How can you realize the promise of transformational technologies?

The enterprise opportunity to deploy new technologies is vast, but CIOs must adapt digital transformation principles to maximize value.

The digital paradigm for large enterprises is in flux. New technologies — from generative artificial intelligence (GenAI) to quantum computing — are complementing more established capabilities in internet of things (IoT) and AI, redefining what is possible through technology transformation. Other corporate priorities are also evolving at pace, forcing businesses to think through the wider implications of technology investments, from sustainability to data ethics.

The EY CIO Imperative Series is designed to provide critical answers and actions to reframe the future of your organization. In this article, we explore the latest insights from the EY Reimagining Industry Futures Study 2024 (pdf) and discuss how a new transformation mindset is essential if emerging technologies are to deliver to their full potential.

New technologies are reshaping the enterprise

The latest edition of the EY Reimagining Industry Futures (pdf) study reveals that investment momentum in emerging technologies is robust. GenAI has rapidly moved to the forefront of the enterprise investment agenda: with 43% of organizations currently investing in it, GenAI ranks third among the nine emerging technologies tracked in our study. 5G and quantum computing are also seeing rising investment activity year-on-year, both up six percentage points in terms of current levels of investment.

Plans to invest over the next one to three years are also encouraging, led by 5G (52%), quantum computing (46%) and GenAI (43%). Meanwhile, less than one in 10 businesses consider these technologies irrelevant, except for blockchain (15%) and virtual reality (VR) and augmented reality (AR) (18%), where resistance is more pronounced. All in all, the prognosis for future adoption of these technologies is very positive.

Investment in emerging technologies

Which of the following technologies is your organization investing in?

The scalability of emerging technologies is not guaranteed

While spending intentions are encouraging, active deployments of emerging technologies are still nascent. Most organizations are still only at the proof-of-concept or piloting phases of deployments, regardless of technology. AI and automation are best established, with limited or extensive deployments accounting for 45%, and 35% of organizations currently investing. While there are no active deployments of GenAI as yet — unsurprising given its infancy — government (42%) and consumer products (51%) have the highest proportions of pilot projects.

Edge computing, IoT, VR and AR all rank further back: at best, active deployments account for one in five companies currently investing in these. IoT deployments are surprisingly low, given these capabilities have been on the market for a decade or more, suggesting limited business appetite to cascade IoT across the organization. Crucially, businesses lack confidence that they can drive frontier technologies into mainstream business processes, with 63% viewing the move from trials to pervasive deployment as challenging. One key inhibitor is the burden of legacy IT, which prevents them from innovating at pace.

Deployment status of technologies among current spenders

What is the deployment status of emerging technologies that you are currently investing in?

Existing transformation roadmaps are feeling the strain

Effective scaling of frontier technologies inside enterprises will require resilient transformation frameworks. For example, while 73% of businesses agree their leaders are interested in the value creation opportunities afforded by GenAI, 52% agree it is forcing their organization to question whether their digital transformation agenda is fit for purpose. Even more (64%) believe that new technologies fundamentally challenge their current transformation agenda.

What is missing from existing transformation roadmaps? Data governance is one blind spot, with 74% of organizations claiming this requires improvement. Meanwhile, environment, social and governance (ESG) factors continue to grow in importance, with 83% of organizations rating it an important or leading consideration in their emerging technology investment decisions, up from 76% last year. This evolving corporate imperative breeds additional challenges, with more than seven in 10 organizations agreeing that they need to do more to harmonize their sustainability and technology strategies, an issue that is most pronounced in Asia-Pacific.

Businesses lack the expertise to combine different capabilities

One of the clearest findings in this year’s results is that businesses want to avoid rolling out emerging technologies in isolation. Indeed, they are highly conscious of the need to integrate cutting-edge software and hardware capabilities so that they mutually reinforce each other, maximizing value creation in the process. One obstacle preventing this is a lack of knowledge: 75% of enterprises require better understanding of how different emerging technologies can be combined to create value.

Moreover, businesses are anxious to explore intersections and adjacencies between specific technologies. When asked which emerging technologies are most complementary to their 5G and IoT strategies, more than half cite AI and automation, the leading answers. Businesses are also seeking a more holistic perspective of the intersections between different capabilities. This year’s responses are more evenly distributed across all emerging technologies, with VR/AR, quantum computing and blockchain all rising in importance as candidates for integration with 5G and IoT.

Complementary emerging technologies for 5G and IoT

Which of the following emerging technologies are most complementary to your organization’s 5G and IoT strategy?

Suppliers are under pressure to improve their value propositions

The solutions portfolios of technology and telecommunications providers are failing to keep pace with enterprise demand for combinations of frontier technologies. Six in 10 businesses don’t believe that vendors adequately articulate how IoT can be integrated with AI and edge computing, for example. A similar proportion (59%) don’t believe vendors provide sufficient AI capabilities as part of their 5G and IoT solutions. A lack of commercial understanding is also a factor, with seven in 10 believing vendors should do more to articulate the business benefits of what they offer.

These pain points require urgent attention, since 32% of businesses list deeper collaboration with technology and telecom vendors as a 5G priority, up from 25% last year. And it’s not only technology combinations that are front of mind as businesses reflect on their vendors: speed of deployment and security credentials are the top two attributes they are looking for in suppliers both now and in the future. Often, they simply don’t know who to turn to or which option to choose: 50% of respondents say their organization is struggling to identify the right type of GenAI vendor, while 53% find it difficult to choose the right 5G deployment model.

Crucially, many enterprises don’t think that technology suppliers understand enough about their own business imperatives: it’s the top improvement they would like to see, followed by better articulation of emerging technology capabilities. These concerns underline the importance of much more meaningful dialogue between enterprises and their suppliers.

Enterprise attitudes towards ICT vendor relationships

What is the most important improvement ICT suppliers should make to improve their relationship with your organization?

Ecosystem collaboration is in place but lacking prioritization

Businesses realize that they need to collaborate with suppliers and peers in new ways if they are to fully exploit new technologies, with 71% agreeing that open innovation principles are widely accepted inside their organization. Meanwhile, 69% of businesses currently collaborate with other organizations as part of an ecosystem, with gaining access to new knowledge and skills the top driver, followed by the ability to access end-to-end technology solutions.

These drivers for ecosystem engagement should help businesses to address the knowledge gaps they experience, while also opening access to new combinations of technologies from different types of suppliers. Yet there is a growing risk that ecosystem strategies are underprioritized: 61% of respondents believe that innovation through collaborative ecosystems is “nice to have” rather than mission critical, up from last year.

There are also operational headaches to consider, with six in 10 businesses claiming that multi-sided partnerships are hard to execute. As a result, enterprises will prioritize technology suppliers that can effectively orchestrate other vendors and partners while at the same time offering a better explanation of their ecosystem role and position.

Enterprise attitudes towards collaborative ecosystems

How much do you agree or disagree with the following statement? My organization views innovation through collaborative ecosystems as “nice to have” rather than mission critical (% agree).

4. Drive more meaningful interactions with suppliers and ecosystems

Clearly communicate your changing business imperatives with technology and telecommunications suppliers so they can deliver more relevant solutions, articulated in more compelling ways. At the same time, share your changing transformation imperatives with them, so that levels of information symmetry with your suppliers are high. Scan the supplier ecosystem for technology providers with differentiated capabilities and prioritize vendors that can orchestrate other partners, so that your ecosystem interactions can focus on creating and sustaining value. Take a braver attitude to collaborative ecosystems by devoting more leadership time and energy to them and by clearly aligning them with your technology strategy.