Why bosses will pay a premium for Microsoft’s ChatGPT tools

Richard White, the chief executive of WiseTech Global, has signed up to trial the new version of Microsoft 365 in Australia.

“If it can assist a person and do a good job of making them more productive, then it’s highly valuable,” he told The Australian Financial Review.

“I certainly wouldn’t even blink at paying for that sort of capability to make all of my staff five or 10 per cent more productive.

“Given what I pay the people that I employ, it’s a tiny, tiny investment.”

Office chores

Revealed in March, Copilot adds large language model tech from OpenAI’s GPT-4 to the company’s popular Office products such as Word, Excel, Teams, PowerPoint and Outlook.

In practical terms Copilot will be able to summarise an email chain and draft a reply. It can be directed to turn a Word document into a PowerPoint presentation or take notes during a Teams meeting. Number crunchers can use Copilot in Excel to analyse trends and create professional-looking data visualisations.

KPMG Australia’s chief digital officer John Munnelly is also bullish on the value Copilot has brought to the consulting shop, turning proposal documents into presentations and recording and summarising internal Teams meetings.

“It will accelerate some of those mundane tasks and give us time to work on the really important strategic stuff… so, Copilot is absolutely going to be a game changer,” Mr Munnelly said.

Gartner’s vendor lead analyst for Microsoft, Jason Wong argues businesses need to have a clear use case and valuable data sitting inside Microsoft 365 to earn a return on their Copilot investment.

“There are already lots of vendors adding on generative AI features to existing enterprise applications, and there are also open source alternatives, like Meta’s LLaMa 2, for businesses that want to build their own,” Mr Wong said.

“So most enterprises won’t be rushing into adopting these emerging tools unless there is clear business value.”

AI arms race

A new report from the Technology Council of Australia and Microsoft found generative AI could contribute $115 billion annually to the Australian economy by 2030, if it is adopted quickly.

While the slow adoption of AI could deliver $45 billion in annual value-add by 2030 and medium-paced adoption could deliver $75 billion by improving existing industries and creating new products and services.

Microsoft is already a big winner from the potential productivity boost, its shares have soared 40 per cent so far this year, largely from its investment in ChatGPT-maker OpenAI.

A report from Macquarie Equity Research found Copilot could add roughly $US14 billion to the company’s revenue if just 10 per cent of its existing users sign up in its first full year. That would more than recoup the $US13 billion Microsoft poured into OpenAI.

The pressure for companies to enter the AI arms race will continue to mount as generative AI moves beyond hype to real-world revenue and Copilot offers organisations a low-risk on-ramp.

Gartner analyst Arun Chandrasekaran says IT bosses will need to sit down with their chief financial officer to ensure they don’t end up buying a Ferrari which sits in the driveway unused.

“Enterprise IT leaders need to partner with CFOs to develop a robust cost-benefit analysis process. This should include a clear timeline for ROI, identify tangible productivity metrics and create a reporting process to track, validate and report financial benefits,” he said.

It may be a small price to pay to join the club of companies leveraging AI. Whether or not they get value out of the spend is another matter.