Why Palo Alto Networks is focusing on just a few big gen AI bets

But when choosing which suggestions to pursue, Palo Alto wanted to invest only in those that provided the biggest financial bang for the buck. “We went after four use cases,” says Meerah Rajavel, Palo Alto Networks’ chief information officer.

Those four included an AI agent called Panda AI that gives automated responses to employees who submit questions related to the IT, HR, and finance departments. There’s also an AI code generation tool for engineers, AI tools for customer support specialists, and another AI tool for customers needing help resolving problems they’re having with Palo Alto’s products.

Rajavel’s approach to AI led to some changed expectations within the company as the technology evolved over the past few years. For example, soon after OpenAI’s AI chatbot ChatGPT debuted in 2022, Rajavel heard from her boss, CEO Nikesh Arora, who said he wanted up to 90% of the 480,000 employee requests submitted annually to be resolved using generative AI. Those worker inquiries span questions about health benefits, changing login passwords, and approval to buy new software from an outside vendor.

But Palo Alto did some research and determined that AI could only solve 18% of those issues by summarizing information, the task that large language models are best at. “This is about someone asking for an action that needs to be done,” says Rajavel, referring to what most employees are seeking with their questions. “It has to complete the task. It cannot just guide the task.”

That led Palo Alto to create Panda, which now fields many employee requests. Today, close to 60% of Palo Alto’s employee-generated tickets are autonomously handled by Panda, and Rajavel says over time, this figure could rise to as high as 80%. Thanks to the help AI provides, the company has ditched a phone line, a dedicated Slack channel, and online portal that employees previously used to submit requests.

Now, all employees are first routed to the AI agent. In cases in which an issue can’t be solved by AI, a ticket is sent to a human agent to tackle.

So where does the cost savings come in? Human agents from outside companies handled many of those ticket requests, and with generative AI, Palo Alto can now spend less on those services. Meanwhile, Palo Alto has reskilled some of its internal support agents to focus more on ensuring that LLMs are trained on the correct data and to validate the accuracy of what the AI spits out.

Another big AI use case for Palo Alto is writing software code. The company’s 6,000 engineers are using AI for code generation today, but Rajavel says that her concerns about protecting Palo Alto’s intellectual property mean she hasn’t authorized popular coding tools like GitHub and Cursor. “We are not going to allow anybody to use a third party,” says Rajavel. Instead, Palo Alto trains its own Claude models, hosted on Google Cloud’s Vertex AI platform, to write code.

In addition to focusing on generative AI, Rajavel says she dedicates 20% of her time talking with customer CIOs, chief information security officers, and other C-suite executives. One Palo Alto offering that frequently comes up in those conversations is its AI Access Security tools, which organizations can use to identify which generative AI apps are being used on their network. 

Rajavel should know what CIOs want to discuss with vendors. Rajavel has held the CIO title four times during her career, most recently at Palo Alto and previously, at three other technology companies: Citrix, Forcepoint, and Qlik.

Yet another area of focus of hers is integrating Palo Alto’s many acquisitions. Since joining in April 2022, the company has spent $500 million to buy IBM’s QRadar software-as-a-service assets; a reported $625 million on Talon Cyber Security, a builder of a secure enterprise browser for remote workers; and a reported $400 million for data security platform Dig Security, which discovers, classifies, and then protects sensitive data.

With the QRadar deal, Palo Alto was able to move customers to its operations platform, Cortex XSIAM. Meanwhile, Talon and Dig’s services were quickly integrated into the company’s existing ecosystem. Rajavel says acquired technologies are merged within 90 days of a deal closing.

When Palo Alto scoops up smaller companies, Rajavel says one danger is that their tools aren’t ready to be used by hundreds of thousands of customers. As a precaution, Palo Alto tries out their tools internally, as a test, before making them more available to customers.

“The very first person who is going to implement the technology is us,” says Rajavel.

John Kell

Send thoughts or suggestions to CIO Intelligence here.

NEWS PACKETS

Google outage disrupts operations at OpenAI, Cloudflare, and dozens more. Last week, Google disclosed that more than 70 of its cloud services stopped working properly, disrupting products of customers and some of its own internal ones including Gmail, Calendar, and Drive. Outages extended for up to three hours for some products, though Google says an engineering team was triaging the incident within two minutes and had identified the root cause after 10 minutes. As TechRadar reports, the outage stemmed from a code issue in Service Control, part of Google’s application programming interfaces (APIs) management and policy checking system. Google says it will publish a full report about the incident in the coming days. It also apologized for the impact to Google Cloud’s users and their customers and vowed “we will do better.”

UNFI hit by a cyberattack affecting Whole Foods. Organic food distributor United Natural Foods said it became aware of a cyberattack on June 5 that took some of the company’s systems offline and thus hampered its ability to distribute orders to customers. This has led to some empty shelves at Whole Foods, as UNFI is the grocery chain’s primary distributor, a relationship that was extended to 2032 last year. UNFI hasn’t shared specifics about the cyberattack and hasn’t set a clear timeline for when its distribution system would fully return to normal. Over the weekend, UNFI did say that it was receiving orders and delivering products and that over the past few days, it had made “significant progress toward safely restoring our electronic ordering systems.”

Nvidia, Perplexity join forces to boost local AI models in Europe. Chip maker Nvidia and AI search company Perplexity announced a partnership with more than a dozen model builders in Europe and the Middle East to make localized AI models that will let Perplexity users search and return answers in the European Union’s 24 official languages. Local businesses are expected to benefit if more LLMs are trained on the nuances of local language and culture, thus producing better search results. The models will run on local data centers in Europe from Nvidia’s network of cloud providers and build upon that company’s strategy to make AI more accessible globally. Nvidia CEO Jensen Huang has called this concept “sovereign AI,” meaning countries will directly invest in AI if they want to benefit from the technology’s future advancements.

Mattel inks partnership with OpenAI. Barbie and Hot Wheels toy manufacturer Mattel announced a new partnership with OpenAI, leveraging the company’s AI technology in ways that could impact both employees and the products it sells. Internally, Mattel says it will add ChatGPT Enterprise to business operations to bolster product development and for coming up with creative ideas. The pair will also debut AI-powered toys and other products based on Mattel’s brands that are expected to go on sale later this year. “It’s really across the spectrum of physical products and some experiences,” Mattel’s chief franchise officer Josh Silverman teased to Bloomberg, without giving full details on what’s ahead. “Leveraging this incredible technology is going to allow us to really reimagine the future of play.”

ADOPTION CURVE

More than 7 in 10 companies are boosting spending on LLMs. A survey found that 72% of organizations anticipate increasing their spending on LLMs in 2025, with 37% saying they are spending $250,000 or more annually on these AI systems. Looking at usage in the first quarter, the survey found that Google’s models were the most used (69%), followed by OpenAI (55%), Meta (38%), and IBM (26%). Eighty percent also said they would be comfortable using AI models by Chinese AI startup DeepSeek, though only 17% did so in the first quarter.

The survey was based on responses from 550 software developers, engineers, and IT leaders who use the services of Kong, a startup that helps clients manage APIs.

When asked for the top considerations when selecting a LLM provider, security and data privacy compliance was the biggest factor (31%), followed by performance and accuracy (25%), and then cost and pricing (24%). “While organizations recognize the importance of security, they’re equally focused on ensuring their investments yield tangible, practical benefits,” writes Kong in its report on the findings.

JOBS RADAR

Hiring:

- Lease & LaBau is seeking a CIO, based in New York City. Posted salary range: $450K-$500K/year.

- Princeton University is seeking a CISO, based in Princeton, NJ. Posted salary range: $265K-$325K/year.

- Citi is seeking an engineering application development director, based in Rutherford, NJ. Posted salary range: $170K-$300K/year.

- Etsy is seeking a director of people systems and technology, based in Brooklyn, NY. Posted salary range: $183K-$237K/year.

Hired:

- Lockheed Martin (No. 59 on the Fortune 500) named Craig Martell as VP and CTO, effective June 23. Martell joins the defense contractor after previously serving as chief AI officer at data security and data management software provider Cohesity. He also previously was the first chief digital and AI officer for the U.S. Defense Department.

- American Electric Power (No. 218 on the Fortune 500) appointed Johannes Eckert to be EVP and chief information and technology officer, effective July 21. Eckert joins the Ohio-based utility after serving as SVP and CIO of Cox Communications, where he held various roles during his 16-year career there. Eckert also held leadership and consulting roles at Kearney, AT&T, Telefónica Germany, and Accenture.

Every Friday morning, the weekly Fortune 500 Power Moves column tracks Fortune 500 company C-suite shifts—see the most recent edition.

- Peloton Interaction has created a CTO role, promoting Francis Shanahan, the fitness equipment maker’s SVP of connected fitness software, to the position. Since joining in 2021, Shanahan has led Peloton’s software engineering team and before his time at the company, was a head of engineering at Nike. Shanahan was also previously SVP of engineering at audiobook producer Audible.

- Gannett announced Joe Miranda as chief technology and data officer, where he will steer new technologies to improve the media company’s systems and products, including AI, machine learning, and data analytics. Miranda was most recently EVP and chief digital and technology officer at nutrition company Herbalife and held roles at Thomson Reuters, Voya Financial, GE Capital, and Nielsen.

- Ascent Hospitality Management named Brian Walluna as CTO, where he will focus on customer-centric technology for the franchisor of restaurant chains Huddle House and Perkins American Food Co. Most recently, Walluna was CTO at BBQ restaurant chain Smokey Bones.

- Westgate Resorts has promoted Angel Miranda to CIO, after serving in the position on an interim basis since January. Miranda has worked for the timeshare resort company since 2013, previously as director of technology and later, VP of technology. As CIO, he will oversee a team of more than 120 and lead enterprise IT strategy, cybersecurity, infrastructure, and guest technology innovation.

- Lee Health named Chris Akeroyd as CIO, joining the Florida-based not-for-profit public health system to steer information systems and IT functions. Akeroyd was most recently EVP and CIO for Children’s Health in Dallas, one of the largest pediatric health systems in the country. He was also previously EVP and chief digital and technology officer at Children’s Health.

- Udemy has appointed Ozzie Goldschmied as CTO, with oversight of the engineering, design, product, data science, and technical product management teams. Previously, Goldschmied was cofounder and head of engineering at Dayforce and CTO of Ceridian, another HR software provider that bought the former company in 2012.

- Peach announced Javier Campos as CTO, joining the advertising automation technology provider after most recently serving as CIO at software provider Fenestra. Campos has also held technology leadership positions at Experian DataLabs, Kantar-WPP, and Havas.