Tag: CIO

Enterprises Aim to Move Beyond Pilots, Accelerate Consumption of AI in 2024—Everest Group, Yates Ltd.

Despite the global economic turndown, enterprises widely adopted AI in 2023, with generative AI playing a substantial role, according to a survey of CIOs conducted by Everest Group and Yates Ltd.

 

DALLAS, January 18, 2024 — If chief information officers (CIOs) have their way in 2024, expect to see more enterprises making adoption of generative artificial intelligence (gen AI) a strategic priority with an aim to move past small pilots to scaled implementations. This forecast summarizes the sentiments of more than 50 CIOs interviewed by Everest Group in collaboration with Yates Ltd. The survey also revealed that improving the velocity of existing operations is the primary motivation driving enterprise gen AI initiatives.

The interviews conducted with global CIOs between October 23, 2023, and January 24, 2024, also underscore that gen AI is more than a passing trend, having successfully penetrated early enterprise adoption thresholds. Nearly 83% of global enterprises are either actively testing their capabilities through pilot programs or have already adopted gen AI for one or more production-grade use cases.

Key Findings from the Survey:

  • Sixty-one percent (61%) of global enterprises are actively exploring and piloting gen AI and 22% have already deployed gen AI for at least one or more processes. Another 15% plan to pilot gen AI soon.
  • The three top objectives CIOs are trying to achieve through gen AI are:
    • accelerating consumption of existing digital tools
    • reducing the latency of knowledge sharing
    • shortening the product development lifecycle.
  • CIOs identifying their top three challenges to scaling gen AI initiatives most often named lack of clarity on success metrics (73%), budget/cost concerns (68%) and the fast-evolving technology landscape (64%). Additionally, 55% named data security and privacy concerns, while 41% cited talent shortage.

The full report of findings — “Capturing the Generative AI Pulse: An Exploration of the CIO Mindset” — identifies the current state of enterprise generative AI adoption and the key challenges in scaling AI initiatives. The report also showcases three waves of generative AI adoption levels for enterprises and provides guidance to help enterprises advance in their generative AI adoption journey. Download the full report.

“Unquestionably, gen AI hype dominated 2023, but our survey indicates that it is more than a passing trend,” said Abhishek Singh, partner at Everest Group. “Our research clearly documents that most organizations are in what we call ‘Wave 1’ or the pilot phase of gen AI adoption; however, in 2024 and 2025 we fully expect more organizations to advance to the ‘Wave 2’ phase of production-grade deployments.

“Although enterprise adoption of gen AI is far from its anticipated peak, enterprises continue to experiment with unique use cases in a wide variety of industries, ranging from high-tech and financial services to healthcare and retail,” continued Singh. “As more of these initiatives document measurable impact, we’ll see adoption and full-scale implementation of gen AI accelerate considerably.”

Everest Group maintains that this shift from Wave 1 to Wave 2 will demand that enterprise leaders cultivate data-driven cultures and invest in digital and data maturity. Successful transitions will also require a comprehensive approach that incorporates technological advances, organizational readiness and ethical considerations.

“Gen AI is transforming senior executives’ perspectives on efficiency, growth and competitive advantage, and will revolutionize their operational strategies,” stated Charlotte Yates, the founder and CEO of Yates Ltd. She emphasized the need for a forward-thinking blueprint in Wave 2 to effectively implement gen AI use cases: “This blueprint should address a wide range of opportunities, risks, and investments in platforms, operating models, organization design, governance, strategic partnerships and culture.”

About Yates Ltd.

Yates is an IT and business consultancy that partners with senior executives to create the strategy, blueprints, financial mechanisms and execution plans to drive and achieve transformation. Our clients gain measurable cost savings, new capabilities, and the ability to outperform their competition. Our areas of focus include enterprise networks, software, managed services, end user services and automation. Services include strategy, sourcing, program execution, change management, communications and governance. Yates Ltd. is a WBENC-certified woman-owned business.

About Everest Group

Everest Group is a leading research firm helping business leaders make confident decisions. We guide clients through today’s market challenges and strengthen their strategies by applying contextualized problem-solving to their unique situations. This drives maximized operational and financial performance and transformative experiences. Our deep expertise and tenacious research focused on technology, business processes, and engineering through the lenses of talent, sustainability, and sourcing delivers precise and action-oriented guidance. Find further details and in-depth content at www.everestgrp.com.

Should CIOs Run Engineering Teams as a Parallel Organization to IT? | Blog

The engineering services market is now disrupting the IT services marketplace. The move to technology platforms and the requisite number of engineers causes a dilemma for CIOs. The need for engineering skills is growing faster than IT skills, and companies are investing more in the engineering function, somewhat at the expense of IT. CIOs cannot ignore this phenomenon. Should a CIO create an engineering organization that runs parallel to the IT organization, or should engineers be part of the IT organization and perform some IT functions?

Read more in my blog on Forbes

Where Is the Bottleneck between Business and IT Aligning? | Blog

Stuart McGuigan, the former CIO of the U.S. Department of State and, earlier, the CIO of Johnson & Johnson, says innovation-driven companies (like pharmaceuticals) usually “either furiously spend money to support the launch of new products or later go back and then cut costs. To do both at the same time requires an operational mindset and an incredibly focused use of technology.”

How The CIO Role Must Change Due To Digital Transformation | Blog

Digital transformation is sweeping through businesses, giving rise to new to new business models, new and different constraints, and presenting a need for more focused organizational attention and resources in a new way. It is also upending the C-suite, bringing in new corporate titles and functions such as the Chief Security Officer emerge, Chief Digital Officer and Chief Data Officer. These new roles seemingly pose an existential threat to existing roles – for example, the CIO.

Read more in my blog on Forbes

Video: Digital Transformation and The New Breed of CIO | Blog

Over the last year, it seemed that CIOs faced an existential threat. This threat was coming from new roles – Chief Digital Officer, Chief Security Officer, Chief Data Officer – as well as the business becoming more and more involved in digital transformation, and looking to inject its influence into IT.

It even got to the point early on last year, where there were questions as to whether or not the CIO’s role would continue, or would it dissolve or devolve into these different roles.

During the course of the year, we investigated this, and have come up with a strong point of view that in fact, the CIO has survived this challenge, redrawn its charter, and has emerged as a very powerful and sustaining executive role in the organization.

You know, in this new charter, what we find is there is no other executive in the organization that has the breadth of vision across all the different operating parts of the organization or the depth of resources to be able to deliver on digital transformation and support the new digital operating models that are emerging – leaving the CIO as the natural place for this responsibility to stay in.

And the new breed of CIO, therefore, is redrawing their charter to support this new vision. Now, redrawing this charter is not easy, and it requires substantial changes in organization, IT organization, as well as a substantial commitment to deepen the relationship with both the business and the board so that the CIO in the organization can play this transformative role.

I look forward to hearing from you this year on how your progress toward this new charter and your experiences as you build this very important role in your organization. 

CIOs Struggle with Gap in Digital Transformation Expectations and Delivery Capabilities | Sherpas in Blue Shirts

As part of our Pinnacle Model™ methodology and benchmarking, Everest Group recently conducted a study of over 200 companies on their digital transformation readiness. The study found companies’ boards of directors typically believe digital transformation is about technology, and they typically under-estimate the cost and expect results in months, not years. Those expectations are a huge gap away from the reality challenging CIOs and senior leaders leading the digital transformation. CIOs participating in our study revealed their companies were unprepared, under-funded and under-supported as to the tools, investment and commitment required to succeed. In this blog, I’ll share how to effectively communicate to your company the requirements for digital transformation to succeed.

Why Is There a Huge Gap?

The gap between expectations and delivery capabilities is because digital transformation is fundamentally different from companies’ past experiences with transformation. The technologies are disruptive and necessitate changing the organization, talent model, mind-sets, policies, processes and procedures – basically, the entire business model. Those changes are not easy. They don’t come all at once. They’re not completely known at the outset. And they unfold over a multi-year journey.

Peter Drucker advised, “If you want something new, you have to stop doing something old.” But the depth and breadth of necessary changes and the required commitment and investment for digital transformation are complicated to explain. They are hard to understand.

The digital journey requires far more resources, support, commitment and investment than anyone wants to believe. Digital technologies also take far longer to implement than people expect. For instance, in Robotic Process Automation (RPA) technology, a company can put a robot up quickly to create process improvement; but getting significant value involves more than that. Sure, a company can automate a function. But until the executives rethink the process that the robots will perform, they cannot create a meaningful improvement or breakthrough performance.

So, it’s no wonder that the boards don’t understand the extent of what is required to successfully complete a digital transformation journey. They also don’t understand that they need to fund IT transformation at the outset so that IT can successfully support the digital transformation.

As a result, most digital transformation initiatives fail (70%, according to a 2013 McKinsey & Company study. Many participants in Everest Group’s Pinnacle study revealed that, even when they understood the journey, they could not communicate it to their board, could not get funding, could not build support for it, and thus could not drive the change necessary to get it done.

How to Communicate Digital Change Requirements to Your Company

From our Pinnacle Model study, we developed an assessment vehicle (a 30-minute questionnaire) from which your company can compare its digital readiness against the broader population and against the market leaders (the Pinnacle Enterprises™). Together with a four-hour workshop, you’ll have the tools that will allow you to identify gaps, create learnings, understand what things you could do differently to improve your company’s readiness and performance and well as build road maps that allow you to systematically mature your digital readiness.

Learn more about our digital transformation analyses

Executives that have gone through the assessment and workshop tell us it created a great tool for communicating with their board of directors and the rest of the business about the support, resources and investment necessary to allow for successful digital transformation.

It is also a supporting budgeting tool that allows you to demonstrate the value against the cost, build support for the investment required to mature digital readiness and communicate the value that the IT organization will be able to achieve or support by increasing its digital readiness.

There’s a startling fact in the 2013 McKinsey study I cited earlier: Of the “successful” 30% that didn’t report their initiatives as failures, “success” was described as either breaking even or finishing the program but not delivering the anticipated business results. Of course, no company wants to undergo the challenge, effort, and expense of transformation only to break even or remain in the same relative competitive position.

Harvard Professor John P. Kotter’s study of 100 companies that underwent transformation initiatives found more than 50% failed in the first phase (getting organizational commitment and cooperation for the initiative). The Pinnacle assessment, workshop and communication tools are very helpful in addressing these issues.

Crucial CIO Skills for Digital Transformation Success | Sherpas in Blue Shirts

What do CIOs making the most progress with digital transformation have in common? They know how to nurture cross-functional collaboration.

All companies are vulnerable to the threat of a competitor’s ability to create new value for customers. That’s why most companies today are considering the opportunities for creating new competitive advantage through digital transformation and virtually all CIOs view digital transformation as a top priority. However, Everest Group’s Pinnacle Model research of more than 200 leading companies finds that only 10 percent of CIOs and their IT organizations are in a state of readiness for digital transformation initiatives.

Through our investigation into these companies’ digital journeys, we identified Pinnacle Enterprises – those that were best prepared for digital change and achieved superior business outcomes because of their advanced capabilities. The outcomes are compelling. Consider these examples:

  • In 86 percent of the Pinnacle Enterprises, the IT organization enabled the enterprise to serve a new market or new customer segment, versus 43 percent of the “unready” enterprises.
  • In 95 percent of the Pinnacle Enterprises, employee productivity increased between 10-30 percent, versus 54 percent of the other enterprises we studied.
  • Of the enterprises implementing Robotic Process Automation (RPA), the Pinnacle Enterprises achieved 4X more ROI (100 percent) than the other enterprises (40 percent) and achieved implementation 3X faster.

Our research also identified the enablers and capabilities of Pinnacle Enterprises to achieve desired outcomes and accelerate timeframes. A notable enabler: We found 95 percent of Pinnacle Enterprises (vs. 58 percent of the other enterprises we studied) built a culture that is effective in collaborating across functions in an organization.

Read more in my blog at The Enterprisers Project

How Cloud Impacts APIs and Microservices | Sherpas in Blue Shirts

Companies considering moving workloads to cloud environments five years ago questioned whether the economics of cloud were compelling enough. The bigger question at that time was whether the economics would force a tsunami of migration from legacy environments to the cloud world. Would it set up a huge industry, much like Y2K, of moving workloads from one environment to another very quickly? Or would it evolve more like the client-server movement that happened over 5 to 10 years? It’s important to understand the cloud migration strategy that is occurring today.

We now know the cloud migration did not happen like Y2K. Enterprises considered the risk and investment to move workloads as too great, given the cost-savings returns. Of course, there are always laggards or companies that choose not to adopt new technology, but enterprises now broadly accept both public and private cloud.

The strategy most companies adopt is to put new functionality into cloud environments, often public cloud. They do this by purchasing SaaS applications rather than traditional software, and they do their new development in a Platform-as-a-Service (PaaS) cloud environment. These make sense. They then build APIs or microservices layers that connect the legacy applications to the cloud applications.

 

Success Factors in Driving Digital Transformation at the Social Security Administration | Sherpas in Blue Shirts

The digital transformation at the Social Security Administration (SSA) is remarkable for its approach to ensure a successful outcome. Shifting the process of retiring into a digital world required overcoming a resistant culture, managing multiple stakeholder groups’ needs, surmounting organizational structures and ensuring leaders didn’t lose sight of the end outcome and focus too much on process. The SSA transformation initiative faced the same challenges that commercial businesses face.

Frank Baitman, SSA CIO at the time, recalls the agency experienced management challenges due to its structure using 1,300 field offices across the US. Its 40,000 field workers spent most of their time assisting people going through the retirement process, which didn’t give them enough time to effectively handle disability determinations and claims, and address a backlog in disability case processing. Disability, a more complex process, required far more human attention and support than the relatively simply retirement process.

Design thinking approach

This was a key consideration in the transition plan. The agency involved employees in the design thinking process so that the new business model would satisfy their concerns. As a result, the website includes a validation process so SSA employees can check in with individual retirees, and make sure they made well-informed decisions when using the online system.

 

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