In 2024, CIOs will remain focused on last year's theme of financial rigor as they scrutinize emerging technology projects and look to corral cloud spending.
A dual focus -- cultivating results-oriented innovation and optimizing tech investment -- will occupy technology leaders in the coming months. In this context, disciplined IT portfolio management, cloud platform consolidation and FinOps expansion will rank among the key developments in 2024. Generative AI seems likely to surface as a critical area as organizations assess spending priorities. CIOs will be called on to expand exploratory pilots into enterprise initiatives that boost efficiency and offer competitive advantage.
But they face other tests as well -- namely the perennial issues of managing data, dealing with IT staffing and bolstering cybersecurity. Read on for the top seven CIO challenges for 2024 and strategies for navigating them.
1. Keeping a sharp focus on innovation investment
CIOs will closely watch business conditions in 2024, even as inflation subsides and some economists suggest a soft landing, rather than a recession, is on the horizon. Technology managers will carefully assess technology investment candidates, focusing on the projects most likely to yield quick and tangible results.
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Salumeh Companieh, chief digital and information officer at commercial real estate services company Cushman & Wakefield, said she and her industry peers will be monitoring the market and prioritizing business outcomes when assessing technologies such as generative AI.
"Be very precise in selecting what your priority use cases are and how you deliver against them and how you measure success," she advised.
CIOs must also be prepared to "pivot without pause" when a project doesn't work as planned, Companieh said. "That's something we're going to have to continue to hold ourselves accountable for," she added.
Financial modeling of emerging technologies -- and the infrastructure they reside on -- reinforces strict assessment practices.
"You're always monitoring ROI positivity in the approach that you're taking," Companieh said. "Generative AI and the methodologies that we're using are new. The existence of them doesn't mean they always make good business sense."
Shannon Johnston, senior executive vice president and CIO at Global Payments, a payments technology company based in Atlanta, said she expects to see a conservative approach to technology spending in the fintech sector during the first half of 2024.
"There won't be a lot of speculative investments, although some companies will be willing to make medium-sized bets on opportunities with a strong potential return," she said. "I don't see any appetite for moon shots right now."
Businesses will watch to see how macroeconomic headwinds play out, especially consumer spending, Johnston noted. Greater budget flexibility might surface in the second half of the year, depending on the prevailing trends, she added.
2. Controlling cloud spending
Until recently, cloud costs provoked the same popular response as cloudy weather: complaining tinged with resignation.
Financial necessity has changed that outlook, however. Economic uncertainty and cloud price inflation now challenge CIOs to get a better grip on as-a-service budgets. Complicating that task is the glut of cloud services and applications organizations acquired during COVID-19, which launched a wave of digital transformation.
"The pandemic drove a lot of increased consumption of SaaS, IaaS and PaaS," said Aashish Chandarana, CIO at Productiv, a SaaS management company in Palo Alto, Calif. "What we have been seeing coming out of the pandemic is CFOs demanding more control, based on the macroeconomic environment."
As a result, CIOs got smarter about cloud use and began to sort out their spending, he added.
"The focus now is on optimization," Chandarana said.
Consolidating duplicative SaaS tools will present one cloud cost management challenge for CIOs this year. Productiv estimated that businesses spend between $7,500 and $11,000 per employee per year on end-user SaaS applications. The average SaaS portfolio contains 371 applications, growing 32% between 2021 and 2023, according to the company.
"The more of this stuff you have, the more you have to worry about it," Chandarana said. "People are starting to be more focused on the value these tools are driving inside the organization."
CIOs, working with CFOs and chief procurement officers, will be trimming that roster this year as software climbs up the list of operational expense line items, he noted.
Alastair Pooley, CIO at Snow Software, which focuses on cloud cost management, also sees SaaS consolidation in the offing. He expects more businesses to adopt platforms instead of SaaS point products. He pointed to the example of organizations standardizing on Microsoft Teams as part of the broader Microsoft 365 suite and turning off contracts for other collaboration offerings.
Against that backdrop, Pooley believes FinOps, best practices for managing cloud spend, will become a CIO mainstay in 2024 and going forward. Organizations will increasingly institutionalize FinOps, regardless of improving economic prospects.
"I don't think [FinOps] will go away at all," he said. "It has good traction and it's got a community of people who treat it as a long-term career path."
3. Scaling AI in the enterprise
CIOs in 2024 will take on the challenge of expanding AI beyond initial pilots and proofs of concept.
Cushman & Wakefield provides an example. The company last year launched an AI-based digital transformation strategy, which spans traditional AI and generative AI. The approach, dubbed AI+, aims to help commercial real estate brokers provide clients with greater insight into site selection and pricing. AI+ also supports facilities managers as they benchmark a building's energy utilization and other performance metrics.
This year, the company plans to scale its AI transformation program. "We're on the same journey many of my peers are on," Companieh said.
Partnering is one aspect of the path to scale. Cushman & Wakefield has assembled partnerships across its business segments, she noted, citing MIT, Microsoft and professional services company PwC as examples. Those partnerships lend a "depth of understanding" that lets the company focus on the top business outcomes it wants to drive for clients, Companieh said.
The scope of collaboration also includes the company's technology, talent, cybersecurity, diversity, equity and inclusion, and commercial teams as well as its executive team, she said.
In addition, Cushman &Wakefield pursue education and training to prepare for wider AI adoption. On the education side, the company has invested in its change management organization. Companieh noted the importance of education in transformation initiatives, which can sometimes get caught up in technology.
"Building up the widget is, candidly, sometimes the easier piece of the pie," she said. "Education and storytelling on an individualized basis, by persona, is going to be critical."
The company's AI training regimen, meanwhile, equips employees to perform their jobs in the most effective and productive manner, Companieh said.
"This is a multidiscipline, enterprise-wide strategy," she said. "We are actually, at an enterprise scale, trying to cross the finish line together versus being a tech-driven, widget-based conversation and strategy."
At Global Payments, Johnston said enterprises made real progress in 2023 by designing governance models that effectively explain why AI models behave the way they do. Those governance models give companies greater confidence to deploy the AI pilots they tested last year. But challenges remain, she said.
"Technology leaders will be wrestling with more practical implementation issues, such as the optimal size of data sets to train their models and the associated cost of computing," Johnston noted. "In an uncertain economic environment, companies don't want to throw money at AI unless there's a cost savings component or a significant revenue upside."
4. Improving automation through generative AI
Businesses have spent years attempting to automate more processes. Eric Johnson, CIO at PagerDuty, an incident management and process automation company in San Francisco, said organizations will tackle the challenge of automation once again in 2024, this time incorporating emerging technologies such as generative AI.
"I think, historically, the tools we had were a little bit clunky, a little bit rudimentary," Johnson said.
The last 18 months, however, have seen a "big awakening" with generative AI, which has accelerated what's possible with automation, he noted. Tools now entering the market go beyond conventional robotic process automation, taking on processes subject to considerable variation or unpredictability, he added.
"You're going to see the CIO community really leaning in hard on how to take advantage of all this cutting-edge technology that's starting to show up in the market," Johnson said. "I think that would be on almost every CIO's agenda for 2024."
AI-based automation also plays well with CIOs' current focus on cost management and tangible results.
"The thing that's nice about automation is that you can measure the before and after," Johnson said. "Driving a clear business impact and measuring that impact, for CIOs, is kind of the low-hanging fruit."
5. Getting the data house in order
Enterprise adoption of generative AI will encourage organizations to redouble their data efforts.
"If you think about generative AI and AI, in general, a lot of it is very much dependent on data inside your organization," Johnson said. "If your data in your company is garbage, what do you think the results of that GenAI program are going to be?"
With that in mind, CIOs will sharpen their focus on data this year, he noted. That means rigorously assessing data management, enrichment and security, as well as addressing data quality and availability.
Scot Baldry, CIO for corporate technology at JPMorgan Chase, also pointed to the importance of data in 2024. The cross-industry pursuit of creative generative AI use cases "will renew organizations' focus on managing their data assets appropriately, especially if they want to take tangible advantage of GenAI's automation benefits," he said.
Cushman & Wakefield, meanwhile, aims to shorten what Companieh called the "supply chain of data." For brokers, that supply chain has traditionally involved multiple steps across multiple data points to gather and analyze data, she said. The company, however, is aggregating data in a voice-activated chatbot that helps brokers address clients' questions during conversations. The chatbot, currently in pilot mode, taps structured data, unstructured data, external public data, proprietary market analysis data and research data.
Making aggregated data available through a chatbot reduces the supply chain and shrinks a broker's "time to insight," Companieh said.
6. Battling IT staffing shortages
While CIOs address generative AI developments this year, they must also handle traditional concerns such as IT staffing.
"The shortage of technology talent will persist in 2024," Johnston predicted.
She said it's incumbent on her, as a technology leader, to blunt the effect of macro workforce trends and maximize her company's ability to attract and retain the best talent.
To that end, Johnston said Global Payments uses a follow-the-sun strategy that places people across time zones to optimize schedules. Another element of its hiring and retention strategy is giving employees meaningful work to remain engaged and investing in educational programs at the local level. That latter element develops knowledge workers with the skillsets that Global Payments needs, she noted.
"CIOs still have a lot of problems with [hiring] staff," said John-David Lovelock, research vice president at Gartner.
Hiring rates are lower, while vacancy rates are higher than they would like, he said. As a result, CIOs are turning to outside providers for staff augmentation and short-term managed services deals. IT organizations are also looking within, investing in boot camps and internal training to level up employees' skill sets, he added.
7. Bolstering cybersecurity in light of AI
Mitigating AI's security risk will also occupy CIOs and CISOs in the year ahead.
Clare Mohr, U.S. cyber intelligence lead at consultancy Deloitte, believes security organizations will face an influx of threat actors using AI to their advantage. Attackers in different countries, for example, began using generative AI last year to improve phishing campaigns, she noted. Specifically, they used the technology's content-creation capabilities to address grammatical and spelling errors that can tip off recipients.
This year, AI-based attack techniques will become more sophisticated. Mohr said she expects to see threat actors use AI to conduct reconnaissance and create malware and phishing campaigns tailored to specific individuals.
Michelle Swan, a partner at Tercera, a Chicago-based investment firm focusing on cloud professional services, also cited threat actors using AI to stage sophisticated attacks and create artificial identities based on stolen data. "New threats will continue to make traditional security models obsolete and push a greater focus on identity-based zero-trust security," she said.
CISOs can keep up with the evolving AI threat, but they will need to encourage more collaboration within their organizations, Mohr said. She recommended integrating intelligence analysts with threat-hunting teams, whether the latter are in-house or outsourced.
"This integration breaks down silos between [intelligence analyst and hunt] teams," Mohr said.
The upshot is a proactive defense stance that anticipates the types of attacks that might be coming. Integrated teams become more effective as mutual understanding grows between teams: A threat hunter knows what to ask an analyst and an analyst knows what hunters need to be successful, Mohr noted.
In this threat environment, technology leaders expect spending on cybersecurity to withstand fiscal pressures in 2024 -- although some CISOs reported spending constraints in 2023.
"Investments in security won't be impacted by macroeconomic conditions," Johnston said. "CIOs will do what it takes to stay ahead of cybercriminals."
John Moore is a writer for TechTarget Editorial covering the CIO role, economic trends and the IT services industry.