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Companies are committing a significant number of resources towards AI, predominantly driven by the c-suite but return on investment expectations are falling short.
This is according to Cisco’s 2024 AI Readiness Index that was launched during the Live event in Melbourne. The Index focuses on six foundational building blocks such as strategy, infrastructure, data, governance, talent and culture.
Respondents from across APJC (38 per cent) reported that as much as 10 to 30 per cent of the IT budget is being allocated to AI deployments.
In Australia, 92 per cent report an increased urgency to deploy AI in the past year, driven primarily by the CEO and leadership team.
The Index also revealed despite significant AI investments in strategic areas like cyber security, IT infrastructure, data analytics and management, companies reported the return on these investments aren’t meeting expectations.
“Only 15 per cent of companies are fully prepared to capture AI’s full potential, yet 86 per cent feel that they only have 18 months to implement an AI strategy before a significant negative impact on them and their business,” Cisco APJC president Dave West said. “The pressure to get it right is incredibly high.
“AI is today’s biggest transition and at Cisco we’re not focused on the hype, we’re focused on how it can help.”
In the Australian market, the index showed only 4 per cent of organisations were fully prepared to deploy and leverage AI-powered technologies, down from 5 per cent a year ago.
The decline is indicative of the challenges companies face in adopting, deploying, and fully leveraging AI.
Infrastructure readiness was a particular pain point with gaps in areas such as compute, data centre network performance, and cyber security.
According to the Index, only 13 per cent of organisations have the necessary GPUs they need to meet current and future AI demands and 17 per cent have the capabilities to protect data in AI models with end–to–end encryption, security audits, continuous monitoring, and instant threat response.
There’s also a sense of urgency with 52 per cent of companies saying they have a maximum of a year to get their AI strategies right or face potential negative impacts.
This points to multiple opportunities on the table for partners to tackle with customers as they continue to build on their AI journey.
Value proposition
Cisco partners in Australia and New Zealand are preparing for a significant shift towards AI, with a 75 per cent increase in AI and infrastructure spend over the next five years, driven by cyber and financial management.
This was part of a Global AI Partner study involving 1500 participants from 29 countries.
It also revealed that 34 per cent of partners expect 26 to 50 per cent of their revenues to come from AI and AI infrastructure.
During a panel discussion at Cisco Live in Melbourne, partners raised key concerns including data governance, security, the cost of generative AI and the value proposition.
This was alongside different consulting and skills sets required to bring value to the table and make a proof of concept into a reality.
Data#3 chief customer officer, John Tan said customers have developed strong AI strategies and they’re looking at partners to help prepare around security, governance and data.
“How we’re helping customers through readiness assessments and those kinds of things, is paramount at the moment,” Tan said.
Additionally, the importance of AI in assisted services, content creation, and data consolidation, further pointed towards the need for a consultative approach and responsible AI practices.
Logicalis Australia national sales director Lisa Fortey added CIOs had a bit of a fear around adopting AI in ensuring that the right framework is in place and the data is properly governed.
“They’re also concerned about adopting generative AI, large language models, the cost and the potential budget blowout and security,” she said.
“Putting their own corporate data into the general knowledge pool of ChatGPT probably isn’t the smartest idea.”
NTT Data VP technology solutions Chris Noonan said clients were at the early stages of understanding the best use cases for particular aspects of their operating environment.
“In the AI conversations that we’re having, there’s a lot more consideration around the importance of the network, performance and security,” Noonan said.
“That infrastructure piece is front of mind as well as landing a platform to run those initiatives.”
Noonan added there were a few key areas that customers were keen on exploring in assisted services, which is the next evolution of chatbots, Copilot style initiatives, content creation and discovery, and streamlining processes for coding and development teams.
“Clients are looking at structured and unstructured data and moving that into one place, whether consolidating data warehouses or spinning up data lakes, to bring that data into one place, and bring value back into the business through those insights,” he said.
Tan added Copilot adoption in the workforce was a segue into leveraging AI further across the infrastructure environment.
“There’s obviously an impact on the workforce, efficiency and costs, but leveraging generative AI to add context has meant not only is it crunching the data, it is actually providing useful information,” he said.
“As a result, we’re starting to see newer AI technology impact productivity and business efficiency.”
Julia Talevski travelled to Cisco Live in Melbourne as a guest of Cisco.