IT leaders explore footing amid shifting needs and the AI power struggle

On the eve of 2023, two and a half years after Covid-19 lockdowns ended in most countries, it appeared to be a return to business as usual for technologists. But then the real disruption came.

While 2023 brought on many changes to IT departments around the world, by far the biggest surprise was generative AI. Many technology leaders already worked with AI for over a decade for things like predictive maintenance and supply chain planning. Some even implemented their own virtual personal assistants (VPAs), which included at least natural language processing—and sometimes more intelligence than that. During COVID-19 lockdowns, for example, specialty chemicals manufacturer Albemarle developed a VPA to provide self-service assistance to over 7,000 employees at home, including a natural language interface with a chat bot, and enough AI to help people interface seamlessly with several business applications at a time.

But even CIOs who had solid experience with AI were surprised by how fast ChatGPT was adopted. “ChaptGPT was announced in November 2022 and hit the world by surprise,” says Patrick Thompson, former chief information and digital transformation officer at Albemarle. “This immediately opened the potential to tap more value from legacy systems.”

Suddenly, for the first time, the power of AI was accessible to non-technologists. Many IT leaders experimented with copilots and virtual assistants that helped users access existing systems. Others explored how the new technology could help write code or create content. “The generative aspects of ChatGPT almost seemed like magic to many, as these models created new written, audio, and visual content right before their eyes,” says Chris Herringshaw, global CIO of Janus Henderson, the British-American global asset management group.

For Neal Sample, CIO of Walgreens Boots Alliance, he and his team were ready for the textual revolution signaled by ChatGPT and other LLMs. “But the advances in images, song generation, video, and other media tools were remarkable,” he says. “We saw media advances that ranged from the very practical, like automatic jump cut editing, to mildly terrifying examples of criminals using deepfake audio to impersonate relatives.”

It was easy to identify use cases, says Sample. But hallucinations, lack of explainability, and regulatory nervousness quickly became barriers to many practical applications. “While some prominent verticals — including financial services, healthcare, and legal — managed to have moderate adoption of generative AI, these were primarily outside their core business cases,” he says.

A range of priorities

But AI wasn’t the only thing on the minds of CIOs in 2023. It was also a year in which management made big decisions about hybrid work policies. In some cases, that meant making hybrid work a permanent fixture; in others it meant abolishing remote working altogether. Either way, the result was that many IT leaders had to support some sort of enterprise transformation in work policies.

Organizations in smaller countries such as Norway tended to continue supporting remote work because they got accustomed to having access to a larger population of skilled candidates. “But with remote and hybrid work comes new expectations in leadership,” says Rune Buseth, founding partner in Bridg AS, an executive recruitment firm there. “All managers, including IT directors, had to change their style to adapt to the trend toward dispersed workforces.”

Cloud was also high on CIO agendas. In hybrid and multicloud environments, the challenges were around cost surprises and excessive data flows between cloud and on-premises, or among different cloud environments. “IT leaders made regaining control of their cloud environments a top priority in 2023,” says Martin Hulbert, CTO of Ignite Technology, a software solutions provider based in the UK.

But cloud was still an enabler that allowed IT managers to shift their focus toward more strategic actions. CIOs who already established a cloud-enabled, adaptable, and resilient architecture in 2023 could spend less time leading IT operations and more in value creation, according to Martha Heller, CEO of Heller Search, an executive search firm based in the US. “The challenge for CIOs now is to create a data-driven culture and get business partners to chime in with high value data business cases.”

Most organizations, including Telenor Sweden, continued to move assets to the cloud in 2023. “We now have around 80% of our IT applications on public cloud,” says its CIO Kristin Lindmark. “With that change, we see great improvements in speed of development and overall performance, and a decrease in incident levels.”

And then there’s green IT, which got a lot of press at the beginning of the year, only to be drowned out by the excitement around gen AI. “While many leaders had been practicing green IT for years, as of 2023, it became imperative to measure it, quantify it, and report on it,” says Herringshaw. Scope 3 reporting, an account of carbon emissions across an organization’s supply chain, will become mandatory in 2024, which meant that most of the preparation work had to take place in 2023. And since IT is one of the biggest spenders in most companies, much of that work fell onto the shoulders of CIOs.

New technology enabled new solutions

2023 was also a year of new solutions. Procter & Gamble launched an internal LLM-based chatbot to boost productivity and innovation, calling it chatPG. “Adoption among P&Gers was comparable to what we experienced at the beginning of the pandemic, with the surge of unified messaging and video conferencing usage,” says Vittorio Cretella, the company’s CIO. “The chatPG platform provides our employees with the same capabilities as an external OpenAI model while protecting our intellectual property and IT security in ways external tools can’t yet do.”

Procter & Gamble also used IoT and machine language models to implement new solutions on their manufacturing lines. “This enabled us to increase quality, resilience, and sustainability,” says Cretella. “On top of that, we implemented our AI factory, which is a workbench for our data scientists to develop machine learning systems with speed and quality.”

In very niche businesses, a whole new array of solutions became practical in 2023. Starlink, which began launching satellites in 2019, now has over 5,500 satellites in low earth orbit (LEO), making their services very useful in remote locations. With Starlink getting approved in many more countries in 2023, some organizations found a solution to a long-standing challenge.

“We began using LEO links and found ways of mounting them on vehicles to have mobile connectivity as we move around,” says Jay Mahanand, CIO of the World Food Program. “The whole LEO satellite connectivity is very important for us. We need 100% connectivity, no matter where we are in the world, to respond quickly to emergencies.”

In 2023, WFP also started exploring use cases where AI could be used to analyze drone images and do damage assessment or predict crop productivity. “We can combine satellite images with local images and use AI to help us see what’s going on,” says Mahanand.

“But with all the new technology comes the obligation to stay on top of developments and to find new ways of applying it for value,” says Bridg AS’ Buseth. “We see this in job requirements for CIO positions, which now call for the ability to create tangible business value. And the fast change is also becoming a challenge for IT leaders when they need to hire skilled staff. The best candidates demand very substantial compensation.”

AI and ML to dominate in 2024

“2024 will be the year that CEOs of most companies scratch the AI itch,” predicts Heller. “They’ll look for CIOs who can create true business value out of the AI hype-cycle, which involves skills in technology, influence, data science, and investment strategy.”

Cretella agrees. Next year, more companies will embrace AI at scale to drive productivity and performance. But companies need to step away from one-off initiatives and move to scaling algorithmic solutions across their entire business. Then they’ll finally feel the true impact of AI — but it requires upskilling talent and building new technology platforms at scale.

“We’re the first CPG [consumer packaged goods] company to create a proprietary machine learning platform being leveraged across 80% of our global business,” he says. “This reduces complexity and makes our data scientists 10 times faster and much more effective.”

Perhaps the best thing to hope for in 2024 is simplicity. A new generation of personal AI assistants could emerge to make our lives easier. “Right now, our electronic lives are balkanized,” says Sample. “No matter what we’re doing, there’s an app for it. I’d personally like an AI assistant that can tie it all together for me.”