Amid elevated expectations for generative artificial intelligence and the billions—perhaps even trillions—of dollars of potential value that could be unlocked by nearly all businesses, an expectations gap is emerging between chief executives and their C-suite tech leaders.
CEOs crave growth—increases to revenue, market share, margin, and the amount of customers they serve. But chief information and chief technology officers remain firmly focused on efficiencies, including infrastructure, application modernization, and basic automation.
Surveys consistently highlight splintered views at the C-suite level. A survey of 600 IT professionals by Salesforce showed that nearly three out of five say business stakeholders hold unreasonable expectations regarding the speed and agility of new technology implementation. At the same time, a majority of CEOs are saying they are “ambivalent or outright dissatisfied” with their organization’s progress on AI and generative AI thus far, 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 discussion this week focused on CIOs and how organizations can be digitally inclusive. “And then when you add in all the hype that exists today around generative AI, in just about every industry, it has increased the pressure on the C-suite to figure out a way to empower their organizations to use these new technologies to drive business growth.”
CEOs are bullish on their view that generative AI will improve the quality of their products, increase the intensity of competition, and significantly change their overall organization.
But that leads to another issue. Companies are currently weighed down by a lot of technical debt. Tech debt is essentially a “tax” that companies pay to address existing technology issues, and it can account for as much as 40% of IT balance sheets, according to McKinsey. As much as 20% of technology money that is budgeted for new products is then diverted to resolving issues related to tech debt.
This problem only swelled in the wake of the pandemic, when tech modernization efforts were put on hold as employers focused on figuring out how to enable their large workforce to log in remotely and have safe access to the systems and applications that are behind firewalls. For many organizations, modernization is a few years behind where it should be. And major projects, such as the shift to the cloud, are complex, fraught multiyear journeys.
Part of the challenge CIOs face is communicating their vision to the organization. CIOs need to translate the tech modernization story into bite-size chunks to show that IT will help with both cost efficiencies and enable growth.
At S&P Global, chief digital solutions officer Swamy Kocherlakota said technology’s transition in support of business growth is almost like a Rubik’s Cube. Where does a company transform tech, and in what order? After you do the transition, how do you ensure employees are aware of the “why” and what the opportunity will be. And what’s the effect when you remove costs and reinvest in the business?
“Every time there’s a new technology, it always drives operational efficiencies, finding the right expense that has the biggest bang for the buck and then giving some portion back to the business. And then reinvesting that creates a snowflake effect,” said Kocherlakota.
Yao Morin, chief technology officer of commercial real estate firm JLL, said that technology is often developed by decision-makers who envision what the tech should be versus technology that’s going to be a good fit for the more junior people who will ultimately 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 that tech is built with the right end user in mind.
“It’s an unusual approach,” said Morin. “But we actually get great adoption and great feedback by doing that.”
Alan Stukalsky, chief digital officer of North America at Randstad, shared that when the staffing agency brings in technology across all of the company’s core applications, it allows end users to share ongoing feedback.
“We’ve been doing kind of a roll-up every month, where we review what some of that data is telling us, to decide what’s the road map for the next quarter,” Stukalsky said. “That’s been extremely helpful.”
Misty Kuamoo, senior vice president and chief technology officer of corporate technology at Nationwide, said she’s helped steer 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 languages of those businesses and be more involved in planning.
“That has been, for us, one of the bigger mindset shifts—that we’ve been able to help my technology team get partnered right up front with the business,” Kuamoo said. “They want us involved.”
