3484: How BDO Is Turning AI Investment Into Real Outcomes

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[00:00:55] And don't forget to use the code TECHDAILY-28 for 28% off. When a global professional services firm commits more than $1 billion over the next five years to AI, I think it's worth paying attention. Certainly caught my attention. And that's exactly what BDO USA announced earlier this year. And at the center of that strategy is my guest today.

[00:01:24] He brings over three decades of experience in digital transformation, innovation and strategic IT leadership. And at BDO, he leads a national IT organization that drives modernization and security across the enterprise. But today we're going to dig into how BDO is putting that billion dollar AI commitment to work.

[00:01:48] Learn more about that global approach to innovation, the balance between risk and opportunity in enterprise AI, and what it takes to align a massive digital transformation with business objectives. So from security to scalability to client impact, my guest will walk us through what AI looks like inside one of the world's largest professional services networks. But enough from me. Let's get Russ onto the podcast now.

[00:02:19] So a massive warm welcome to the show. Can you tell everyone listening a little about who you are and what you do? Well, thanks, Neil. Hello, everyone. My name is Russ Halers. I have spent over three decades in the technology sector. It seems like a long time now. I see that in, you know, when we start talking about it. But spent the last 25 years working at BDO. Currently serve as the chief information officer.

[00:02:46] In my current role, I'm responsible for overall technology vision and strategy. You know, I'm also this includes everything from managing infrastructure, cybersecurity and AI. I'm passionate about leading BDO through, you know, technology changes and what comes next in the technology field. Seems like it's always changing. And for me, it's been a privilege working for an organization that's committed to not only innovation, but funding the innovations.

[00:03:15] Well, it's a pleasure to have you join me on here. And every day I try and demystify a different area or learn more about the role that technology is playing in transforming businesses in every industry. And one of the things that put BDO firmly on my radar was when I read that you'd recently announced a billion dollar investment in AI over the next five years.

[00:03:39] And over the last three years, I think there's been a lot of talk around AI and getting value from it and ROI and kind of investment into this kind of technology. So I've got to ask, what was it that drove that commitment for that billion dollar investment? And what outcomes do you hope they will deliver? Yeah, it's a very good question.

[00:04:03] We started, let me start off by, you know, we started our journey into AI, I would say back in 2017, 2018. And then when Generative, you know, hit in November, you know, came, I think it was released in November 22, if my memory serves me correctly.

[00:04:22] You know, we looked at this and said, hey, wait a minute, this is going to be now the price point is down to where the average corporation can in smaller corporations can, you know, adapt this very quickly and inexpensively compared to speaking to, you know, before. You know, we started our initiative there.

[00:04:41] We named a chief data and AI officer at that point and dedicated the full team through our early experience with AI, generative AI especially. We started seeing, you know, the value from it. And, you know, as we took a look at this, we felt that, you know, for the future, you know, we want to make a deep commitment to innovation.

[00:05:11] And this has always been part of our strategic plan since our current CEO has been, you know, been in office. So for us, it's just not a buzzword. We do really try to live up to it. And so as we were looking at this, you know, first and foremost, we recognized that AI was going to fundamentally reshape the business landscape. And we felt that, you know, we really need to be committed to funding this.

[00:05:38] And it really, you know, we were watching how AI was opening up, starting to open up new possibilities. And we wanted to make sure that as we looked at our own business, we looked at how the, we were future proofing BDO to, you know, to be a leader in this area. And also, you know, to serve our clients.

[00:06:01] And the other thing that we were looking at, to be honest with Neil, is, you know, as individuals are coming out of college and, you know, coming into the workplace, they don't want to go into a workplace that, you know, I was going to joke and say they're back from the 1980s. And, you know, we really felt that in order for us to deliver the solutions that our clients expect and the timeframe they expect, we had to really double down on the investment and ensure that, and to ensure that, you know, BDO was successful in the future.

[00:06:29] So that's what kind of drove the initial, you know, investment in there, the decision for the investment. We're already seeing, you know, I would say fruits of the labor from that standpoint, our early investments in, you know, in internal, internalizing like a chat BDO or chat GPT system, we call it chat BDO. We're seeing about 65% utilization in that system.

[00:06:55] And we've saved approximately, since the inception, about a million hours of professional time using that. So, you know, as we look at this, we know that, you know, the AI can help us automate tasks, uncover, you know, let's say data patterns, enhance our services. But we felt that, you know, from a driver standpoint, we felt that it really would future-proof BDO.

[00:07:18] So, from an outcome perspective, you know, what we're expecting is that it will help us improve quality and efficiency of our services and allow us to create new solutions for our clients and that we'd be able to go to market on.

[00:07:34] I think if you take a look at other, you know, technology trends in the past, whether it be, you know, deployment of the PCs when the PCs hit the market, the dot-com era, you know, mobile phones, you know, things like that. We saw a lot of trailing changes to how businesses were performed. Today, you know, I can do almost everything that I do on my PC on my mobile phone. So, you know, 10, 15 years ago, did you think you could do that?

[00:08:04] And how did that change the business landscape? So, we're thinking that this will change the way we deliver services to our clients and we want to be prepared for that and make sure that we empower our people to do their best work. And I'm curious, how would you say you approach AI adoption differently in a professional services environment compared to other industries, just for leaders listening that might be scattered around multiple industries?

[00:08:32] What do you do differently, do you think, or what is different about your approach? Well, you know, it's interesting you ask that question. I started my career out in manufacturing working for a subsidiary of GM at the time, EDS. And, you know, obviously, you know, manufacturing is going through its own, you know, I'll call it revolution, but automation, you know, the factory floor and stuff like that.

[00:08:58] And when you compare a professional services firm to, let's say, manufacturing or retail, we are really people-centric. We use a people-centric approach at BDO anyway. And I feel that, you know, our expectation is to be able to empower our employees to do their jobs better. It's an augmentation of what they're doing. It's not a replacement. Whereas in some industries, it's really to kind of replace the, you know, the human element.

[00:09:28] Here, it's really to help them, you know, give them the data that they need, give them the tools and the tech they need to make decisions quicker. And that's where we really feel the difference is in, you know, in the professional services area. We also feel that it will help build trust integrity.

[00:09:46] You know, if you take a look at, for example, in an audit process, you know, the requirements you do spot or let's say when you're going through a validation, you might, you know, do sampling. Well, going forward, that's not going to be, you know, with technology, you're not going to do that. You know, you sample the entire, you know, evidence file. So this will, I think, also build trust with integrity with our clients.

[00:10:12] And I think that's a little different approach than what some of the other manufacturing, you know, industries or other industries are using themselves and the approach that they're using. And just to bring that to life, are there any other examples of how AI is already being applied within BDO and how it's improving operations or client services? Because I think, again, there's a lot of excitement at the moment, but a lot of businesses trying to work out where that value is.

[00:10:38] And I think it would really bring to life if you had any examples you could share around that. Absolutely. As I mentioned previously, you know, the first thing we did is we named a chief data and AI officer. I took a look at this, and if you think back and compared it to other things that we've seen in the trends, let's say security, you know, 20 years ago, 15 years ago, IT security wasn't as pronounced as it is today.

[00:11:05] And I felt that in order for us to be able to focus on deliberate AI solutions and AI driven, you know, applications and things like that, you know, we really needed to double down and build a team around it. So our first aspect was to build a dedicated team that would focus on delivering these solutions. So our early wins were internalizing. Well, first off, we built out the framework. We started with that. We wanted to start with like the ethical AI piece of it.

[00:11:35] So we really focused on, you know, policies, procedures, making sure that we're protecting a client's data. I mean, that's foremost in the front of our minds. And then we moved to our first tool, which I mentioned before was that we internalized a BDO system. And then we built it from there. We focused internally on, I would say, on the improvement areas, you know, things making it easier for people to find information.

[00:12:03] We had so this tool is multifaceted. And, you know, we received some very positive feedback in the first, you know, let's say year, year and a half of its implementation. We've now extends are in the process extending that tool even further. We're going to release a new copy of it coming up in the next month.

[00:12:26] And this will be a multi-agent environment transforming, you know, its current platform into a dynamic platform. And, you know, it's actually a proactive business partner to make it more seamless, intelligent, you know, to the end users and help them. So this will go out, you know, early, like I said, in the next month or so. And it's going to include a couple different apps on it.

[00:12:51] One is the, you know, the chat system, but also a .pro system that can analyze documentation and things like that. But also we released another one called Consulted Selling. We're in the process of modifying that system as well. And that system gathers information on potential clients and helps us, you know, collate the information in a much faster pace than what we have done in the past.

[00:13:16] I mean, something that could take you, let's say, a five-day, you know, time frame to gather information. It can do it in, you know, a couple hours. So we've got a couple of those things that are in the hopper. Our first piece, you know, Neil, you mentioned earlier on in the conversation where companies are trying to feel out the ROI and stuff like that. But we're looking at it in two aspects for AI. One is, you know, the price of barrier of entry.

[00:13:41] You have to have it just to stay in business or to, you know, kind of, you know, to be, you know, get a seat at the table maybe is maybe a better way to say it. But the other part of it is we're now working with the business lines even more closely to build solutions or to start, you know, diving into solutions that will help in their, you know, business automations. So we have a whole team that we're going to spin up on AI business automation and transformation.

[00:14:11] And the whole idea of this team is to be able to go after business reengineering. So this is in addition to the AI team that we first implemented two, three years ago. We are now, or two years ago, excuse me. We are now building out a larger team to go after more broader form of adoption across the enterprise within BDO. And we're also working with third parties.

[00:14:40] We're working with third parties on advanced audit solutions. So parties that have experience doing this type of work. And our goal is to bring more solutions to the table at a faster pace than what we're able to today. And BDO has got a global footprint.

[00:15:00] So how do you ensure your AI initiatives align across so many different regions while also respecting local regulations, local needs, et cetera? I would imagine that is somewhat of a challenge too. That's a big challenge within, I think, a lot of county networks or corporations even. When you take a look at the global footprint of a company, what might work in, let's say, the United States may not work in the UK.

[00:15:31] And you take a look at other countries with different rules and regulations. That has to be at the forefront of your AI strategies. So what we do within BDO to help us with not only AI strategies but even with business strategy and things like that, we normally form roundtables or committees and take representation from those local countries to help form policies and procedures

[00:16:00] and get the countries to participate and share information across boundaries, for example. So for AI specifically, we have a global international innovation and AI roundtable, a little bit of a multiple. But we do have a committee that meets regularly. So, for example, in that one, we got the U.S. firm, UK and New Zealand sharing information on a regular basis, whether that's governance frameworks or lessons learned.

[00:16:31] And we are sharing with others as well, not just those three. But it is, you know, it's designed to help get information out to those firms. And also, it helps with adoption. As you take a look at, you know, something that's adopted here, there's been tools that we'll adopt here or build here in the U.S. that, you know, we'll take a look at deploying those or using those in other countries.

[00:16:58] And then we help, you know, those member firms with that. And that's something that is, I would say it's been, you know, even in my days at Global, that's something that we really try to lean into. We haven't cracked the nut completely, but that's something that, you know, still on our agendas and it's at the top of our minds is to ensure that we are sharing, you know, regionally as well.

[00:17:26] I think the other part that, you know, that we look at on this is the local regulatory requirements in business needs. It is different from country to country. You know, you get the economy of, you know, the U.K. or the U.S. comparatively speaking to, you know, a smaller, you know, smaller region or a smaller firm. That's totally different than, you know, they need total, different tools and different tool sets maybe.

[00:17:52] So we have to keep that in mind as not only the business aspect, the local laws and regulations, but also just what the business requires in those areas. So it does create, it does create opportunities. And, you know, we're in the process of, we encourage this cross-reaching and sharing of governance and documentation to promote best practices. But this is going to be an ongoing, you know, an ongoing effort.

[00:18:21] And I would say that, you know, in a network like ours, it's never really ever something that you check off, but it's something that you always aspire to achieve. I love that. And when I was doing a little research on you, I also read that you've led IT strategies both in the U.S. but also internationally. So, again, how has that global experience, has that helped shape your perspective on innovation? Any big lessons there? Yeah, you know, it's interesting.

[00:18:51] I started that career in 2010 or that position in 2009, 2010 and working as the global head of IT. And it does change your perspective. You know, you come in with one perspective from a culture and you realize very quickly how you have to change your style and be.

[00:19:15] I felt that it really changed how I approach things, made me more open-minded and allowed me to listen. I think as a leader, sometimes we want to talk all the time and we want to, you know, pontificate our experience and our knowledge. And I think sometimes as a leader, you have to sit back and listen. You have to listen to, you know, to the individual's neck field. That is one of the biggest things that, you know, that working internationally has taught me.

[00:19:46] And not only that, but there is differences. And you have to respect that and try to, you know, be respectful of local values and things. So from my perspective, that's kind of what shaped, you know, me as a leader as I, you know, left that role and came in as the CIO in the U.S. firm in 15.

[00:20:08] The way we conduct the strategies for not only for global, but also for the, you know, the local firms is normally what we do is we get together as IT leaders, specifically within the technology realm. And we develop a, you know, global strategy and we work together jointly on that. And this is being led now by Belinda Thompson, who is the global head of IT for BDA Global.

[00:20:37] But then our strategies locally, you know, our strategy within the U.S. does feed into the global strategy. So it ties together. So there's a lot of collaboration back and forth on that. And that's how we do it to, you know, to try to have that commonality between, you know, between the member firms at a high level. And security and compliance, these are other top priorities for firms, especially when they're handling sensitive client data.

[00:21:07] So how are you balancing AI adoption with some of those responsibilities? You've probably had lots of conversations around that, but anything you can share around that? Absolutely. You know, that was one of the initial, you know, the initial concerns right off the bat was around security and sensitivity to data. You know, you know, when the tools started to hit the marketplace, if you recall, you know, two years ago, that it was kind of like the wild west.

[00:21:36] So I like to refer to it as and security and stuff wasn't necessarily top of mind.

[00:21:43] And, you know, one of the things that we did is, you know, we took a look at where, you know, the Internet-based chat products were at and quickly realized that, you know, we could be, we could have some serious issues if, you know, if our employees are using those systems to, you know, support client, you know, client deliverables and things like that. So that's what led us to, you know, developing our internal frameworks.

[00:22:12] Mike has done a fantastic job on that as the chief data and AI officer. So he really dug into that in the first, you know, couple months of his role, even before he was officially named in that role. He really dug into that and to help, you know, form our policies and procedures. You know, it was not a popular opinion, to be honest with you, Neil.

[00:22:37] There was times where I think people felt that, you know, we were too constrictive. But we also looked at it from, you have to, you know, balance your AI adoption with security and compliance. It's a must, especially with the data that, you know, that we have to protect. So that's one of the things we looked at. We looked at, we partnered with Microsoft on that. And, you know, they're obviously a partner with OpenAI.

[00:23:05] And so we leveraged services through that. And the reason we did that was that that allowed us to put a wall around our data so that if, you know, if we do want to roll out a, you know, let's say a client sensitive type of product, we know that it's protected and it's not going to be shared with a greater LLM to train, you know, the large language models. And so that was a big consideration for us. So when we look at tools and services that were adopted, we have to look at the, you know,

[00:23:32] look at the tech to see, you know, are we able to control that? If we can't, then we don't buy those tools or technology. And we've really, I think, honed our responsibility there. It's, you know, our policy and framework that we developed is really about responsible adoption. And, you know, the team, I think, does a great job.

[00:23:56] We also have the way we drive this out into our business lines. We have a research and AI development team called the RAID team. And they explore the new technologies and they bring it to, you know, kind of a committee style team to raise awareness. And also, and that's how, and then we start investigating. So if they come up with, let's say they need a new widget and our new tool, we'll start looking at it.

[00:24:24] We'll start looking at investigating not only the tool and the tech and does it meet the business needs, but also does it meet our legal obligations and our security, you know, obligations there. So that's almost, I would say that is probably one of the biggest determining factors of whether we'll use something. It's got to meet the business need, obviously, right?

[00:24:44] But also security and security and how that data is handled is going to be really utmost important. So we'll turn a product down if it doesn't meet it. And beyond increasing efficiency, what role do you see AI playing in enabling BDO professionals to deliver more value to clients? What kind of help are you seeing it playing there?

[00:25:10] You know, I think what we're seeing so far with the tools and the tech that we, you know, that we've been able to put into our users' hands is, you know, we started with the efficiency side first, but also the security and adoption. We really want to ensure that, you know, our data was protected.

[00:25:28] But now we're moving to that next phase where, you know, our tools are helping our, you know, our users uncover deeper patterns in client data, for example, in its automating routine tasks. So our, you know, our goal is not to replace but augment our, you know, our employees to allow them to focus on more value-added analysis.

[00:25:51] And, you know, so that's, you know, as we look at this, we feel that that's the value that it's going to bring to our clients is it's going to allow them more time to focus on the value-add side of the business instead of the, you know, instead of the routine and mundane tasks that we can, you know, hopefully automate. So we feel that that'll be more proactive in providing a personalized service and support to our clients.

[00:26:17] And beyond that, we feel that that'll also help us drive smarter and more, you know, impactful business decisions and outcomes for those clients so that as we, you know, take on a client, we can look at that and say, you know, this is their business. This is how they operate, you know, and modify or adopt, you know, tools and tech for that. That's going to be down the road. But, you know, that's one of the benefits of having a dedicated team to look at that stuff.

[00:26:44] They can be in tune to what the business needs and adapt much faster to the market shifts. And as you look a little further ahead, how do you expect AI to maybe even change the role of CIOs and the broader professional services industry? If you look into the future, any predictions or any gut feelings about where this leads? You know, that's a very good question. Yeah. First off, I really feel the CIO role is always changing.

[00:27:12] And, you know, and I don't mean to make that a cheeky answer, but I do feel that it's changing on a almost a daily basis. It feels like AI will fundamentally reshape the role of the CIO. So that's, you know, that's a given. But I think the shift will come from traditional IT leadership and management.

[00:27:32] If you take a look at some of the things I get bogged down on on a daily basis, that really needs to shift to be, you know, more strategic and be more a strategic leader instead of focusing on the operations, let's say, of an IT organization. So I think that's going to be one of the key shifts right there. And then I think the other key shift is that just like with any other tech, you know, curve we've seen in the past.

[00:27:57] The other piece is it's going to be how do we integrate more of this into our business and every aspect? That's going to be forefront of any CIO's mind as they go forward. It's not going to change. And I think it's, you know, I think it's going to drive value add to the business. So that's going to be another, I believe, another change in the, you know, the aspect of our roles.

[00:28:22] Another thing I think is going to happen is we're going to have to figure out, you know, just because you automate something or invest in it, going back to the earlier statement about ROI for AI solutions, you have to win and fail. And we have to be able to have models to track these AI powered solutions.

[00:28:42] They're not cheap. And if they're not delivering the, you know, the defined benefit and, you know, the productivity or, you know, the ROI that you expected out of them, then we have to have models to basically accelerate. If it's not a competitive advantage to have that tool, then maybe we need to shut it down. So I think that's another thing that we're going to have to do is we're going to have to change how we manage and, you know, manage and report on those in Monitrum.

[00:29:10] And then last but not least, I feel another one on there, Neil, that we have to really change on is really ensuring that our IT infrastructure remains ethical and secure. As we roll out these solutions, you know, it's easy to misconfigure something or, you know, with the technology, if you have a bad business process, you know, AI is just going to make it a faster, bad process.

[00:29:36] And, you know, you make sure that, you know, that it's ethical and it's secure. So we need to make sure that, you know, as you go through this evolution, that you're really looking at these business processes and, you know, streamline them and fixing them as you go. So I think it's really going to put the CIO in the limelight of business transformation going forward much, much more than they have in the past.

[00:30:04] Well, thank you so much for sharing your insights with everyone today. And through the power of manifestation and a little serendipity, I want to see if there's something we could do for you. Because some of the biggest names in business, VC funding and tech have either been guests or maybe even listened to this podcast. So is that a person you'd love to have a breakfast or lunch with? Who would it be and why? And hopefully he or she might just get to hear this. But who would it be? You know, I think it would be Warren Buffett.

[00:30:34] Oh, yeah. I just I admire I admire the way he operates. If you take a look at, you know, his life and how he has lived his life, how he operates from a business strategy and how he plans his legacy. I think it's just a, you know, just a real cool.

[00:30:57] I think he I think he's got a cool personality and it'd be fun to sit down with him to, you know, have a breakfast and chat about, you know, what shaped his, you know, his life in and just have a good conversation about it. Love it. Well, we'll throw that out into the universe. Let's see what we can make happen there. And for anybody wanting to find out more about the journey you've been on with BDO and AI and your investment, et cetera. Where would you like to point everyone?

[00:31:25] I would say head out to our head out to our BDO.com website for the US. And if anybody wants to talk in greater, you know, hit me up on LinkedIn. Awesome. Well, I'll add links to absolutely everything there. And more than anything, just thank you for taking the time to come on here, share your insight, share your journey.

[00:31:47] I think there is so much value, especially for people just starting out and with a little bit of trepidation on what the best things that they could be doing and the best place to start. And I think being able to follow in your footsteps there, I think is priceless. So thank you for sharing that with me today. Thank you, Neil. Appreciate the opportunity to be on your show. Been awesome. Thanks. So a big thank you to Russ for sharing how BDO is thinking about AI at enterprise scale.

[00:32:14] It's one thing to experiment with small pilots, but it is another to back that with five years and a billion dollars of investment. And one of the big takeaways for me is AI is no longer a side project. This investment proves it's a strategic priority, one that is directly tied to business outcomes. And modernization now is much more than just tech upgrades.

[00:32:39] It's about integrating AI or any technology responsibly across global operations and client services. And leadership in AI isn't just about innovation. It's about trust, governance and making sure that technology amplifies professional expertise. So for more on BDO's vision, please just visit BDO.com. Check out the firm's latest updates on its global AI investment. And I'll leave you with this.

[00:33:08] If your organization were to make a $1 billion bet on AI, where would you place your chips? Efficiency? Security? Client experience? Or somewhere completely different? Let me know. TechBlogRiderAtOutlook.com LinkedIn X Instagram just at Neil C. Hughes And the website, TechTalksNetwork.com But that's it for today. So speak with you all again tomorrow. Bye for now. Bye for now. Bye for now.

[00:33:38] Bye for now. Bye for now. Bye for now. Bye for now.