The emerging impact of AI, combatting more sophisticated cyberthreats and improving sustainability are the top priorities for CIOs. With the rise of digital technology and its influence on business success, are we entering a new era?
A recent study has shown that Chief Information Officers (CIOs) are investing in AI tools to ensure they position themselves front and centre in the world’s Fourth Industrial Revolution.
Results in the 2024 CIO Report from global technology service provider, Logicalis UK&I, revealed that 85% of CIOs are earmarking budgets solely for AI development and implementation.
Undoubtedly, this needs to be a strategic objective for many senior leaders in 2024 as 87% of CIOs reported a substantial demand for AI technology from across their organisations.
Before the calls of ‘the robots are taking over’ are made, it is worth noting that there is an air of caution amongst many CIOs – 72% said that they are apprehensive about the challenges of regulating AI use internally, and 64% of business leaders expressed worries about AI threatening their core business propositions.
The Logicalis CIO Report surveys the views of 1,000 CIOs across the globe and has tracked the strategic influence of the CIO for over a decade. During that time technology leaders have moved from the basement to the boardroom. Now, in 2024, CIOs must juggle major disruptive forces. The rise of AI and advancing security threats, global economic uncertainty and the mounting need for climate action, are upending the status quo and bringing a whole new set of leadership challenges.
Cybersecurity findings from the CIO Report include:
- 83% reported experiencing a cyber hack in the last year
- Less than half (43%) felt their business was fully equipped to handle another major security breach
- Malware and ransomware (41%) are the most significant risks to organisations over the next 12 months, with a similar portion reporting data breaches (36%) and phishing attacks (35%) as the two other most significant risks.
As if getting to grips with emerging AI and combatting sophisticated cyber hacks wasn’t enough, CIOs are also facing growing pressures to limit the environmental impact of their organisations on top of the traditional demands to control costs.
Sustainability findings from the CIO Report include:
- 92% of CIOs are increasing investment in environmental sustainability initiatives
- 89% of CIOs have clear targets to reduce carbon emissions from IT
- 96% of CIOs say their function has a voice in the company’s overall sustainability planning and target-setting
To identify potential areas for improvement, CIOs must know where to look and the data deluge continues to make this a challenge. Four-fifths (80%) of technology leaders struggle to analyse performance across their digital footprint. This lack of visibility is not only a time drain, but a barrier to finding opportunities to bring down costs, enhance service and deliver maximum value back to the business.
No single company can tackle these challenges alone, so it’s encouraging that almost all respondents are alive to the need for collaboration and see the value in assessing the sustainability credentials of new suppliers.
We get insight from Pascal Brier, Group Chief Innovation Officer, Capgemini; Nathan Marsh, Regional Executive, Europe, Middle East and Africa (EMEA); and Michael Winterson, Managing Director, European Data Centre Association (EUDCA), about their thoughts on CIOs and the impact of a potential Fourth Industrial Revolution.
Pascal Brier, Group Chief Innovation Officer, Capgemini
When the concept of Digital Transformation first emerged, it was mainly focused on transforming how a company’s headquarters operates, affecting areas very close to the world of the CIO. Yet, the second wave of Digital Transformation is going beyond administrative processes to digitise a company’s industrial assets like products, factories, manufacturing and supply chains.
IT is often viewed as a support function in these environments, and responsibilities are shared between functions like engineering directors, technical directors and industrial directors as well as the CIO. So, a CIO’s first challenge is to ensure they get the legitimacy and the mission to lead this second wave of Digital Transformation which has now expanded far beyond their normal operating environment.
Ultimately, the CIO has the power to lead this new wave of Digital Transformation, but only if they develop the necessary relationships with peers in other functions and take steps to understand how industrial environments operate. To conceptualise this, they should consider the three dimensions of the fourth industrial revolution: products, factories and industrial processes.
CIOs need to first establish how they should support the digitalisation of products, and whether they are best placed to lead the project. For example, digitalising products can mean developing specific embedded and industrial software, so CIOs must determine whether to share power with someone specialised in such environments or if they should take responsibility solely in a domain where they may lack expertise.
The second dimension is the digitalisation of factories and industrial facilities. Here, CIOs will grapple with how to manage vastly different industrial sites. It’s almost impossible to define a common digitalisation strategy for environments as different as a gigafactory versus a 150-year-old factory, so they will need to determine what should be digitalised and what will require too much effort.
The third dimension concerns processes. This can be achieved by taking advantage of digitalisation to improve an organisation’s engineering, customer service and supply chain processes. Here, CIOs face the challenge of digital continuity. They should think about how to break down data silos and help different departments, like manufacturing and supply chain, to collaborate.
Underpinning everything they do, the CIO must be prepared to transform business processes, and not just the technologies that support these processes. By thinking about business processes first and not just the technologies, they will be better prepared for the rapid changes of the fourth industrial revolution.
Nathan Marsh, Regional Executive (EMEA), Bentley Systems
Europe is a diverse, vibrant and economically active region with clear ambition to leverage the benefits of responsibly designed, deployed and managed AI across our industries. EU and UK governments have embraced the potential of AI. They have established forums, policies, standards and regulatory frameworks that guide, govern and steer how AI is built and used, as well as how positive value is captured. AI can empower a fourth industrial revolution across all industries in Europe.
Over the last year, there has been debate on AI-powered applications and solutions to improve project efficiency, organisational effectiveness and industrial outcomes. Leveraging AI, Machine Learning and other intelligent applications presents immense potential for addressing issues across our industrial lifecycle. Crucially for CIOs, data is the foundation for AI-powered anything, and industries must get better at organising, structuring and controlling the data baseload so that the full benefits of AI can be unlocked across valuable data sets.
AI will be so pervasive, and is so early in its development, that it will become industry. As a progressive CIO who is focused on creating and extracting value from information, I would see major opportunities for AI across all industries. I see a good level of preparedness across the CIO community across three strategic domains:
- Accuracy: The enhanced fidelity of AI-enabled data analysis, twinned with assessing benchmarks via accessing global cloud data, means that AI will deliver an unprecedented level of accuracy in data modelling and optioneering. Having access to an almost universal volume and class of industrial data – and processing it quickly and relentlessly – enables a new level of accuracy and, in turn, better-quality decision-making.
- Pace: Building on this new level of accuracy in data modelling and optioneering, AI delivers industry pace with increasingly faster processing power, enabled by ongoing improvement in chip design, performance and more directive analysis from ‘learned AI’ practices. Stimulated by Quantum Computing, the speed of accessing, analysing and optioneering data will become almost immediate. Time taken can then be redeployed elsewhere, creating further value across industries.
- Integration: Aggregating data sets to present a full picture – including context, benchmarks and relative performance data – brings the additional AI-enabled value to accuracy and pace. This integration is where we see AI move from smart to wise.
AI offers CIOs a practical, and relatively untapped, opportunity to bring together data, processes and systems faster, more accurately, and in a more integrated way to enable richer quality decisions that deliver social, environmental and economic value to our industrialised world.
Michael Winterson, Managing Director, European Data Centre Association (EUDCA)
The fourth industrial revolution has arguably been underway since the advent of the client-server model, which made technology easy for businesses to consume. We are, perhaps, 40 years into the fourth industrial revolution.
However, we are at an inflexion point on the adoption curve where the application of Artificial Intelligence (AI) has changed things rapidly and will demand more changes.
Firstly, it requires the entire business leadership to start thinking about the digital element of their business at the same time as they think about the underlying business. AI is not a technology that can be tacked on, it is just too expensive and unless leadership starts thinking digitally as they build their business plan, such an approach is doomed to failure.
The entire board needs to consider the digital portion of the business, in terms of expertise to deliver, the factory, production, the supply chain — the entire digital programme to deliver the product or service.
If the business isn’t looking inside asking ‘how do we incorporate digital technology into the fundamental key ingredient of our product’, then it’s always going to deliver late, underperform and be problematic.
It is down to the CIO to deliver on that programme.
The CIO is no longer the arbiter of digital technology. The CIO role has evolved to become equal to the CFO and the CHRO and represents at its core — the money, the people and the technology that allows the executives to build whatever product or service they envision.
And businesses must be ready for failure. Looking back into previous industrial revolutions, few foresaw the impact of electrification on industry. Steam needed vertical stacking to accommodate the engines and the rising drive belts for machinery. Electricity literally flattened the factory floor and allowed people like Henry Ford to develop modern production lines. Similarly, AI will have some unexpected impacts as it rolls out with mass adoption and development, and businesses must be ready for some friction along the way.
The domain of the CIO, under the executive vision and decision, is actual core infrastructure realisation. The CIO will make informed decisions about the mix of on-premises, cloud services and Edge Computing, insourcing and outsourcing, with AI layers, making digital infrastructure choices that are resilient and yet flexible, that are future-proof and scalable.
Now, we are moving beyond the fourth industrial revolution. The CIO must become adept at deploying advanced technologies in the right form factor to achieve the strategic vision.
