2024 Technology Key Issues Research – Transcript

Kyle Robichaud:

What did surprise me this year is four out of the top 10 parties that IT has, the business actually says, “I don’t have confidence that you can deliver to IT.” This includes improving stakeholder experiences, realizing value from investments in technology, aligning technology skills and talent to business needs, and maturing and industrializing data’s value to the enterprise. There’s definitely some underlying things that need to be looked at this year.

Announcer:

Welcome to The Hackett Group’s “Business Excelleration Podcast^®.” Week after week, you’ll hear from top experts on how to avoid obstacles, manage detours and celebrate milestones on the journey to Digital World Class^® performance.

Gary Baker:

What priorities do technology leaders have for the coming year? How prepared are they to address them? On this week’s “Business Excelleration Podcast,” we’ll discuss findings from our 2024 Technology Key Issues research. I’m Gary Baker, Global Communications director for The Hackett Group, and I’m joined by Principal Michael Fuller and Principal Kyle Robichaud, both from our Technology Transformation practice. Welcome to the podcast, gentlemen.

Michael Fuller:

Hi, Gary. Thanks for having me.

Kyle Robichaud:

Thanks for having us.

Gary Baker:

OK, Mike, why don’t you get us started by sharing a little bit of background on the Key Issues Study?

Michael Fuller:

Sure. So as probably most of our listeners know, we’ve been producing the Key Issue Study across multiple functions for many years, and this year I thought was particularly interesting considering everything that’s going on in the background from an economic, political – just from last year with ChatGPT and OpenAI kind of disrupting a lot of technologists’ plans for the year.

But this year’s report, it really focuses on trends ­– the priorities that are not just shaping the technology and the IT groups, but also the businesses that they partner with. We’re going to look at objectives, as well as some of the critical capabilities that IT leaders and business leaders need from technology groups, and then look at some of their concerns – questions around what those groups will actually be able to deliver.

So anyways, I think this year’s study is very interesting. Some of the priorities remain very similar to previous years. But I think what our listeners will hear is a lot of talk around some of these changes and some of the critical areas of focus, and their ability to deliver are going to be germane to how they deliver services, as well as areas that other companies are focused on. So I’m excited to have the conversation.

Gary Baker:

Kyle, what surprised you most about this year’s findings?

Kyle Robichaud:

I’ll start and tell you one thing that didn’t surprise me, and I think that it’s for the third year in a row, securing data in systems has been the No. 1 priority for IT organizations. But getting down to what did surprise me this year is the fact that four out of the top 10 priorities that IT has, the business actually came back and says, “I don’t have confidence that you can deliver this to IT.” This includes improving stakeholder experiences, realizing value from investments in technology, aligning technology skills and talent to business needs, and maturing and industrializing data’s value to the enterprise. Just the fact that these four key things is part of the top 10 priority is just the business doesn’t have that confidence. So there’s definitely some underlying things that need to be looked at this year from an IT organization.

Gary Baker:

Of the four issues you mentioned, which do you think has the most impact on the business?

Kyle Robichaud:

I really have to say that it would be maturing and industrializing data’s value to the enterprise. This isn’t just because data is really the lifeblood of being able to make decisions, but it’s about making the right decisions at the right time.

This is really where AI comes into the picture. AI is going to become table stakes for companies to stay relevant in the market, and allow companies to make the right decisions faster and at the right time. If companies don’t have a good hold of their enterprise data, you’re going to run into the age-old problem of garbage in, garbage out.

This could lead to a number of factors that the contractor’s going to have to deal with. This could be the sharing of potential sensitive data – where we would see hallucinations, which is the inaccurate or fabricated data that can come out of a Gen AI system – issues with quality control, or incorrect or inappropriate context that really comes out of that. So at the end of the day, the data within the organization, it’s going to be such a huge factor for being able to just stay competitive and remain relevant in the future market.

Michael Fuller:

Kyle, that was one of the four as well – that IT leaders and CIOs, CTOs, CDOs, they don’t believe they have the skills and talent to execute. So it’s a top priority – inability to execute and just think about a lot of our clients where they’re focusing, standing up different models of data COEs, so some of just the basic things like data integrity, data structure, data architecture. If you can’t deliver that, forget about Gen AI because it just goes back to just produce a lot of garbage.

Kyle Robichaud:

Yeah, I was talking to one of our clients actually today, and we took a quick look at the top 10. The great thing was everyone in the top 10 resonated. This is his agenda. This is what they’re focusing on. But when we got to talk about industrializing data, he really talked about how they actually officially established a global data center of excellence that they’re using. It’s a combination of IT and the business working together to make sure that they put standards around their data. They’re controlling where it’s going within the organization. They’re paying real focus attention on analytics and also the data quality. So it definitely is something that’s, even though the business is saying, “We don’t have confidence,” IT is still going to put their best foot forward and put the right things in place so that they can make sure that they’re treating data how it needs to be treated.

Michael Fuller:

This client that you were talking to did. I mean technology is one thing and what the IT org does is along those same veins, but do his business partners see what their role in it is, their accountability, their responsibility?

Kyle Robichaud:

Yeah, I think this is the beginning of the journey for them and the whole goal of establishing this is really to help make sure the business knows that they have a huge ownership part of the data. It’s really something about the maturing of the organization, and they’re definitely going on the right path.

Michael Fuller:

Probably the two of us could talk about this for quite a while, but there are key issues as well. But it’s definitely a challenge in setting it up, understanding what the needs are, managing it, etc. So looking forward to seeing what happens this year with that.

Gary Baker:

Mike, what stood out to you among this year’s findings?

Michael Fuller:

Well, this first part didn’t really stand out because having been in technology for 27 plus years, every year technology organizations are asked to do more. It’s no surprise. What did surprise me was that there’s an expectation that in a single year, that that volume is expected to go up by over 5%. So you have a very large pile of demand that’s sitting there waiting for these technology organizations.

However, technology teams have always been asked to do more with less. This year, the number of people or resources that are supporting those technology organizations is only going to rise by 0.2%. So you can do the math – 5% increase in volume, 0.2% increase in staff. Then even at the outsourcing side of things, volumes there when you look about its services and the staffing, that’s expected to actually shrink based upon what technology leaders are telling me. Not the market overall and not the dollars, but simply in terms of the number of services and the number of people. So it goes back to some of the skill gaps, especially around critical areas. It surprised me.

Obviously, there’s economic headwinds, although last quarter over 3% growth of GDP and inflation appears to be relatively tamed. That could change midyear. The one thing we never are surprised by is how rapid economic conditions can change, but that gap is still significant. I do think that that kind of goes back to the story that Kyle was talking about though, which is AI. And AI is not just Gen AI, but it includes all aspects of automation and technology. Organizations have been using automation for a long time, so hopefully that’s a way that organizations can close that efficiency gap, but it certainly isn’t a smooth path to do that. I don’t know. Kyle, what are you seeing?

Kyle Robichaud:

I guess almost a question back to you there, Mike. You mentioned where AI coming into play, but one of the challenges in the near term is are clients going to be able to get from their piloting of these new AI technologies to getting them implemented in their day-to-day business operations to achieve all those types of savings? And what types of challenges are you seeing out there on the market?

Michael Fuller:

I guess I was going to take a slight step back is like, AI, as I just mentioned, isn’t just Gen AI. It includes simple things like workflow automation. So a few years ago, RPA was kind on everybody’s lips, but as companies realized that that was a temporary fix, it kind of slowed their journeys down in terms of automation, because they wanted to wait to see what their enterprise platforms could do because there’s a lot of workflow automation built-in into that. So I think if technology organizations focus some of these I guess less sexier things that are associated with AI – like workflow automation or using automation that’s built into tools, or some of the automations that are just done simply on the infrastructure side that have been there for a long time – it’s going to help them meet those challenges associated with the volume.

Then I think as companies become more mature there, it can start thinking about, “OK, what are we going to do with LLMs and developing more Gen AI capabilities?” But I think it’s like anything – it’s crawl, walk, run, and IT orgs have to crawl first.

Gary Baker:

Kyle, could you share an example of a company that really is kind of realizing the value that data and automation can drive, and talk about how they got there?

Kyle Robichaud:

Well, I think one interesting thing to think about – just building off of where you were going, Mike, on the other aspects of AI – looking at automation, we did some work with a client that is going through a journey in the service management space. They’ve partnered with ServiceNow, which they’ve just released some of their initial AI capabilities. But one of the things that we saw the opportunity for and they’ve gone after is, really around using not, and this isn’t just Gen AI, but this is everything from automation and just using machine learning within the platform to help reduce tickets. And we estimated that once they get everything in place, they’ll hit potentially a 50% reduction of tickets that they have in their system. So far, been able to achieve upwards of 25% to 30% of that at least in other things. So looking at being able to use auto-routing when you’re routing tickets – just reducing the average resolution time – and that comes from the data perspective of having the right service catalog in place so that service desk agents are able to respond to tickets appropriately faster and get to resolutions quicker.

Then there’s always the additional focus area around chatbots where there’s more trained chatbots that have automated regular responses, and now you bring Gen AI into the picture, and it really helps them to be able to really help to redirect tickets to the right place automatically and drive that more as a conversational piece. So even though at the same time you’re speeding up the time to resolution, you’re also increasing the customer satisfaction, giving them more of a lifelike experience as well. So definitely seeing a lot of good things happening in the space all around.

Michael Fuller:

Yeah, it kind of goes back to, what do technology organizations have to deliver? Obviously, there’s availability. There’s uptime. No one’s going to tolerate slow performance, but then it’s, “OK. Ninety percent plus of anyone in a company’s interaction with IT is through the service desk.” If you can make that efficient utilizing automation, that’s where you start. If companies are less mature in the overall AI journey, kind of going back to basics and some of these ITIL or ITOM processes are definitely a way to go.

Gary Baker:

OK. Gentlemen, any closing thoughts?

Michael Fuller:

I’m just looking forward to the year. It’s already, jeez Louise, we’re halfway through the first quarter, but it feels like we literally just started. So I’m looking forward to see the challenges, see how it evolves, and see how companies are able to respond. So looking forward to it. How about you, Kyle?

Kyle Robichaud:           

I agree with the same thing, and I think just to touch on one thing that you brought up a little bit, Mike, around some of the economic pressures, I do think some of the interesting conversations I’ve had so far this year ties back to our No. 2 top priority here with improving enterprise cost-efficiency. It’s really where a lot of IT leadership, they’re utilizing these new technologies – whether it be automation or Gen AI or analytics capabilities, to really make sure that they’re becoming more efficient for the business in these unique ways. So instead of just going and just trying to slash costs, they’re focusing more on these efficiency opportunities, which will allow their organization to still support the business going forward.

Gary Baker:

OK. Great insights, gentlemen. Thanks for taking a couple of minutes to talk with us.

Michael Fuller:

Thanks, Gary.

Kyle Robichaud:

Thanks for having us.

Gary Baker:

Listeners can download a summary version of the research we’ve been discussing from the Technology Insights page of our website, and we’ll also put a link to it in the show notes.

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