Dive Brief:
- CIOs need to rethink their approach to AI to drive long-term value, according to an AWS report published Thursday. The AWS Executives in Residence team interviewed 154 executives deploying AI across 27 countries for the report.
- More than two-thirds of executives said legacy workflows posed the biggest hurdle to deriving value from AI, not limitations of the technology. AWS found that enterprise leaders succeeding at value creation rework end-to-end business processes and reinvest the gains — such as increased employee capacity or time saved — into pre-planned areas.
- Without clear direction for AI-driven gains, the value creation is lost, Tom Godden, an AWS executive in residence, told CIO Dive. “This is a business problem more than it is an IT problem,” Godden said. “If you approach it as an IT problem, your gains are going to be nominal at best.”
Dive Insight:
Outdated ways of working are dragging down AI value creation, meaning CIOs need to fundamentally shift the way individuals and teams work.
Less than 25% of enterprises have been successful in their efforts to scale AI across multiple business operations, according to Gartner research. Still, global AI spend will nearly double this year as companies continue pursuing adoption of the technology.
Targeting AI piecemeal at different operational aspects — coding, for instance — still doesn’t make other processes such as governance, funding, approvals or coordination across teams faster, Godden said.
“This is where a lot of people are seeing these early gains and going, ‘Where did my gains go?’” he said. “Well, it’s because you made one part of the supply chain faster, not the entire supply chain.”
In the AWS report, Franz Decker, CIO at BMW, said “the biggest surprise was how much organizational alignment, process reengineering, and change management mattered compared to the technology itself.”
Redesigning work to focus on minimal coordination, handoffs and overhead is critical to AI value creation, the AWS report found.
“Work was designed for a world where execution was expensive and information moved slowly,” the report said. “AI reduces those constraints. The organizations creating value are not optimizing old workflows with AI; they are redesigning how work gets done around what AI and humans each do best.”
Enterprises are starting to realize AI gains as they identify areas where the technology can drive improvements.
Pet supplies retailer Chewy projected $50 million in annual cost savings due to AI starting in its 2027 fiscal year. Meanwhile, food distribution giant Sysco is eyeing $500 million in AI-driven cost savings through deployment of an AI-powered efficiency improvement program over the next three fiscal years.
