intervention, but there clearly is an issue that 68 00:03:54,150 --> 00:03:58,320 Gavan Ord: smaller businesses are less tech- savvy overall than larger businesses. 69 00:03:59,100 --> 00:04:01,680 Gavan Ord: We look at last financial year, the government had a 70 00:04:01,680 --> 00:04:06,389 Gavan Ord: technology investment boost, that ended. We need policies like that 71 00:04:06,389 --> 00:04:11,010 Gavan Ord: that encourage tech investment. We also need policies that encourage 72 00:04:11,010 --> 00:04:14,520 Gavan Ord: businesses to go and seek professional advice, which includes in 73 00:04:14,520 --> 00:04:17,310 Gavan Ord: the technology space. Because, as I said before, there's a 74 00:04:17,310 --> 00:04:22,020 Gavan Ord: strong connection between tech investment, tech strategy, and profitability. 75 00:04:22,740 --> 00:04:24,719 Jennifer Duke: And part of that probably comes back to having the 76 00:04:24,719 --> 00:04:28,409 Jennifer Duke: right tech skills. Is there an upskilling piece in this picture? 77 00:04:29,250 --> 00:04:32,700 Gavan Ord: Look, it's a really interesting question because we did ask 78 00:04:32,760 --> 00:04:37,110 Gavan Ord: in the survey around tech talent and the shortage of 79 00:04:37,110 --> 00:04:40,290 Gavan Ord: tech talent. First of all, I would say it's not 80 00:04:40,290 --> 00:04:43,500 Gavan Ord: an Australian specific issue, it's a global tech talent shortage. 81 00:04:44,370 --> 00:04:48,930 Gavan Ord: And the overwhelming majority of respondents said they are experiencing 82 00:04:48,930 --> 00:04:54,690 Gavan Ord: a technology talent shortage. Secondly, and probably positive, is that 83 00:04:54,990 --> 00:04:58,469 Gavan Ord: that tech shortage is not necessarily meaning businesses are canceling 84 00:04:58,469 --> 00:05:03,330 Gavan Ord: tech projects. They instead are finding other ways to deliver 85 00:05:03,330 --> 00:05:06,839 Gavan Ord: tech projects. The survey shows that the most popular way 86 00:05:06,839 --> 00:05:09,238 Gavan Ord: to overcome this current tech shortage is to try and 87 00:05:09,240 --> 00:05:12,660 Gavan Ord: upskill their current staff. So in terms of government policy, 88 00:05:12,660 --> 00:05:17,759 Gavan Ord: yes, there is the current skills boost. That's one policy 89 00:05:17,759 --> 00:05:22,320 Gavan Ord: which is trying to encourage businesses to upskill their staff. The 90 00:05:22,320 --> 00:05:25,410 Gavan Ord: shortcoming in that particular policy is it has to be 91 00:05:25,410 --> 00:05:29,880 Gavan Ord: training via a TAFE or a university, for example. But a lot 92 00:05:29,880 --> 00:05:33,359 Gavan Ord: of the tech training is actually run by the tech 93 00:05:33,360 --> 00:05:37,500 Gavan Ord: vendors themselves, so they don't necessarily get that boost of 94 00:05:37,500 --> 00:05:38,339 Gavan Ord: tax deduction. 95 00:05:38,790 --> 00:05:40,529 Jennifer Duke: Stay with me, Gavan, we'll be back in a minute. 96 00:05:46,980 --> 00:05:51,630 Jennifer Duke: I'm talking to Gavan Ord from CPA Australia. So one 97 00:05:51,630 --> 00:05:54,030 Jennifer Duke: part of this where I feel like the skills shortage 98 00:05:54,089 --> 00:05:56,339 Jennifer Duke: can't necessarily be trained up in- house, so you might 99 00:05:56,339 --> 00:05:59,309 Jennifer Duke: correct me, is when it comes to cybersecurity. And your 100 00:05:59,309 --> 00:06:03,029 Jennifer Duke: report looked at cybersecurity as well. Is there a continued 101 00:06:03,029 --> 00:06:06,150 Jennifer Duke: ramping up in the focus on cybersecurity? Are the risks increasing? 102 00:06:07,110 --> 00:06:11,490 Gavan Ord: The risks are increasing. And I'll probably give three bits 103 00:06:11,490 --> 00:06:15,510 Gavan Ord: of advice to small business. First, you are a target 104 00:06:15,660 --> 00:06:18,630 Gavan Ord: of cyber criminals. Two, you are a target to cyber criminals. 105 00:06:18,630 --> 00:06:22,140 Gavan Ord: And, three, you are a target of cyber criminals. So 106 00:06:22,140 --> 00:06:24,089 Gavan Ord: you can't just assume because you're small you won't be 107 00:06:24,089 --> 00:06:27,510 Gavan Ord: attacked. But what the survey does show is that, yes, 108 00:06:27,510 --> 00:06:31,558 Gavan Ord: cybersecurity is a major focus for many businesses, which is 109 00:06:31,559 --> 00:06:35,579 Gavan Ord: good. But, also, cybersecurity is not just about technology. As 110 00:06:35,580 --> 00:06:39,719 Gavan Ord: you know, Jen, a lot of the cybersecurity problems are people based. 111 00:06:39,720 --> 00:06:44,760 Gavan Ord: They inadvertently get sucked in by a phishing attack or 112 00:06:44,760 --> 00:06:49,529 Gavan Ord: some other sort of scam. So developing cybersecurity talent is 113 00:06:49,529 --> 00:06:52,620 Gavan Ord: not necessarily just about the technology side, it's also about 114 00:06:53,039 --> 00:06:58,500 Gavan Ord: all people in your business having that cybersecurity mentality, that 115 00:06:59,370 --> 00:07:03,270 Gavan Ord: professional skepticism when they get that email requesting them to 116 00:07:03,690 --> 00:07:06,480 Gavan Ord: change the banking details for an invoice. 117 00:07:06,990 --> 00:07:09,059 Jennifer Duke: That's a great point. Do you think there's a role 118 00:07:09,059 --> 00:07:10,800 Jennifer Duke: here for cyber insurance as well? 119 00:07:11,850 --> 00:07:15,390 Gavan Ord: Cyber insurance is one part of it. I wouldn't necessarily 120 00:07:15,390 --> 00:07:17,970 Gavan Ord: say it's the most important part. Just because you have 121 00:07:17,970 --> 00:07:20,370 Gavan Ord: house insurance doesn't mean then you don't lock the front 122 00:07:20,370 --> 00:07:25,499 Gavan Ord: door. So you still have to invest in your cybersecurity 123 00:07:25,500 --> 00:07:28,800 Gavan Ord: technology and the people skills around cybersecurity. 124 00:07:30,060 --> 00:07:32,550 Jennifer Duke: And one of the interesting findings in the report is 125 00:07:32,550 --> 00:07:35,880 Jennifer Duke: around the tech expectations over the next 12 months. And 126 00:07:35,880 --> 00:07:37,650 Jennifer Duke: it looks like there's a decline in the number of 127 00:07:37,650 --> 00:07:41,130 Jennifer Duke: businesses expecting to implement those major tech initiatives over the 128 00:07:41,130 --> 00:07:42,331 Jennifer Duke: next year. Why is that? 129 00:07:42,331 --> 00:07:50,250 Gavan Ord: Yeah, that's a really good question. And it's something that we thought about quite a bit ourselves. We tend 130 00:07:50,250 --> 00:07:53,400 Gavan Ord: to think that COVID brought forward a lot of tech 131 00:07:53,400 --> 00:07:57,300 Gavan Ord: investments, so we jumped all onto Teams. There was a 132 00:07:57,300 --> 00:08:00,899 Gavan Ord: lot of tech investment brought forward during the COVID period. 133 00:08:00,900 --> 00:08:03,059 Gavan Ord: So I think the investment that might be happening in 134 00:08:03,059 --> 00:08:08,460 Gavan Ord: the next 12 months has actually already happened. Secondly, obviously the economy 135 00:08:08,460 --> 00:08:13,110 Gavan Ord: is slowing in Australia in particular, and businesses are taking 136 00:08:13,110 --> 00:08:16,259 Gavan Ord: a little bit more cautious approach. So we are seeing 137 00:08:16,260 --> 00:08:20,580 Gavan Ord: some of the ABS stats are showing investments are down. 138 00:08:21,059 --> 00:08:26,010 Gavan Ord: So I think there's two things. There's the economy and 139 00:08:26,010 --> 00:08:28,530 Gavan Ord: that a lot of tech investment was brought forward during COVID. 140 00:08:30,120 --> 00:08:32,429 Jennifer Duke: And as you well know, businesses are often in this 141 00:08:32,429 --> 00:08:35,130 Jennifer Duke: situation of weighing up between what they can afford to 142 00:08:35,130 --> 00:08:37,230 Jennifer Duke: do, what they can't afford to do, and deciding on 143 00:08:37,230 --> 00:08:42,509 Jennifer Duke: that spectrum. Where would you put tech innovations in that category? 144 00:08:43,530 --> 00:08:45,780 Gavan Ord: Look, I think all investment you need to run through 145 00:08:45,929 --> 00:08:49,860 Gavan Ord: a return on investment lens, regardless of whether it's tech 146 00:08:49,890 --> 00:08:53,579 Gavan Ord: or otherwise. Sometimes, that can be hard with some brand 147 00:08:53,580 --> 00:09:01,500 Gavan Ord: new tech. But things like AI, it's not brand new. AI's been around for a long time. So you 148 00:09:01,500 --> 00:09:04,650 Gavan Ord: can do that return on investment calculation, or at least 149 00:09:04,650 --> 00:09:08,578 Gavan Ord: provide a very good guess. But what our research shows, 150 00:09:08,580 --> 00:09:11,370 Gavan Ord: and you mentioned the small business survey we did earlier 151 00:09:11,400 --> 00:09:14,579 Gavan Ord: when you worked at CPA Australia, it shows that tech 152 00:09:14,639 --> 00:09:18,840 Gavan Ord: does provide quite a big boost to business performance and 153 00:09:18,840 --> 00:09:22,170 Gavan Ord: business profitability. So I think it should really be up 154 00:09:22,170 --> 00:09:25,468 Gavan Ord: there for many businesses. Obviously, it's a business mode, business 155 00:09:25,470 --> 00:09:29,490 Gavan Ord: proposition, but, overall, our data shows that tech is something 156 00:09:29,490 --> 00:09:33,238 Gavan Ord: that businesses should really be focused in on. Because our 157 00:09:33,240 --> 00:09:37,228 Gavan Ord: data shows it does provide, in many instances, a good 158 00:09:37,230 --> 00:09:38,310 Gavan Ord: return on investment. 159 00:09:39,000 --> 00:09:41,069 Jennifer Duke: Gavan, that was fabulous. Thank you very much for talking 160 00:09:41,070 --> 00:09:41,610 Jennifer Duke: to Fear & Greed. 161 00:09:42,179 --> 00:09:42,900 Gavan Ord: Thanks for having me on, Jen. 162 00:09:44,160 --> 00:09:46,770 Jennifer Duke: And that was Gavan Ord, Senior Manager of Business and 163 00:09:46,770 --> 00:09:50,429 Jennifer Duke: Investment Policy for CPA Australia. This is the Fear & Greed 164 00:09:50,429 --> 00:09:53,309 Jennifer Duke: daily interview. Join us every morning for the full episode 165 00:09:53,309 --> 00:09:57,088 Jennifer Duke: of Fear & Greed, Australia's best business podcast. I'm Jennifer Duke, 166 00:09:57,120 --> 00:10:00,330 Jennifer Duke: Economics Correspondent for Capital Brief, and filling in for Sean Aylmer. 167 00:10:00,630 --> 00:10:01,410 Jennifer Duke: Have a great day.