WEBVTT - Tech in 2024: what happened and what’s next 0:00:00.480 --> 0:00:03.120 This week on the Business of Tech powered by two 0:00:03.160 --> 0:00:06.480 Degrees Business, the big tech news that define twenty twenty 0:00:06.519 --> 0:00:09.280 four and what may lay ahead for twenty twenty five. 0:00:10.240 --> 0:00:12.959 It was just like thousands of hours of work and 0:00:13.000 --> 0:00:17.320 millions of dollars fielding a bed that was ultimately unsuccessful. 0:00:17.600 --> 0:00:20.239 The industry's gone from a kind of a boom time 0:00:20.320 --> 0:00:23.599 to a time where we're seeing the potential for some 0:00:23.760 --> 0:00:26.400 kind of brain drain happening nuclear fusion. 0:00:26.480 --> 0:00:29.680 It's almost this hubristic level of ambition, right. 0:00:29.880 --> 0:00:32.840 Are you not concerned in the displacement of New Zealand 0:00:32.880 --> 0:00:37.000 companies to non tax paying tech companies? Am I crazy here? 0:00:37.080 --> 0:00:38.680 Or is this a bigger problem? 0:00:38.920 --> 0:00:41.199 We're joined by the leading journalists who have covered some 0:00:41.280 --> 0:00:45.400 of the big tech stories from AI installed government IT projects, 0:00:45.560 --> 0:00:49.160 to takeover attempts, and some big exits for our startups. 0:00:49.720 --> 0:00:52.960 I'm Ben Moore and I'm Peter Griffin with our eightieth 0:00:53.040 --> 0:00:56.800 episode of the Business of Tech and our penultimate episode 0:00:56.800 --> 0:00:59.040 for the year. Ben, Who've we got on the show 0:00:59.040 --> 0:00:59.440 this week? 0:00:59.560 --> 0:01:02.800 We've got four journalists, each with unique perspectives on a 0:01:02.800 --> 0:01:06.080 particular aspect of tech. We've got our business desk colleague 0:01:06.080 --> 0:01:09.120 Rebecca Stevenson. She's the senior markets journalist who has been 0:01:09.200 --> 0:01:11.640 keeping an eye on our listed tech companies this year. 0:01:12.120 --> 0:01:15.120 There's Rob O'Neil, senior writer for Reseller News on the 0:01:15.200 --> 0:01:18.760 big movements in the enterprise tech space. Finn Hogan who 0:01:18.840 --> 0:01:21.800 writes for Caffeine Daily and also does some work for 0:01:22.120 --> 0:01:25.520 dig a tech focused PR company, and he's wrapping up 0:01:25.560 --> 0:01:28.560 what twenty twenty four held for our tech startups. And 0:01:28.600 --> 0:01:32.240 finally Duncan Greeve, founder and media writer at The Spinoff, 0:01:32.400 --> 0:01:34.679 who has been keeping a close eye on big tech 0:01:34.840 --> 0:01:35.400 this year. 0:01:35.800 --> 0:01:38.840 Yeah, great lineup, and we were initially intending to have 0:01:38.920 --> 0:01:43.000 them all into ended MEHQ for one big conversation until 0:01:43.000 --> 0:01:46.880 we realize the challenging logistics of doing that. So instead 0:01:47.200 --> 0:01:51.040 we've got four short, sharp segments featuring this week's guests 0:01:51.040 --> 0:01:54.880 on various aspects of tech in twenty twenty four. Where 0:01:54.880 --> 0:01:56.040 shall we start, Ben. 0:01:56.280 --> 0:01:58.480 Let's start with the z X and a couple of 0:01:58.560 --> 0:02:01.800 listed tech companies that have been on Rebecca Stevenson's radar 0:02:01.960 --> 0:02:08.320 this year. So you are the markets reporter, extraordinary business desk. 0:02:08.520 --> 0:02:10.480 If I say to you that what is the biggest 0:02:10.520 --> 0:02:13.959 story enlisted tech of the year in New Zealand. What's 0:02:13.960 --> 0:02:16.120 the first thing that pops into your mind, Well. 0:02:15.960 --> 0:02:17.320 It would have to be two things. 0:02:17.360 --> 0:02:20.799 I'm afraid break on Who's the advanced still high tech 0:02:20.840 --> 0:02:24.840 manufacturer of all sorts of interesting bits that go inside 0:02:25.000 --> 0:02:28.960 high tech systems and it's failed takeover bid was a 0:02:29.040 --> 0:02:33.079 huge story for listed tech companies this year. And then 0:02:33.200 --> 0:02:36.120 on the flip side we had gen Track, which is 0:02:36.160 --> 0:02:40.359 the utility software provider, which was also listed on the exchange. 0:02:40.720 --> 0:02:43.320 It just seems to be going from strength to strength 0:02:43.639 --> 0:02:49.280 and continually I guess, surpassing analysts expectations, winning customers, increasing 0:02:49.360 --> 0:02:53.400 revenue and doing incredibly well. So it's blasted into the 0:02:53.960 --> 0:02:56.960 ZX fifty last year and people thought, you know, well, 0:02:57.000 --> 0:02:59.480 maybe it would start to sort of top out sometime soon, 0:03:00.080 --> 0:03:03.360 not at all. It recently reported its full year result 0:03:03.440 --> 0:03:07.680 which was very strong, increased its revenue by about twenty 0:03:07.680 --> 0:03:12.400 five percent, and that sat its share price spike up 0:03:13.040 --> 0:03:15.720 really quite high on the day, up to about fourteen 0:03:15.760 --> 0:03:18.240 dollars at one point, I think. And then now its 0:03:18.280 --> 0:03:21.440 market cap is more than one point four billion, and 0:03:21.480 --> 0:03:24.480 it started the day while under that, so a couple 0:03:24.480 --> 0:03:27.240 one hundred million in a few days for gen Track. 0:03:27.639 --> 0:03:31.080 Yeah, yeah, I think it's a We had Gentrack CTO 0:03:31.320 --> 0:03:34.560 new CTO Mark Ree, a former CTO of Zero, on 0:03:34.600 --> 0:03:38.640 the podcast not long ago, and the market for what 0:03:38.720 --> 0:03:43.080 they are producing globally, I think is really strong because 0:03:43.080 --> 0:03:45.320 there are so many of these utilities companies that are 0:03:45.360 --> 0:03:48.600 needing to upgrade their systems and get something modern, digital 0:03:48.600 --> 0:03:50.960 and flexible to meet the changing demands. 0:03:51.000 --> 0:03:51.200 You know. 0:03:51.240 --> 0:03:54.800 And that sounds like I'm literally spouting gen track pr 0:03:55.200 --> 0:03:59.200 but actually it's also true. So what is what has 0:03:59.240 --> 0:04:02.920 been the news and market response to Genrack's success. I'd 0:04:02.960 --> 0:04:07.080 imagine there'd be quite a bit of buzz. Yeah. I think. 0:04:07.120 --> 0:04:10.720 Look, it's just the best performing share on the exchange, 0:04:11.000 --> 0:04:14.040 you know, and you really can date it back to 0:04:14.520 --> 0:04:17.440 the leadership of Gary Miles. I was crunching the numbers 0:04:17.440 --> 0:04:21.200 actually today and he started in October twenty twenty, and 0:04:21.200 --> 0:04:23.080 I think the shares are up more than nine hundred 0:04:23.160 --> 0:04:28.400 percent since he joined. So it's just been extraordinary, just 0:04:28.440 --> 0:04:31.920 a crazy ride in the share price since. And then 0:04:32.320 --> 0:04:37.279 somewhat ironically, perhaps that's also created some blowback, a little 0:04:37.320 --> 0:04:41.520 bit of blowback around his remuneration and the incentives for 0:04:41.560 --> 0:04:44.599 the senior leadership as I put it, they've kind of 0:04:44.600 --> 0:04:47.719 been hoist on their own petard a little bit because 0:04:47.720 --> 0:04:50.159 of the success of the share price they had to 0:04:50.200 --> 0:04:54.040 reach about ten dollars, Well it's gone way past that, 0:04:54.120 --> 0:04:58.359 trading today at about thirteen dollars ninety ish, and also 0:04:58.400 --> 0:05:02.080 had some earnings per shares targets that Gary Miles and 0:05:02.120 --> 0:05:05.080 the other senior leaders had to hit to get some shares, 0:05:05.160 --> 0:05:09.320 more than nine million shares vested to them for hitting 0:05:09.320 --> 0:05:12.480 these targets. But there's been a little bit of criticism 0:05:12.560 --> 0:05:15.240 about that from the New Zealand Shareholders Association, who. 0:05:15.120 --> 0:05:16.560 Felt the thresholds were too low. 0:05:17.040 --> 0:05:20.160 However, you know, as Gentrek would say, well, we certainly 0:05:20.160 --> 0:05:23.560 didn't think that last year. And you know when Gary started, 0:05:23.680 --> 0:05:25.520 Gary Miles started, I think the shares we wrote about 0:05:25.520 --> 0:05:28.680 a dollar seventy. So to be saying ten dollars was 0:05:29.480 --> 0:05:32.159 too high or too low, now, you know, it's the 0:05:32.160 --> 0:05:33.520 benefit of hindsight perhaps. 0:05:34.200 --> 0:05:39.000 Yeah, that is interesting, the idea that you set these 0:05:39.160 --> 0:05:42.719 targets that you see as kind of almost outlandish, like 0:05:42.800 --> 0:05:44.839 had they ever reached that level, and then when you 0:05:44.880 --> 0:05:48.600 have a runaway success, you do end up with shareholders going, oh, 0:05:48.640 --> 0:05:50.840 hang on a minute, we hoped for this, but now 0:05:50.880 --> 0:05:53.880 we've got to clamp down and make sure that we're 0:05:53.920 --> 0:05:57.080 not spending too much where we're not supposed to be. 0:05:57.240 --> 0:06:00.240 Is that a common story enlisted companies or is this 0:06:00.880 --> 0:06:04.039 something that hasn't really been too much of a problem before. 0:06:04.240 --> 0:06:06.600 Well, you have to be in it to win it, 0:06:06.839 --> 0:06:09.680 I guess, you know. And so in Genrack's case, they 0:06:09.680 --> 0:06:12.480 did have a special general meeting in September last year 0:06:12.960 --> 0:06:18.080 specifically for this issue and to change some of the 0:06:18.120 --> 0:06:21.400 sort of triggers around and the sort of rules around 0:06:21.920 --> 0:06:24.960 whether or not Gary Miles and the senior leadership team 0:06:24.960 --> 0:06:29.680 would be able to get those incentives and those new shares. 0:06:30.720 --> 0:06:33.400 Andy Green, who was the chair, basically said that we 0:06:33.480 --> 0:06:36.880 believe that we need to do this to keep them 0:06:37.279 --> 0:06:40.080 to perform well for the next three financial years. So 0:06:40.160 --> 0:06:42.679 this is for the twenty twenty four financial year, twenty 0:06:42.720 --> 0:06:45.280 twenty five and twenty twenty six, so it's not all 0:06:45.320 --> 0:06:49.120 a one hit wonder. They have hit the first earnings 0:06:49.120 --> 0:06:52.320 per year target for twenty twenty four because they just reported, 0:06:52.800 --> 0:06:55.160 but they're still twenty twenty five and twenty twenty six 0:06:55.200 --> 0:06:58.120 to come, and obviously it sort of ramps up from there. 0:06:58.320 --> 0:07:03.560 They have to hit higher targets to get that full whack. 0:07:04.640 --> 0:07:07.120 What Gary Mayles said to me when I met up 0:07:07.160 --> 0:07:10.040 with him recently was that they're in a really competitive 0:07:10.160 --> 0:07:15.320 environment for talent and private firms can pay higher. You know, 0:07:15.440 --> 0:07:18.520 they are public firms get the scrutiny and are benchmarked 0:07:18.600 --> 0:07:20.960 like this and everybody can see what they get. But 0:07:21.040 --> 0:07:24.200 also gen Track is competing in this global talent poll 0:07:24.680 --> 0:07:28.760 where you know, public tech companies can offer you know, 0:07:29.040 --> 0:07:32.080 really generous incentives. So he said that they're trying to 0:07:32.080 --> 0:07:34.880 strike a balance, and they say they've gone basically in 0:07:34.920 --> 0:07:38.600 the middle of what sort of a public firm perhaps 0:07:38.680 --> 0:07:42.760 benchmark New Zealand listing incentive scheme would be, and between 0:07:42.800 --> 0:07:46.000 a private equity listing because they want to get the 0:07:46.000 --> 0:07:48.400 best talent because, as you said, this is a massive 0:07:49.200 --> 0:07:53.480 global transformation program that's happening for utilities providers and they 0:07:53.640 --> 0:07:56.200 really they want to be number one here. They want 0:07:56.240 --> 0:07:59.280 to win all these contracts, they want to win across 0:07:59.320 --> 0:08:00.160 the world. 0:08:00.120 --> 0:08:01.440 And all these different countries. 0:08:01.520 --> 0:08:04.600 So you know, they believe they need to yeah, really 0:08:04.640 --> 0:08:07.400 be attractive and have those incentives in place. 0:08:07.600 --> 0:08:10.520 And that's a big conversation generally, but in tech specifically, 0:08:10.640 --> 0:08:14.440 this idea of private companies being able to just splash 0:08:14.440 --> 0:08:17.520 around more money on talent compared to public companies. And 0:08:17.560 --> 0:08:20.880 I think it's especially true of New Zealand, where salaries 0:08:20.880 --> 0:08:23.000 are generally a little bit lower than globally in tech 0:08:23.040 --> 0:08:27.080 as well. So definitely worth keeping an eye on to 0:08:27.440 --> 0:08:29.800 get a sense of how that pressure is impacting a 0:08:29.800 --> 0:08:33.160 New Zealand company. Yeah, let's look now at the other 0:08:33.200 --> 0:08:36.040 story you talked about, which was Racon and they had 0:08:36.040 --> 0:08:39.959 a difficult time with a takeover offer. But companies get 0:08:40.000 --> 0:08:42.480 takeover offers all the time, right, and some work out 0:08:42.520 --> 0:08:46.080 and some don't. What made this one so controversial. 0:08:45.920 --> 0:08:48.720 Well, it was a little bit fraught from the start. 0:08:48.840 --> 0:08:52.160 I mean it sort of popped up in December when 0:08:52.160 --> 0:08:54.760 we were lots of us were on holiday, and they 0:08:54.800 --> 0:08:57.920 felt that their hand had been forced, that they were 0:08:57.960 --> 0:09:01.040 forced by media reports in Austria E to make the 0:09:01.080 --> 0:09:04.080 bid public and then they were basically a sort of 0:09:04.080 --> 0:09:05.760 on record and they had a lot of pressure from 0:09:05.800 --> 0:09:09.840 shareholders to keep them updated because this was quite a 0:09:09.920 --> 0:09:12.880 juicy premium, you know. I think it was valued them 0:09:12.920 --> 0:09:16.720 at about a dollar seventy per share. Well, Raycon shares 0:09:16.720 --> 0:09:19.120 have been trading at about fifty nine cents lately, so 0:09:19.160 --> 0:09:23.600 you can understand why people wanted to know what was 0:09:23.640 --> 0:09:27.319 going on with this bit. Now, this sort of rolled 0:09:27.360 --> 0:09:31.040 on for a few months, this kind of not much 0:09:31.080 --> 0:09:34.640 going on in terms of updates. Raycon said, you know, look, 0:09:35.160 --> 0:09:39.280 when we know something, will tell you. But it was 0:09:39.320 --> 0:09:42.440 a difficult and expensive process for the business. You know, 0:09:43.200 --> 0:09:45.240 the chair got up at their own your general meeting 0:09:45.280 --> 0:09:49.359 and said, it was incredibly onerous going through this process 0:09:49.800 --> 0:09:53.960 with what we think was a Nasdaq listed Apple supply, 0:09:54.160 --> 0:09:57.640 a huge company called Skyworks, and basically they had to 0:09:57.720 --> 0:10:01.600 bring in consultants, they needed legal advice, yes, just management 0:10:01.640 --> 0:10:02.920 had to be available, you know. 0:10:02.880 --> 0:10:04.600 The CEO, the board. 0:10:05.920 --> 0:10:08.600 It was just like thousands of hours of work and 0:10:08.720 --> 0:10:12.720 millions of dollars actually as well that it cost Raycon 0:10:12.800 --> 0:10:17.280 and Fielding a bid that was ultimately unsuccessful. Since then, 0:10:17.320 --> 0:10:20.840 the share price has just been falling away really because 0:10:20.960 --> 0:10:23.079 you know, it felt a little bit like the one 0:10:23.080 --> 0:10:25.800 that got away. People were like, well, why did it fail? 0:10:26.920 --> 0:10:32.440 Raycon said it was material complexities were uncovered as part 0:10:32.440 --> 0:10:35.200 of the process, so really a bit of a question 0:10:35.280 --> 0:10:38.800 mark there about I guess potentially the future of Raycon. 0:10:38.840 --> 0:10:41.480 You know, a lot of people say it is really 0:10:41.600 --> 0:10:44.960 a good acquisition target now and it should perhaps be 0:10:45.080 --> 0:10:48.680 bought by someone bigger. However, you know they'll want the 0:10:48.720 --> 0:10:50.200 price to be right. 0:10:51.920 --> 0:10:56.439 What does material complexities actually mean? Because in my understanding, 0:10:56.480 --> 0:10:59.800 if there is a material issue with a company, it 0:10:59.840 --> 0:11:03.360 needs to be disclosed if they're listed. So how does 0:11:03.400 --> 0:11:07.400 that interact with this concept of material complexities that prevented 0:11:07.520 --> 0:11:08.200 a takeover? 0:11:08.960 --> 0:11:11.280 The thing is, we really we don't know much. You know, 0:11:11.520 --> 0:11:15.320 Raycon just continues to say that, you know, they're keeping 0:11:15.360 --> 0:11:20.199 the market informed of anything that they need to know. Basically, 0:11:20.280 --> 0:11:22.320 I mean, we don't know. There's been a lot of 0:11:22.400 --> 0:11:28.640 speculation about why this deal actually fell over. One person 0:11:28.679 --> 0:11:31.680 that I spoke to who has knowledge of these sorts 0:11:31.679 --> 0:11:35.920 of deals, pointed to just the general complexities of the 0:11:36.000 --> 0:11:39.880 markets that Raycon operates and you know, and sort of 0:11:39.880 --> 0:11:41.520 pointed me to the fact that, you know, we have 0:11:41.559 --> 0:11:44.520 a chip war going on between the US and China, 0:11:44.720 --> 0:11:48.360 and you know, Raycon is obviously active in those sorts 0:11:48.360 --> 0:11:53.240 of industries and it is incredibly complex, you know, tense, 0:11:53.559 --> 0:11:57.160 sort of secretive. People are worried about their IP and 0:11:57.200 --> 0:11:59.360 then you've just got this idea of you know, who 0:11:59.360 --> 0:12:01.920 owns the check apps as well at the heart of 0:12:01.920 --> 0:12:04.679 it all. So they said, you know, it's a really complex, 0:12:04.800 --> 0:12:08.320 difficult sort of agreement to get across the line when 0:12:08.360 --> 0:12:12.400 you're trying to sell a business like Raycon that is highly, 0:12:13.040 --> 0:12:18.520 highly technical, highly secretive, you know, customers, we're not even 0:12:18.559 --> 0:12:20.720 allowed to you know, they don't talk about their customers 0:12:20.760 --> 0:12:23.199 a lot of time or name them. You know, everybody's 0:12:23.200 --> 0:12:26.199 trying to protect their patch and protect their competitive advantage. 0:12:26.440 --> 0:12:29.480 You know, particularly, I guess with the rise and rise 0:12:29.559 --> 0:12:33.199 of artificial intelligence, cloud computing, data centers and all of that. 0:12:33.240 --> 0:12:36.040 You know, Raycon really wants to be playing in that 0:12:36.080 --> 0:12:39.160 sphere and be an important player. So there's a lot 0:12:39.200 --> 0:12:44.680 of commercial sensitivities and non disclosure agreements and things. So yes, 0:12:45.440 --> 0:12:47.680 they said, yes, it is materially complex. 0:12:47.800 --> 0:12:48.520 The whole thing. 0:12:50.840 --> 0:12:55.120 Interesting. Well just by out of time unfortunately, because there's 0:12:55.160 --> 0:12:57.880 so many more companies that we could talk about. Obviously, 0:12:57.920 --> 0:13:00.839 there was the big listing of being AI this year 0:13:01.360 --> 0:13:05.720 and some material complexities going on as we speak with 0:13:06.160 --> 0:13:10.800 being AI, so we'll hopefully get some stories about that 0:13:10.920 --> 0:13:15.120 coming out in the near term. Any other companies that 0:13:15.200 --> 0:13:18.880 you think are particularly worth a shout out on the 0:13:18.920 --> 0:13:21.240 tech listed front before we wrap up. 0:13:21.920 --> 0:13:24.880 Well, look, I mean Spark has absorbed a lot of 0:13:25.000 --> 0:13:28.679 energy this year, which you're probably closer to, you know, 0:13:28.720 --> 0:13:31.800 than I am, But I think they're a classic example 0:13:31.840 --> 0:13:34.160 of perhaps some of the things that have also been 0:13:34.160 --> 0:13:36.319 affecting Raycon as well. You know, we saw the sort 0:13:36.360 --> 0:13:40.880 of infantry stock piling and a lot of expenditure throughout 0:13:40.880 --> 0:13:43.880 COVID as you know, mobile networks providers and things were 0:13:43.920 --> 0:13:46.720 worried about not having parts, so you saw Raycon and 0:13:46.720 --> 0:13:50.239 people like that, you know, get a bit of a blip. 0:13:49.960 --> 0:13:52.000 From that, but all that has retrenched now. 0:13:52.320 --> 0:13:55.520 So the global economic sort of pullback has really been 0:13:55.559 --> 0:13:59.080 affecting a lot of tech companies. In terms of a 0:13:59.080 --> 0:14:02.160 little company that I keep an eye on, there's our Frio, 0:14:02.559 --> 0:14:08.520 which is the refrigeration sensor and software company, which someone 0:14:08.640 --> 0:14:11.440 sort of perhaps sarcastically said to me, you know, if 0:14:11.440 --> 0:14:13.800 you had sort of a dollar for every time they 0:14:13.840 --> 0:14:15.640 said they were going to be making it, you know, 0:14:15.720 --> 0:14:19.480 you'd probably be quite wealthy. But you've got to admire 0:14:19.560 --> 0:14:22.320 the persistence of that business. But they've got some really 0:14:22.320 --> 0:14:26.400 interesting things happening as well, and kind of like similar 0:14:26.440 --> 0:14:28.560 to gen Track in a way. It's that, you know, 0:14:28.800 --> 0:14:31.840 looking at energy use and energy consumption. 0:14:31.600 --> 0:14:34.120 Is a really a big theme. I think that's running 0:14:34.120 --> 0:14:36.280 through for a lot of these sort of listed. 0:14:35.920 --> 0:14:40.200 Companies in tech companies, and how you can create savings 0:14:40.280 --> 0:14:43.480 cost savings and give customers more information about how they're 0:14:43.560 --> 0:14:46.400 using energy and how they can save energy. I think 0:14:46.520 --> 0:14:49.600 is going to be a huge trend for like a Freo, 0:14:49.880 --> 0:14:52.320 gen Track, et cetera in the coming years. 0:14:52.680 --> 0:14:56.600 Yeah, and Eerod's another one who similar in terms of 0:14:56.720 --> 0:15:02.680 driving down costs around transportation duration and those kinds of areas. 0:15:03.200 --> 0:15:03.480 Cool. 0:15:03.720 --> 0:15:07.440 Well, thank you very much, Rebecca. It's super interesting and 0:15:07.480 --> 0:15:11.120 I look forward to seeing some more in the adventures 0:15:11.160 --> 0:15:13.560 of the zet X from you in the next year. 0:15:16.600 --> 0:15:21.080 It's tumultuous year for tech companies and speaking to Beck's later, 0:15:21.200 --> 0:15:24.440 she also said Vista Group had quite a bit of 0:15:24.560 --> 0:15:27.320 drama at the board level, which is worth reading about 0:15:27.320 --> 0:15:30.000 and you can check out Rebecca's excellent reporting on that 0:15:30.160 --> 0:15:31.800 at Business Desk as well. 0:15:32.080 --> 0:15:34.560 Sort of mixed bag for our listed tech companies and 0:15:34.560 --> 0:15:38.600 that really went for the whole enterprise. It space to 0:15:38.760 --> 0:15:41.760 the big tech projects in the corporate world and in 0:15:41.880 --> 0:15:45.200 the government sector. Here's Rob O'Neil on some of the 0:15:45.240 --> 0:15:50.120 big developments he covered at reseller News this year. Rob O'Neil, 0:15:50.440 --> 0:15:53.200 Welcome back to the Business off Tech, the man who 0:15:53.240 --> 0:15:55.880 likes to get down in the weeds in enterprise tech, 0:15:55.880 --> 0:15:58.440 coming to us from fong Array. How are you doing. 0:15:58.840 --> 0:16:01.040 Good? Good, good to be here, Pete. Thanks for inviting me. 0:16:01.160 --> 0:16:04.160 Yeah, and we just spent some time together in California 0:16:04.200 --> 0:16:07.720 recently we went to a SpaceX launch together. So busy 0:16:07.960 --> 0:16:11.720 end to the year and a busy year for enterprise tech, 0:16:11.880 --> 0:16:15.280 which is really all about what companies are doing with technology. 0:16:15.560 --> 0:16:18.600 So what are your big picks for the big developments 0:16:18.640 --> 0:16:20.080 in enterprise tech this year? 0:16:21.040 --> 0:16:23.120 Well, I mean the first one will come as no surprise. 0:16:23.120 --> 0:16:25.760 It's AI. It's not so much that AI is new. 0:16:26.560 --> 0:16:28.680 It's been developing quite strongly over the last few years, 0:16:28.680 --> 0:16:31.160 but it has kind of reached that inflection point during 0:16:31.200 --> 0:16:33.400 this year where people are really starting to roll it 0:16:33.400 --> 0:16:36.600 out and develop use cases for it. But the real 0:16:36.640 --> 0:16:39.560 reason why there's been this breakthrough an adoption is because 0:16:39.760 --> 0:16:41.760 the vendors have developed the tools. You know, It's not 0:16:41.800 --> 0:16:44.560 like companies are trying to develop their own AIS or 0:16:44.760 --> 0:16:47.040 which some were you know, even just a few years ago, 0:16:47.120 --> 0:16:49.760 but the tools are now available, so you know, it's 0:16:50.320 --> 0:16:53.040 become much more achievable. Like with any I system, there 0:16:53.040 --> 0:16:55.360 will be integration challenges if you want to apply AI 0:16:55.440 --> 0:16:59.400 across systems and across processes. I think it's called multimodal AI, 0:16:59.520 --> 0:17:03.000 for instance, maybe incorporating sensors and IoT devices as part 0:17:03.040 --> 0:17:06.199 of that network. You know, that's really where things are 0:17:06.200 --> 0:17:08.040 going to be heading and trying to do that in 0:17:08.040 --> 0:17:10.480 a safe way, in a controlled environment where you don't 0:17:10.480 --> 0:17:16.120 get hallucinating AIS contaminated with external data of some sort. 0:17:16.400 --> 0:17:18.640 I think those are the things that will be going 0:17:18.680 --> 0:17:19.320 on right now. 0:17:19.600 --> 0:17:23.359 We've heard so much about the supposed productivity gains that 0:17:23.400 --> 0:17:26.760 come with using the likes of Microsoft Co Pilots. Apart 0:17:26.760 --> 0:17:29.719 from the vendors who all quote great progress in this 0:17:29.800 --> 0:17:33.120 area because they're pushing their own services, have we seen 0:17:33.200 --> 0:17:36.879 any real evidence among our own companies that they I 0:17:36.960 --> 0:17:39.240 seeing those productivity gains. We saw report out from the 0:17:39.240 --> 0:17:42.560 Australian government which did a trial of Copilot and said 0:17:42.640 --> 0:17:45.760 actually the public servants using it saving you know, for 0:17:45.800 --> 0:17:48.320 thirty or forty minutes a day. Have we seen any 0:17:48.400 --> 0:17:50.600 more evidence like that, particularly here in New Zealand, that 0:17:50.640 --> 0:17:52.920 it's actually delivering return on investment. 0:17:53.560 --> 0:17:56.480 You hear it anecdotally, don't you. And I think there's 0:17:56.520 --> 0:17:58.439 always the problem. You're going to get people who just 0:17:58.560 --> 0:18:01.280 want it now, you know, the early adopters, and they 0:18:01.320 --> 0:18:02.920 will build it into their. 0:18:02.800 --> 0:18:04.639 Own work habits very very quickly. 0:18:04.920 --> 0:18:06.919 And then you've got other people who maybe are not 0:18:07.000 --> 0:18:09.160 quite as quick on the on the uptake and need 0:18:09.200 --> 0:18:10.360 to be guided a little bit more. 0:18:10.400 --> 0:18:10.520 Now. 0:18:10.720 --> 0:18:12.920 It's the other thing about all of these software tools 0:18:12.960 --> 0:18:16.919 is that they bring creative possibilities. How the application is 0:18:16.920 --> 0:18:20.440 applied is a is a creative challenge for the user, 0:18:20.640 --> 0:18:22.840 and that's where some real innovation can happen because of 0:18:22.840 --> 0:18:24.680 course the users are the ones who are most familiar 0:18:24.680 --> 0:18:26.880 with the with the value as in the data, where 0:18:26.920 --> 0:18:29.199 the problems are, the need to be solved, what the 0:18:29.240 --> 0:18:32.600 problems are, and how to do that safely. So I think, yeah, 0:18:32.760 --> 0:18:34.679 those will be the sorts of issues that have been 0:18:34.760 --> 0:18:37.840 being grappled with now. The impact on jobs, of course 0:18:37.920 --> 0:18:39.880 is the is the follow on from that, and that's 0:18:39.880 --> 0:18:41.760 actually part of something we'd like to maybe like to 0:18:41.760 --> 0:18:42.760 talk about next. 0:18:43.240 --> 0:18:46.520 Yeah, So talking about jobs particularly, one of the big 0:18:46.720 --> 0:18:49.400 trends this year really in New Zealand has been the 0:18:49.440 --> 0:18:52.880 head count reduction in the public sector. We've just seen 0:18:53.160 --> 0:18:55.359 in the last couple of weeks, you know, the proposals 0:18:55.359 --> 0:18:58.840 to really slash headcount again at health which will impact 0:18:58.880 --> 0:19:04.160 the data and dig division there, huge reduction. What's your 0:19:04.200 --> 0:19:07.280 take on how this is sort of playing out in 0:19:07.359 --> 0:19:12.440 terms of affecting government's ability to digitally transform. It's got 0:19:12.440 --> 0:19:17.000 a aggressive roadmap DEIA just put it out at Service 0:19:17.040 --> 0:19:19.640 Modernization Roadmap. It wants to do all of this sort 0:19:19.640 --> 0:19:22.520 of stuff. Do we actually have the resources to push 0:19:22.560 --> 0:19:23.240 this through now? 0:19:24.160 --> 0:19:26.560 They've also come up with another one market lad initiatives, 0:19:26.600 --> 0:19:30.640 which will allow players in the market to suggest projects 0:19:30.680 --> 0:19:33.879 that might might improve service, so you don't necessarily have 0:19:33.880 --> 0:19:35.600 to go through a full tender process when you go 0:19:35.680 --> 0:19:37.720 through that. So they are greasing the wheels of innovation, 0:19:37.800 --> 0:19:39.560 you can say, with some of that within the public service. 0:19:40.040 --> 0:19:42.280 Let's just get some numbers on the public service cuts. 0:19:42.280 --> 0:19:45.640 For starters twenty two there were sixty two forty three 0:19:45.640 --> 0:19:48.800 public servants twenty three there were sixty three, five hundred 0:19:48.800 --> 0:19:51.399 and thirty seven and As of yesterday, eight hundred and 0:19:51.440 --> 0:19:55.920 sixty five layoffs had been reported. Right now, that's still 0:19:56.080 --> 0:19:58.320 relatively early days, but as you can see, it doesn't 0:19:58.320 --> 0:20:01.280 actually take us down below the twenty twenty two number. 0:20:02.040 --> 0:20:04.280 So everything's a matter of perspective. 0:20:04.320 --> 0:20:04.600 Really. 0:20:04.840 --> 0:20:07.520 I believe that some of those I haven't quite worked 0:20:07.560 --> 0:20:10.959 up the exact relationship, but some of those positions that 0:20:11.000 --> 0:20:13.399 are being vacated are not filled at the moment. 0:20:13.400 --> 0:20:13.800 Anyway. 0:20:14.160 --> 0:20:17.320 It could be an anticipation of these losses that the 0:20:17.480 --> 0:20:21.840 agencies have already decided to allow head counter shrink naturally 0:20:21.920 --> 0:20:24.320 when they have an opportunity to do that. That's probably 0:20:24.359 --> 0:20:27.200 my reading of it. But yeah, I mean, we think 0:20:27.200 --> 0:20:30.119 of them as huge cuts, and they could well be 0:20:30.320 --> 0:20:32.680 in the future huge cuts, but right at this point 0:20:32.720 --> 0:20:36.000 in time, it's not appearing that huge. 0:20:36.240 --> 0:20:37.760 Still early days, We'll wait and see. 0:20:37.880 --> 0:20:40.240 We heard so much at the start of the coalition 0:20:40.359 --> 0:20:42.760 government's term. They stopped three Waters, that was a big 0:20:42.760 --> 0:20:46.359 IT project, tip the Kinger. They sort of unwound that 0:20:47.280 --> 0:20:50.720 MSD has big transformation project on the go. What's really 0:20:50.760 --> 0:20:52.800 your sense on the state of some of these big 0:20:52.840 --> 0:20:57.119 government tech projects. There has been sort of freezing of 0:20:57.160 --> 0:20:59.800 some budget and that some of those big ticket items 0:20:59.800 --> 0:21:02.360 still rolling along the likes of three Waters. 0:21:02.720 --> 0:21:04.720 Three Waters is basically pretty much right off. 0:21:04.760 --> 0:21:06.920 It had advanced quite a bay, but not to the 0:21:06.960 --> 0:21:09.720 point where it could really be rolled out anymore. So 0:21:10.119 --> 0:21:13.639 you're looking at a two hundred and two hundred million 0:21:13.840 --> 0:21:15.960 right off of three Waters. In terms of TEA the 0:21:16.040 --> 0:21:18.200 King of they've they're still working on the project there. 0:21:18.560 --> 0:21:22.080