Insights from Gartner Symposium, Gold Coast, September 2024
As we move further into 2024, the buzz around Generative AI (GenAI) has evolved significantly. While the initial hype has settled, recent surveys indicate a profound shift in perception among CEOs and CIOs. According to the latest Gartner surveys, a staggering 74% of CEOs now believe that AI is the technology that will most significantly impact their industries—up from 59% just months earlier. This growing conviction places substantial responsibility on CIOs to harness AI effectively, as 60% of them are now tasked with leading their organisation’s AI strategies.
However, with this responsibility comes a formidable set of challenges. CIOs are beginning to grapple with the realities of deploying AI, as many initiatives slip into what Gartner describes as the Trough of Disillusionment. Here, we explore the emerging barriers and provide actionable strategies for CIOs to ensure they deliver genuine value from AI technologies at scale.
1. The Challenge of Realising Business Benefits
While enthusiasm for GenAI tools remains high—with 97% of technology leaders expressing eagerness to adopt them—72% of employees report difficulty in integrating these tools into their daily routines. For organisations to unlock the potential of AI, user adoption is crucial.
Key Action: CIOs should focus on targeted deployment of GenAI, ensuring that specific roles benefit from tailored implementations. For example, less experienced employees in lower-complexity roles, like call centre agents, can achieve significant productivity gains through these tools. Conversely, in high-complexity roles, seasoned professionals—such as software engineers—will benefit more as they can effectively validate and utilise AI outputs.
2. Managing Costs and Risks of AI
AI can be an expensive venture. Gartner’s research shows that over 90% of CIOs cite cost management as a significant barrier to achieving value from AI. The average expenditure for organisations deploying GenAI reached around $2.3 million in fiscal year 2023, and costs are projected to rise further as GenAI pricing models evolve.
Key Action: To manage these costs effectively, CIOs should create proofs of concept that not only test technological capabilities but also assess cost scalability. Understanding the components of AI costs will allow organisations to negotiate better with vendors and avoid the potential for cost overruns that can reach 500-1000% if left unchecked.
3. Navigating the Proliferation of AI and Data
AI and data are increasingly integrated into all facets of the enterprise, leading to significant governance challenges. As AI models draw on vast amounts of data—much of which may be unstructured—organisations face difficulties protecting sensitive information and ensuring compliance.
Key Action: CIOs must adopt a more nuanced approach to data management that emphasises access rights and permissions. This strategy is essential to mitigate risks associated with AI accessing sensitive data and to create a unified data pipeline that encompasses both structured and unstructured data.
4. Addressing Unintended Consequences of AI
The introduction of AI into the workplace can provoke a range of emotional responses among employees. While some may embrace the technology, others might feel threatened, leading to potential decreases in morale and productivity. Alarmingly, only 39% of employees believe AI will yield fair outcomes in their organisations.
Key Action: CIOs should take a proactive stance in managing the behavioural impacts of AI. This entails co-designing new roles and processes with employees, ensuring that they are part of the transformation journey. Understanding how AI alters work dynamics is essential to mitigate jealousy, overdependence on technology, and other negative behavioural outcomes.
5. The Path Forward: A Balanced AI Strategy
CIOs are at a pivotal moment where they can shape how AI is perceived and implemented within their organisations. The key to success lies in balancing productivity gains with other strategic business benefits. Gartner reports that half of all enterprise GenAI initiatives are directed toward augmenting employee productivity, while the other half focus on broader business outcomes, such as creating new revenue streams.
Key Action: CIOs should manage AI benefits as a portfolio, assessing the size of investments in each area while considering associated risks and rewards. This holistic view will enable organisations to reap the full benefits of AI while maintaining control over costs and governance.
Conclusion
As the AI landscape continues to evolve, CIOs play a crucial role in navigating its complexities. By addressing these challenges head-on and adopting strategic, tailored approaches to AI implementation, organisations can unlock the true potential of AI, fostering innovation and driving business success. The journey may be fraught with obstacles, but with careful planning and execution, the rewards are well within reach.
PhoenixDX Co-Founder and Director, Juan Martin, attended this Gartner event on the Gold Coast. “The focus was squarely on AI-assisted software development as the best way forward. Gartner spoke about the ‘AI sandwich’ with fillings including data, embedded AI, BYO AI, Trust, Builtin AI and centralised data. OutSystems’ platform approach to AI fits perfectly with this model as it takes the complexity and pain out of managing each ingredient separately.”
