Today’s CIOs and IT leaders are making changes to their organizations’ tech and digital transformation strategies.
However, according to an internal study by Andover Intel that surveyed more than 200 CIOs and senior technology planners, the reality is different than the media hype claims.
Trends are changing – including the increasing importance of AI, moving back to the cloud or moving data and apps away from the cloud; the increased use of virtual private networks (VPNs); and the continued emphasis on app modernization – as CIOs decide what could support an organization’s business needs.
Here’s how CIOs and IT leaders are thinking beyond the hype around digital transformation to drive positive change in their organizations.
Contents
Where the company introduces AI
Is AI taking over the company? The answer is nuanced.
Many CIOs are aware that business departments drive the vast majority of AI testing. In addition, many specialist departments carry out these experiments without there being a formal AI implementation project. In other words, the CIO neither supports software development nor accumulates capital expenditures.
Generative AI is the most well-known form of AI outside of the IT organization, is easily accessible in an as-a-service form and allows users to explore the tool’s potential without the limitations of a formal software deployment.
Only about a quarter of CIOs believe their companies are committed to AI in manufacturing. But the potential for widespread adoption is promising.
According to the same internal research, chatbots in some form account for over 85% of actual AI projects. These AI projects have a formal, approved budget. Many of these chatbot projects focus on providing customer support.
The remainder of targeted AI implementations are a combination of dedicated AI tools from IT or network vendors, such as network monitoring systems or predictive maintenance software, for operational support and a small number of enterprise-hosted AI applications for business analysis.
Line departments are driving broader AI adoption through free or included tools that help employees with email and document creation.
Because the CIO is not directly involved in these applications and there is no capital project with CFO review, it is unclear whether the application of these tools will provide significant business benefits.
There is no guarantee that a free or integrated AI model will be available in the future. There is also no guarantee that user benefit will justify paying that price if AI vendors set a price that provides a reasonable ROI.
Ultimately, if you offer free access to a new technology, there will always be users who benefit from it. Additionally, it remains to be seen whether there is a better use case for adopting AI in the enterprise.
Why skepticism obscures cloud repatriation
You’d think people would be getting their work out of the cloud in droves. It’s not like this. But according to internal research, that doesn’t mean they’re happy with their cloud decisions.
Over 50% of organizations using the cloud reported to Andover Intel that they had made significant errors in cloud assessment and development.
According to the same internal research, only 3% said they have repatriated apps since January 2023, i.e. moved them back from the cloud to the data center. However, this value is twice as high as in the previous year.
According to the same internal research, a third of companies said they had to make major changes to some of their cloud applications, almost always to reduce cloud costs.
Repatriation is a crucially big change. What matters is why CIOs and IT leaders believe they made mistakes that drove up their cloud costs.
According to the same internal research, the problem is a combination of hype and the difficulty new cloud prospects have finding the right people to lead cloud projects.
Experienced software architects with knowledge of cloud capabilities, costs, and the relationship between the two are difficult to find. Most software architects want to work for vendors, cloud providers, and startups. Young architects often need help determining the optimal structure for cloud apps.
According to the same internal research, less than 20% of CIOs say they have considered third-party resources to assist with cloud planning and development.
Many CIOs who chose not to use third-party resources cited cost as the primary reason for noncompliance. The number of third-party projects completed and checked for results is probably too small for statistical certainty. Still, it appears that third-party resources did not perform better than internal planning and development.
How revamping the VPN will benefit the company
VPNs have been around for a long time. Like many long-lasting technical concepts, they are constantly evolving. This development has given rise to two primary VPN models. The first is Multiprotocol Label Switching (MPLS) VPN, which is offered as a service by network operators worldwide. The second is an overlay VPN – a type of VPN that runs on another network – and is used by both businesses and consumers to improve the privacy and security of the connection when using the Internet.
What is currently happening in the VPN market is a merging of these models and a merger with the cloud and a potentially game-changing new access option.
Many CIOs rely on MPLS VPNs because of their reliability and because they can negotiate service level agreements to ensure quality of service.
What these same CIOs don’t like is the cost, which they say is more than five times that of a similar speed Internet connection. Additionally, MPLS VPNs are often unavailable in many remote locations, especially outside of large markets such as the US and EU.
Software-defined wide area networking (SD-WAN) technology is designed to combine MPLS VPNs at large sites with Internet overlay VPNs into a unified VPN. The technology can serve locations where MPLS VPNs are too expensive or unavailable. It can potentially even replace MPLS VPNs in some or all locations.
However, according to internal research, less than 5% of CIOs say they have replaced MPLS VPNs.
That could change as SD-WAN becomes increasingly available as a cloud component, either alone or as part of a Secure Access Service Edge model. SASE is a network architecture that combines WAN skills with features such as cloud access security brokers and firewall-as-a-service.
With this functionality, SD-WAN can transfer workflows from the Internet directly to the cloud and then to the corporate VPN. When employees in a remote location – whether at home, a small branch office, or even a current MPLS VPN location – use the Internet and the cloud to access apps, they do not need to use a VPN at the access point.
According to internal research, a fifth of CIOs say they are exploring this cloud-first VPN option.
Fixed wireless access (FWA) is also impacting the plans of many CIOs. Typically offered as a use case of 5G cellular technology, FWA could deliver hundreds of megabits of bandwidth wirelessly. If the technology becomes widely available, it could make all cloud VPN options both faster and more cost-effective.
To date, less than 10% of CIOs are actively engaging with FWA. However, according to the same internal research, the number has doubled since 2022.
What happens when hype overlaps?
One of the more abstract points CIOs have raised in 2024 could prove to be one of the most profound in the long run.
In 2022, digital transformation, application modernization and cloud computing were treated as three largely independent CIO initiatives. At the beginning of 2024, a third of CIOs wondered whether the three IT initiatives belonged together. According to internal research, almost half of this group believed this was the case.
Many CIOs discovered that moving an app to the cloud cannot simply be viewed as a redeployment. Code changes are almost always critical to finding the right balance between the scalability benefits of the cloud and the compliance and hosting cost benefits of the data center.
These CIOs also say that the best business cases for transformation include leveraging the cloud. Therefore, it would be beneficial to consider the same modernization techniques as cloud adoption overall.
Using different names for IT activities that have the potential to drive change when they are likely to require similar steps from IT staff, similar involvement from business departments, and similar technology decisions simply creates confusion and increases risk.
When companies consider changes within the organization, best practices say they should evaluate any proposed changes to optimize time, costs and results.
Tom Nolle is founder and principal analyst at Andover Intel, a consulting and analytics firm that first looks at evolving technologies and applications from the perspective of the buyer and the buyer’s needs. By nature, Nolle is a programmer, software architect and manager of software and network products. He has been providing consulting services and technology analysis for decades.