I believe 2024 will be the year of focusing on business value. That applies to gen AI, but it goes further than that. Most companies are now more than ten years into their digital transformation journey. Having already picked the low-hanging fruit, they now want to get more value and return on those investments. However, there are fundamental sentiment shifts in the appetite to invest more to get more value.
Digital Density
One of those shifts focuses on digital density. You can take almost any large enterprise tech estate and divide it into those that have high or low digital density. High digital density describes companies that already invested in moving large parts of their estates into the cloud over the last ten years.
In 2024, there is little appetite to invest to move estates in low digital densities to the cloud. These companies already moved what was possible to move. Those pieces left will be there for quite some time before more funding is available. Although there are huge estates that have yet to move into the cloud and get on the digital transformation journey, funding now is tight and likely to stay tight.
Companies now lack the appetite for large quantities of investment in under-invested areas. They are willing to make more tech investments to get to greater value, but there is less appetite to continue funding the migration of workloads into the cloud.
This is a fundamental sentiment shift from modernizing IT so a company can extract value from the investments already made.
Decision Makers For Funding
Gen AI brought about a shift in the sentiment around the executives who make the decisions to invest in technology. They are the ones who determine potential value in those investments.
Historically, investments had the objective of creating efficiencies. Moving to the cloud effectively reduced friction within the tech stack. Those decisions were IT-based and led by a CEO and CFO requesting funding from the board to implement, modernize IT, and move to the cloud.
In contrast, gen AI allows a company to do things differently. The worthiness of these investments is not judged on efficiency. Rather, the question is whether the technology creates value for the business.
Therefore, increasingly, gen AI funding decisions are the responsibility of departmental budget holders responsible for business activities. They are the executives who need information about the technology before they can make a decision to move forward. The business leader responsible for particular business activities needs a clear vision of how they can use gen AI.
Think about the cloud problem that was the pressing issue for IT investment over the last ten years. That is largely a technical issue: how to get applications into the cloud.
But gen AI is primarily a business issue. How can we use it? How can we make this tool deliver business value?
Multidisciplinary Approach
Success with gen AI needs more than just AI experts or data experts and their specific expertise. It is becoming apparent that to get the full value of gen AI – or even get any value – takes multidisciplinary teams.
It is more than having the tool available, having it with the necessary information, and more than individuals knowing how to use the tool. Where to use it must work in concert with other technology to give the desired business result.
This is a challenging problem for most organizations. Most companies hire specific skill sets, and they do not normally address problems through multidisciplinary teams.
As an example, if a company applies a gen AI tool to the finance accounting function, the people on the team need to understand finance and accounting. They also must understand how that operates uniquely within the company. They must understand how to work with data. They also need to understand AI and how it fits in concert with other technology so they can get to a successful implementation.
The gen AI implementation journey is a multidisciplinary journey, and it requires more than a combination of specific tightly focused expertise.
This is also a problem for the third-party service providers or the tech services organizations, internal IT, external consulting, systems integrators, etc. The specialist model used today breaks down or tends to be difficult in a multidisciplinary journey.
Third-party tech service providers must rethink how they go to market if they want to participate in the revenue wave building around gen AI.
Providers and enterprises alike recognize more investment will be necessary. But they want a clear line of sight to those investments. This is an indication of how CIOs, CTOs, and businesses are evolving their thinking around where and how to make tech funding decisions in 2024.
