Between the high expectations for generative AI and the billions – perhaps even trillions – of dollars in potential value that could be unlocked by almost every company, an expectations gap is emerging between CEOs and their C-level technology leaders.
CEOs crave growth: increases in revenue, market share, margin, and the amount of customers they serve. But IT and Chief Technology leaders remain firmly focused on efficiency, including infrastructure, application modernization and core automation.
Surveys consistently highlight fragmented opinions at the C-suite level. A survey of 600 IT professionals conducted by Salesforce found that nearly three in five say business stakeholders have unreasonable expectations about the speed and agility of implementing new technologies. At the same time, a majority of CEOs say they are “ambivalent or completely dissatisfied” with the progress their organization has made so far in AI and generative AI, a recent BCG survey showed.
“CEOs are focusing on growth, CIOs are focusing on efficiency,” said Rohan Pal, Chief Transformation Officer at ServiceNow, during a Fortune This week’s discussion focused on CIOs and how organizations can be digitally inclusive. “And then, when you add in all the excitement that exists around generative AI today, across almost every industry, there is increased pressure on senior management to find a way to enable their organizations to use these new technologies to drive the business. growth.”
CEOs are optimistic that generative AI will improve the quality of their products, increase the intensity of competition, and significantly change their overall organization.
But this leads to another problem. Companies are currently burdened with a lot of technical debt. Technology debt is essentially a “tax” that companies pay to address existing technology problems and, according to McKinsey, can represent up to 40% of IT balance sheets. About 20% of technology money earmarked for new products is then diverted to solve tech debt problems.
This problem only worsened in the wake of the pandemic, when technology modernization efforts were put on hold while employers focused on how to enable their vast workforces to log in remotely and have secure access to the systems and applications they they are behind firewalls. For many organizations, modernization is a few years behind what it should be. And major projects, like moving to the cloud, are complex and challenging multi-year journeys.
Part of the challenge CIOs face is communicating their vision to the organization. CIOs must translate the story of technology modernization into bite-sized pieces to demonstrate that IT will contribute to both cost efficiency and growth.
At S&P Global, Swamy Kocherlakota, Chief Digital Solutions Officer, said the technology transition to support business growth is almost like a Rubik’s Cube. Where does a company transform technology and in what order? After making the transition, how to ensure employees are aware of the “why” and what the opportunities will be. And what is the effect when you remove costs and reinvest in the business?
“Every time a new technology is introduced, it always drives operational efficiency by identifying the right spend with the best value for money and then returning a portion to the company. And then the reinvestment creates a snowflake effect,” Kocherlakota said.
Yao Morin, chief technology officer at commercial real estate firm JLL, said technology is often developed by decision makers who imagine what the technology should be versus a technology that will be suitable for the younger people who will eventually use it. That’s why with generative AI solutions, for example, JLL takes a slightly different approach, using a bottom-up feedback loop to ensure the technology is built with the right end user in mind.
“It’s an unusual approach,” Morin said. “But we actually get great adoption and great feedback that way.”
Alan Stukalsky, digital director of North America at Randstad, shared that when the staffing agency introduces technology into all of the company’s core applications, it allows end users to share continuous feedback.
“Every month we do some sort of summary, where we look at what some of this data is telling us, to decide what the road map is for the next quarter,” Stukalsky said. “It was extremely helpful.”
Misty Kuamoo, senior vice president and chief technology officer of enterprise technology at Nationwide, said she has helped drive a mindset shift with her technology teams, encouraging those who work with a variety of departments, including legal, human resources, marketing and finance, to speak the language of those businesses and be more involved in planning.
“This was, for us, one of the biggest mindset shifts: We were able to help my technology team collaborate directly with the business,” Kuamoo said. “They want us to be involved.”