Maximizing the Business Value of AI with a Digital Platform InfoBrief, sponsored by ServiceNow | May 2024 Tony Olvet Group Vice President, Worldwide C-Suite and Digital Business Research, IDC Craig Powers Research Director, Worldwide Digital Business Strategies, IDC 2InfoBrief, sponsored by ServiceNow May 2024 | IDC #US52065424 Maximizing the Business Value of AI with a Digital Platform Table of Contents CLICK BELOW TO NAVIGATE TO EACH SECTION IN THIS DOCUMENT. Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 The View of AI and Digital Business from the C-Suite . . . . . . . . . . . . . . . . . .4 The Digital Business Impact of AI Everywhere . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 How Enterprises Are Developing and Driving AI-First Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 The Four Pillars of a Digital Business: Platform at the Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Understanding Characteristics of Digital Business Leaders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 Trends in Digital Platform Adoption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Digital Platform Usage and Barriers to Adoption . . . . . . . . . . . . . . . . . . . . . . . 10 Business Outcomes: Leading Digital Businesses Outperform the Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Digital Business: Scorecard KPIs Among Leading Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 AI-First Platform Adoption for the Next-Gen of Technology Modernization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Key Factors in Strategy Development and Applications across the Enterprise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Business Outcomes: Learning from Leading Digital Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Important Actions in Deciding Which Digital Platform to Adopt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Guidance for Leaders Seeking a Competitive Edge . . . . . . . . . . . . . . . . . . . .17 About the IDC Analysts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Message from the Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 3Table of ContentsInfoBrief, sponsored by ServiceNow May 2024 | IDC #US52065424 Maximizing the Business Value of AI with a Digital Platform Executive Summary As companies enhance their digital business capabilities, they are increasingly focused on deriving value from AI. This expected value comes in the form of optimized processes, augmented automation, and digital business model innovation, for example. Companies are feeling disruption from generative AI (GenAI). This has led to organizations seeking out how they can augment their processes and innovation with the assistance of GenAI. C-suite executives also see AI as an area of significant growth in 2024, and that has led to AI being the top new digital technology investment. Enabling AI through a digital platform, particularly one with built-in security and data features, provides significant competitive advantages. Most companies are still building out their platform and feel that investment is needed in their data systems. Those leading digital businesses with platforms in place have been able to capitalize on the latest AI technologies and are seeing major benefits over nascent digital organizations in their markets. 4Table of ContentsInfoBrief, sponsored by ServiceNow May 2024 | IDC #US52065424 Maximizing the Business Value of AI with a Digital Platform The View of AI and Digital Business from the C-Suite CEOs say that modernizing IT to achieve better business outcomes is their number 1 priority for tech leaders (CIOs/CTOs/CDOs). For CIOs, the top business objective is modernizing core business applications. More than any other characteristic, CEOs seek measurable business outcomes from their tech providers. Gaps in digital business execution are the second most common business risk mentioned by CEOs behind economic pressures. This creates urgency to invest in the four pillars of a digital business to transform processes and deliver business outcomes. Three-quarters of CEOs feel that AI presents a “massive” or “significant” opportunity to drive differentiation and new growth in 2024. The three top-of-mind technologies for the C-suite are: GenAI Automation Cybersecurity In terms of business benefits, the C-suite is most focused on asking IT leaders to improve customer experience (CX) with GenAI, according to IDC’s GenAI ARC Survey. IT leaders indicated that integrating GenAI into existing customer-facing applications is a key area for the C-suite. 5Table of ContentsInfoBrief, sponsored by ServiceNow May 2024 | IDC #US52065424 Maximizing the Business Value of AI with a Digital Platform The Digital Business Impact of AI Everywhere The market has moved from the excitement and hype of 2023 to a focus on the practical realities of implementing AI to drive bottom-line and top-line growth. Organizations are focused on business impact in this new era defined by AI: impact on productivity, experience, and revenue. Success in AI begins with data and requires an enterprise wide digital platform approach. Without a platform approach, an organization will not be able to scale its digital business. 6Table of ContentsInfoBrief, sponsored by ServiceNow May 2024 | IDC #US52065424 Maximizing the Business Value of AI with a Digital Platform How Enterprises Are Developing and Driving AI-First Strategy AI success starts with data and is built on a digital platform. On average, companies expect to spend 16% of new project budgets on GenAI in 2024, according to IDC. Organizations feel GenAI disruption most in the areas of rebalancing decision-making roles, resetting decision-making and data leverage expectations, reorganizing financial and operational systems, and reworking customer engagement, experience, and support. Top factors limiting expanded or initial use of GenAI include concern that it jeopardizes control of data and intellectual property as well as excessive costs related to GenAI enhanced apps and the infrastructure associated with model training or running these apps. AI is a key strategic piece for optimizing internal processes, augmenting the automation of key functions, and innovating new business models. 7Table of ContentsInfoBrief, sponsored by ServiceNow May 2024 | IDC #US52065424 Maximizing the Business Value of AI with a Digital Platform The Four Pillars of a Digital Business: Platform at the Center Organizations are investing in and developing technology to innovate digital business models that drive new efficiencies and greater market share. These focus on standardizing processes across the organization, improving workflows, and utilizing AI to drive automation. Data architectures enable the analysis, AI, and accessible visualizations and insights supporting data-driven decision-making. Integrating IT and digital strategy to support digital business platforms can help with recruiting, retaining, and upskilling top talent. Mastering these capabilities leads to measurable improvement in business outcomes and key performance indicators (KPIs). Digital business models Operational processes Data and AI Organization Business Model Organization ModelDigital Business Platform Operating Model 8Table of ContentsInfoBrief, sponsored by ServiceNow May 2024 | IDC #US52065424 Maximizing the Business Value of AI with a Digital Platform Understanding Characteristics of Digital Business Leaders • Leaders provide world-class support for business model innovation through digital tech investment. • A diversity of digital business models are developed and deployed. • There is an overall digital-first approach to processes and revenue. • Digital business platforms are built while IT and digital business architectures are integrated. • Agility at scale is created to support innovation across the organization. • The ability to recruit, retain, and train employees is improved while identifying the next generation of digital business leadership. • Processes are standardized across the organization and integrated into a single system accessible across all departments. • The use of AI is expanded in automating processes, tasks, and workflows. • Improving efficiency through workflows creates a more attractive place to work. • Data is a strategic asset and essential to corporate strategy. • There is a willingness to utilize a variety of data architectures and data sources (both internal and external). • Supporting AI is a top data priority. Digital Business Models Data & AI Organization Operational Processes 9Table of ContentsInfoBrief, sponsored by ServiceNow May 2024 | IDC #US52065424 Maximizing the Business Value of AI with a Digital Platform Trends in Digital Platform Adoption Customer-focused functions such as customer service and customer engagement are the most implemented digital platform functions worldwide. The top factor driving adoption of digital platforms is improving the customer experience, with the other top benefits being improved security and reduced operational costs. Digital Platform Adoption Top 5 Factors Driving Digital Platform Adoption Worldwide 27%17%24%31% 21%19%26%32% 20%21%26%32% 21%21%28%28% 20%20%30%29% 24%21%26%28% 24%17%31%26%Customer engagement/customer relationship .