If you boil down most of the conversations, threads, conference agendas and professional development for IT leaders today, you’d essentially have one central question: How can digital technology enable business?
Of course, this question can get complicated depending on the context. Namely, how do we answer it in the face of five major technology trends: 1) generative AI, 2) cost optimization, 3) talent, 4) sustainability, and 5) cybersecurity.
The Benefits and Risks of AI
Generative AI is on everyone’s mind – and especially those who work in enterprise tech. Of course, organizations need to be clear-eyed and recognize the phenomenon emerging – AI hallucinations, unintentional bias, data security and the ever-threatening bad actors – but we are not in an AI apocalypse. Business leaders and advisers need to lean into these new capabilities with cautious optimism and not allow fear, uncertainty and doubt to stop them.
The benefits of AI are simply worth some risk. As with many emerging technologies, capabilities spawned by digital transformation and swiftly changing customer demands, enterprises need to proceed with smaller steps, smaller bets – but proceed nonetheless. Large language models make AI and machine learning far more accessible and available without the need for deep technology skills or knowledge. And, due to this democratization, the technology is already with us and in use by a broad swath of the population.
So, if you’re not already well on your way to figuring out what it is, how your business will use it and how it will likely disrupt everything from your suppliers, your partners, your employees and your customers, then you are already lagging behind. The great news is that the technology market did very rapidly lean in, and so we’re seeing an explosion of investment and uptake. It’s time for enterprises to begin to address their own AI agendas and protocols and develop their enterprise-level AI platforms to take advantage of this fast-moving technology.
Optimizing Business Costs with IT
The ISG Index reported reduced growth in the hyperscaler market, with annual contract value for Infrastructure as a service (IaaS) down 22% year to date. Demand for cloud is down significantly.
It’s also important to note that organizations have completed their more straight-forward migrations to the cloud and are now left with the large, complex applications that often don’t easily migrate. These applications are more likely to be replaced with cloud native versions or entirely new software products that constitute steep complexity, high cost, longer timelines and greater organizational change to implement. Therefore, while cloud costs continue to grow, largely based on the ease of establishing new capabilities and expanding and replicating data, enterprises are often stuck with their traditional data centers that continue to run larger, complex and often core systems that constitute a large portion of their overall technology spend.
Given the macro-economic conditions and market pressures, enterprises are finding the extra time and money needed to address the issue of re-deploying, re-factoring or re-designing their more complex systems hard to come by. Could AI help solve some of the time and cost challenges? Could large language processing technology drive cloud utilization and help hyperscalers get back to their growth trajectories? Would this lead to some interesting AI investment by the hyperscalers themselves?
Companies need to get their arms around cloud utilization and spending while they also work to manage large, heritage – and usually struggling – core systems. A first step for many will be to put in place the appropriate governance and FinOps protocols for their current cloud platforms to optimize costs. The goal should be to focus on cost optimization and use those savings to fund a cycle of continuous transformation and modernization.
How Tech Talent Is Impacting Enterprises
New areas of the world are seeing the benefit of their investments in education. Areas such as Spain, Portugal, Mexico and Vietnam are now commonly on the list for organizations seeking available and cost-effective digital talent. And while the work-from-home model is certainly not dead, there is a clear move to a more balanced approach to the workplace by many in the technology sector. Sustainability and the globalization of the workforce are important factors as the power in talent acquisition swings back toward the employer.
Of course, generative AI has the potential to bring enterprises dramatic increases in productivity. Natural language processors are likely to be part of many organizations’ labor strategies. Companies that can stay agile in the face of rapid change in technology, promote self-learning and empower talent will see a real boost in innovation, productivity and continuous transformation. Of course, technology service providers continue to provide and enable some of the most readily available pools of talent in both traditional and emerging geographies, markets and emerging skill areas.
The Enterprise ESG Dilemma
Sustainability remains a key focus for many organizations as they struggle to meet looming deadlines, regulatory requirements and public demand with strained core capabilities and infrastructure. The excessive heat across Europe and the world keeps this conversation near the top of the agenda. This has also been a key objective driving many organizations toward cloud migration, so they can get help from hyperscalers that are able to apply energy efficiency and carbon reclamation. Enterprises are also working to establish analytics for both measurement and reporting against their sustainability goals and objectives – underscoring a broader need for connectivity across the entire value chain to improve energy measurement.
How Cybersecurity Ties to Everything
Cybersecurity and data security have implications across AI, cloud, hyper connectivity and the continued convergence of information, engineering and operational technologies (IT/ET/OT). Most organizations are reviewing and strengthening their cybersecurity strategies, testing their maturity and threat levels, and doing it quickly as foundational AI models bleed into technology architectures. For most organizations, it’s time to dust off those cyber and risk management strategies and make a plan to prepare for the morphing regulatory landscape (see DORA, the EU AI Act and NIS2).
If we think about technology as a business enabler, we are on the right path. But business enablement is not an impromptu activity to be taken up on the whims of the technology market. Organizations need to employ careful design and planning and even more careful governance of their technology-as-business-enabler mindset. This is especially true when it comes to the most pressing things on the business agenda, including generative AI, cost optimization, talent, cybersecurity and sustainability.
ISG understands how exciting a time it is to be in the technology industry. We help enterprises understand the market and make a plan to invest in the right capabilities for their business goals. The ISG Digital Business Summit brings together renowned experts and thought leaders to share their insights on digital transformation, data analytics, artificial intelligence, digital marketing and cybersecurity. Contact us to find out more about the Digital Business Summit and how you can join us at our next event.
About the author
Ola Chowning
Ola is a passionate thought leader in emerging delivery models that contemplate the rapidly changing technology landscape. She advises organizations in the opportunities related to emerging technologies, digital transformation, provider ecosystems, new ways of working, and the culture of product-oriented delivery. Ola is fluent in Adaptive Organizations, Digital Strategy, Sourcing, Enterprise Agility, DevOps, Cloud and modern architectures, helping clients evolve their technology landscape, operating models and cultures. Ola is ISG's Digital Lead for North Europe and a member of the European Leadership Team.
Past achievements for clientsIn her positions as digital lead for North Europe as well as a firm partner, Ola expands the reach of ISG’s enterprise and digital solutions. But these roles also allow her to impart to her clients tried-and-true advice based on years of experience as both a technologist and service provider. At times, Ola may point you in a faster, more rigorous direction than you were anticipating—simply one of the many ways she relentlessly champions her clients’ technological evolutions across every industry.
Having never told a client to deploy something she wouldn’t do (or hasn’t already done) herself, Ola’s goal-oriented gusto has resulted in many successes for her clients:
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She advised a partially transformed logistics company (that had a pervasive, costly architectural sprawl issue) to create standards, guardrails and integrated roadmaps to promote efficiency and velocity using what was currently working well. Ola helped spark synergies among the teams impacted, and in only eight weeks, teams saw as much as a 200% increase in their throughput.
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On a tight deadline and limited budget, she applied Agile and modern delivery model principles to convert a brick-and-mortar's business model (with legacy systems and cumbersome practices that were seemingly incompatible with a more collaborative way of working) into a modern digital setting.
