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Is the decision-making power for Gen AI investments moving away from CDOs?

Integration of GenAI technology into corporate plans requires cooperation amongst CDOs, CIOs, and CTOs.

“Gen AI has been a bit difficult because it is one thing where many companies will see short-term success, but they might not succeed in the medium and long term.” – Pramod Gosavi, an investor at 11.2 Capital, said in an exclusive interview with AIM Research. 

With its capacity to produce fresh content, automate intricate procedures, and improve decision-making, general artificial intelligence (Gen AI) offers enterprises a game-changing potential. Its effects extend beyond data administration and analytics, including customer service, marketing, and product development, among other areas. Due to the wide-ranging effects, investment choices must be made in a more cooperative manner including a larger range of stakeholders, such as chief technology officers (CTOs), chief information officers (CIOs), and even chief executive officers (CEOs), in addition to CDOs.

According to the AIM Research Leaders Survey on Generative AI Priorities and Challenges for 2024, 74% of respondents anticipate an increase in budget allocation for Generative AI initiatives, while 21% expect budgets to remain unchanged, and only 6% are uncertain. This underscores a strong trend towards heightened investment in Generative AI initiatives for the upcoming year.

Multidisciplinary Impact of GenAI

The potential of GenAI to revolutionise customer experiences, company operations, and product development means that jobs inside the C-suite beyond the CDO must contribute. For example, because deploying GenAI systems is technically challenging, there is a growing involvement of Chief Technology Officers (CTOs) and Chief Information Officers (CIOs). In a same vein, Chief Risk Officers (CROs) and Chief Financial Officers (CFOs) play a critical role in evaluating the risks and financial effects of GenAI investments.

Statistics Highlighting the Shift

Increased Productivity and Economic Gain: GenAI is associated with a potential productivity increase of up to 50%, as noted by Teradata’s Chief Product Officer Hillary Ashton. Furthermore, McKinsey reports suggest that GenAI could contribute between $2.6 trillion and $4.4 trillion annually to the global economy.These significant economic benefits underscore the need for a strategic approach to GenAI investments, involving senior leadership beyond the CDO.

Adoption and Experimentation Rates: Deloitte’s third-quarter CFO Signals report indicates that 42% of companies are experimenting with GenAI, with 15% actively incorporating it into their business strategy.This level of engagement across companies highlights the strategic importance of GenAI, necessitating broader executive oversight.

Concerns and Challenges: The top concerns for GenAI adoption include the potential impact on risk and internal controls (57%), data infrastructure and technology needs (52%), and investment needs (51%). Addressing these concerns requires a collaborative effort from various C-suite executives, including CDOs, CTOs, and CFOs, to ensure a balanced approach to risk management, technological readiness, and financial planning.

Generative AI in Asset Management: The asset management sector is witnessing a transformative impact from GenAI, with applications ranging from quantitative and algorithmic trading to regulatory compliance. This sector’s global trend towards GenAI adoption necessitates strategic investment decisions that align with long-term business goals, further emphasizing the need for involvement from C-suite executives beyond the CDO.

Shift in Decision-Making Power in certain sectors

Technology Sector

In the technology sector, the decision-making power for GenAI investments is increasingly shared with Chief Technology Officers (CTOs) and Chief Information Officers (CIOs). This shift is driven by the technical complexities and infrastructure demands of GenAI projects, which require specialized knowledge in AI and machine learning operations (MLOps).

According to a survey by McKinsey, 40% of technology firms report that CTOs are now primarily responsible for GenAI initiatives, reflecting the technical leadership required for successful implementation

Financial Services

In financial services, Chief Risk Officers (CROs) and Chief Financial Officers (CFOs) are playing more significant roles in GenAI decision-making. This change is due to the high impact of GenAI on risk assessment and financial forecasting.

A report by Deloitte highlights that 36% of financial institutions have started involving CROs in GenAI investment decisions to better manage the potential risks associated with AI deployments

Healthcare

The healthcare sector sees a collaborative decision-making approach involving Chief Medical Officers (CMOs) and Chief Innovation Officers (CIOs), alongside CDOs. This is because GenAI applications in healthcare often require deep integration with patient care systems and innovation strategies.

Guidehouse reports that 52% of healthcare organizations are now involving CMOs in the GenAI decision-making process to ensure alignment with patient care objectives

Statistical Insights

Investment Growth: The U.S. saw AI investments reach $67.2 billion in 2023, with a significant portion directed towards GenAI

Role of CDOs: Despite the shift in decision-making power, 73% of U.S. companies still involve CDOs in GenAI investments to some extent, particularly for data governance and integration aspects

Sector-Specific Investments: In the U.S 43% of companies generating at least $1 billion annually plan to invest $100 million or more in GenAI, indicating the scale of investment and the broadening scope of decision-makers involved.

In order to properly respond to the question, it is imperative that we explore the functions of Chief Data Officers (CDOs), Chief Information Officers (CIOs), and Chief Technology Officers (CTOs) in companies, particularly with regard to their engagement with generative AI (GenAI) investments and the strategic significance of these positions in utilising data and technology for innovation and business growth.

Chief Data Officers (CDOs)

CDOs are primarily responsible for an organization’s data management strategy, focusing on data quality, data governance, and leveraging data as a strategic asset. Their role has evolved significantly with the advent of GenAI, positioning them as key players in driving data-driven decision-making and innovation.

  – According to a survey by NewVantage Partners, 65% of firms now have a CDO, a significant increase from just 12% in 2012.

  – Research suggests that organizations with a CDO see at least a net 5% improvement in revenue growth rates compared to organizations without a similar role.

Chief Information Officers (CIOs)

CIOs oversee the organization’s overall technology strategy, including the implementation and management of IT systems. Their role intersects significantly with that of CDOs, especially in ensuring that technology infrastructure supports data strategies.

  – A study indicates that organizations turning to CIOs to oversee data management and strategy are only half as likely to see business impact from their data initiatives compared to those with a dedicated CDO.

  – Collaboration between CIOs and CDOs is crucial, with successful partnerships leading to more effective data utilization and strategic decision-making.

Chief Technology Officers (CTOs)

CTOs focus on external-facing technology and product development, playing a critical role in leveraging technology to enhance product offerings and customer experiences. Their involvement in GenAI investments is crucial for developing innovative products and services.

  – The role of CTOs in driving digital transformation is highlighted by their focus on adopting emerging technologies like AI and IoT to create competitive advantages.

  – CTOs, especially in collaboration with CDOs, can significantly impact an organization’s ability to innovate and adapt to market demands.

The Interplay and Importance of CDOs, CIOs, and CTOs in GenAI Investments

Integration of GenAI technology into corporate plans requires cooperation amongst CDOs, CIOs, and CTOs. When integrated, each role’s distinct viewpoint and skill set may significantly increase corporate value through the use of technology and data.

  – Organizations that effectively integrate the roles of CDOs, CIOs, and CTOs are better positioned to leverage GenAI for strategic advantage, with some industries reporting up to a 25% acceleration in growth due to effective data and technology leadership.

  – The presence of a CDO is correlated with stronger performance, indicating the strategic importance of this role in leveraging data for business success.

In conclusion, the roles of CDOs, CIOs, and CTOs are increasingly important in the context of GenAI investments. Their collaboration and strategic alignment are key to leveraging data and technology for business growth, innovation, and competitive advantage. The provided statistics underscore the impact these roles can have on an organization’s ability to effectively utilize GenAI and other emerging technologies.

Picture of Anshika Mathews
Anshika Mathews
Anshika is an Associate Research Analyst working for the AIM Leaders Council. She holds a keen interest in technology and related policy-making and its impact on society. She can be reached at anshika.mathews@aimresearch.co
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