The technology sector has recently navigated a challenging phase characterised by global economic instability. Nevertheless, generative artificial intelligence (GenAI) strategies have sparked renewed confidence.
As the central focus of digital transformation strategies, GenAI takes prime position in the latest EY's ranking of the top 10 opportunities for technology companies in 2024.
The report, however, warns that the majority of organisations (90%) are still in the early stages of AI maturity, making a strong case for the establishment of an AI control tower to ensure safe and ethical AI deployment, with humans at the helm.
Ken Englund, EY Americas TMT Leader, elaborates: "In 2023 the tech industry navigated global economic headwinds and geopolitical tensions, while creating broad expectations around the potential of AI. By placing AI at the crux of their strategies, technology businesses can outpace competitors, expedite their transformation journeys and reorient operations to take advantage of rapidly emerging technologies and business models."
The report also introduces the opportunity to implement GenAI in front and back-office use cases, which debuts in second position on the ranking. The document suggests companies should prioritise high-value, high-impact use cases that can bring about transformative changes. This may include deploying GenAI for software coding (front-office) or employing AI to attract and retain talent (back-office).
CEO's are recognising the potential of AI. The report notes that 65% of tech CEOs believe their organisation needs to act urgently on GenAI to prevent competitors gaining an upper hand.
This situation makes it unsurprising that shaping corporate investment strategies around the AI roadmap has secured a spot (fifth position) on this year's top 10 opportunities list.
AI and large language model (LLM) utilisation have gained significant momentum, leading to mergers, acquisitions, and partnerships that can help to overcome hurdles, such as the high demand for hardware and the costly training required to equip teams with the skills to deploy these technologies.
Olivier Wolf, EY-Parthenon Global TMT Leader, explains: "Despite the regulatory challenges involved in AI deals, there is massive potential. The platform-based nature of today's tech businesses means there will be numerous attractive companies with business models founded on existing AI ecosystems."
"The most effective strategy for growth will involve a mix of small to medium-sized acquisitions, corporate investments, and partnerships, all of which can facilitate faster access to intellectual property and the competencies necessary to develop new propositions."
In the current geopolitical climate, establishing extra supply chains in emerging markets is a pertinent opportunity, particularly for hardware-focused companies. Creating operations in areas such as India and ASEAN countries can offer a way to avoid areas susceptible to trade disputes, a strategy which secured fourth place in this year's ranking.
The report also identified the emphasis on data centres' energy efficiency, ranking eighth in the top 10 list. As GenAI algorithms become increasingly complex, the energy required to power data centres is set to surge, with AI's energy consumption predicted to match that of a country the size of the Netherlands by 2027.
Collaborative ventures with energy equipment providers are proposed as a way for businesses to mitigate this risk, leading to both short- and long-term cost benefits.