The days of IT as a siloed department are over. The rise of generative AI (GenAI) has sounded the death knell for this outdated model. Technology is no longer just a tool; it represents the very fabric of the business. And although various enterprise technology roles have of course emerged, "technology" has been curiously absent from the strategic decision-making table.
Here's what we mean:
An IBM Institute for Business Value study looked into the reason(s) why, showing a growingly disconcerting disconnect between the ambitions of IT leaders and the perceptions of their C-suite counterparts. While tech executives are eager to embrace the potential of generative AI, many struggle to maintain the reliability of fundamental IT services.
In 2013, nearly 70% of tech CxOs believed their IT organizations were effective at providing basic services. Today, that figure has dropped to 47%. This decline is particularly acute among CEOs and CFOs, who now express less than half the confidence they had in 2013.
The emergence of GenAI has likely only exacerbated these challenges. Over the past six months, 43% of tech CxOs have reported increased concerns about their technology infrastructure's ability to handle the demands of this new technology. As a result, they now prioritize investments in hybrid cloud solutions to optimize their infrastructure for scaling generative AI. Despite this focus, respondents indicated they are currently spending nearly 30% more on hybrid cloud than on AI itself.
"Tech leaders today are grappling with multiple business demands, made even more complicated by the rise of generative AI. They must navigate the challenges of modernizing their IT infrastructure and scaling generative AI to support the business' core competitive advantage, " said Mohamad Ali, Senior Vice President, IBM Consulting.
The study also highlighted the importance of collaboration between tech CxOs and their finance counterparts. While two-thirds of CEOs believe a strong partnership is essential for organizational success, there is a disconnect in practice. Only 39% of tech CxOs report collaborating with finance to embed tech metrics into business cases, and 35% of CFOs say they are engaged early in IT planning. The study found that high-performing tech CxOs who connect technology investments to measurable business outcomes achieve 12% higher revenue growth.
As organizations navigate through GenAI, responsible AI has become a top priority for tech CxOs. However, there is a gap between intentions and actions. While 80% of CEOs believe transparency in the use of next-generation technologies is crucial for fostering trust, many organizations fall short on delivering core responsible AI practices. Only half of respondents reported delivering on explainability, and even fewer are addressing privacy, transparency and fairness.
The increasing regulatory scrutiny surrounding GenAI has further complicated the picture. According to the survey, 41% of tech CxOs have expressed growing concerns about regulation and compliance, but the majority still view regulatory change as an opportunity rather than a barrier.
To meet the challenges that come with GenAI, tech leaders must rethink their talent strategies. Nearly two-thirds of tech CxOs believe their competitiveness will hinge on their ability to attract, develop, and retain top talent. However, 58% struggle to fill key technology roles, and 27% identify talent as a top priority. Over the next three years, tech executives anticipate a surge in skill scarcities across key areas, including cloud, AI, security and privacy. Financial pressures also hinder investments in technology talent for more than half of tech CxOs.
“In this evolving AI landscape, the relationship between tech CxOs and their finance counterparts has never been more important, aligning technology spend with business outcomes to drive real value from AI investments,” said Ali.
The study offers an assessment of the challenges facing tech leaders as they strive to balance the demands of modernization with the need to deliver reliable basic services. They must learn to balance strategic investments in infrastructure, strong collaboration between tech and finance, a commitment to responsible AI practices and a proactive approach to talent management.
Edited by
Alex Passett
