Ctg sit23 hub banner.jpg

'Fear of missing out' driving CEOs to throw cash at AI - Gartner

A survey from the analyst house found that company bosses believe AI will significantly impact their industry over the next three years

Fear of falling behind in the tech race will drive AI investment while CEOs believe an economic downturn or recession in 2023 will be "shallow and short".

Analyst house Gartner surveyed over 400 CEOs and other senior business executives from July through December 2022, spanning North America, Europe, Asia/Pacific, Latin America, the Middle East and South Africa, across different industries, revenue and company sizes.

Results found AI was the top technology that CEOs believe will significantly impact their industry over the next three years, cited by 21 per cent of survey respondents.

"Generative AI will profoundly impact business and operating models," said Gartner distinguished VP analyst, Mark Raskino.

"However, fear of missing out is a powerful driver of technology markets. AI is reaching the tipping point where CEOs who are not yet invested become concerned that they are missing something competitively important."

Recession issues will shrink while sustainability focus grows

Despite the impact of current economic headwinds, half of CEOs cited growth as the top strategic business priority for the next two years.

After three years of volatility, CEO priorities are stabilising and leaders are looking past the aftershocks of the omnicrisis period to a time when talent, sustainability and next-level digital change will be the levers of competitive performance, Gartner said.

Technology also remains a top focus area for CEOs, closely followed by workforce issues.

Image

Description

Credit: Gartner (May 2023)

"When determining business priorities, CEOs are hesitant, but not frozen," said Kristin Moyer, distinguished VP analyst at Gartner.

"More than half of CEOs believe an economic downturn or recession in 2023 will be shallow and short, and the survey showed only a modest rise in cash flow, capital and fundraising concerns."

Moreover, Gartner claims mentions of environmental sustainability rose 25 per cent over the previous year's survey, which was the first time sustainability ranked among CEOs' top ten priorities.

The research firm predicts that by 2026, environmental sustainability will be a higher CEO strategic business priority than the technology-related category.

Having said that, a Gartner survey found last year that sustainability will be one of the first areas to face cuts in organisations feeling their margins triple squeezed by rising inflation, talent shortages and supply constraints.

Inflation driving shifts in customer behaviour

Gartner's survey also found that inflation was ranked as the most damaging business risk by 22 per cent of CEOs, and nearly a quarter cited greater price sensitivity as the biggest shift in customer expectations they anticipate this year.

However, increasing prices is still the top action that CEOs are taking in response to inflation (44 per cent), followed by cost optimisation (36 per cent) and productivity, efficiency and automation (21 per cent).

Vendors such as OVHlcloud and IBM raised prices to combat inflation last year.

"It's concerning that CEOs do not yet seem to be focused on productivity as much as they should be in an inflationary period," said Moyer.

"This may be due to wishful thinking that inflation will not become a persistent feature of the economic landscape. CEOs must embrace automation to redesign methods, processes and products for efficiency, rather than pushing cost increases onto customers."