70% of Aussie CIOs plan to slash vendor ranks

The region’s top CIOs are optimistic about AI adoption but face challenges in realising its value, with legacy tech and rising cloud costs complicating progress.

Insights from ADAPT’s CIO Edge event highlight a shift toward customer-focused domains, with CFOs increasingly influencing technology decisions.

Technology vendors will need to rethink their approach, aligning with organisations’ long-term goals rather than offering one-time solutions.

In this article, we break down these trends and share practical insights to help technology vendors better engage with CIOs in 2024.

Australian CIOs are optimistic about AI, but they are struggling to get value from it

Generative AI took centre stage at CIO Edge.

Conversations in the main plenary and across private roundtables revealed how Australian organisations are approaching the testing and deployment of these solutions.

Our survey findings suggested that Australian CIOs are optimistic about generating value from AI.

CIOs emphasised improvements in productivity or efficiency, the ability to scale innovation and disruption, and the ability to use AI to create new products, services and revenue streams as their top three benefits of AI.

But they are not ready to harness value from AI. ADAPT’s latest research indicates that two-thirds (66%) of Australian CIOs are unprepared to truly harness AI in 2024.

Not one Australian CIO surveyed is fully prepared. The potential barriers for Australian CIOs to get value from AI include:

A lack of industry use cases around AI

Most CIOs said they’re not quite sure how to demonstrate value from their AI pilots and deployments.

They need real world examples of organisations in their industries that have succeeded with AI before they have the confidence to proceed.

Convincing leadership teams to fund large scale AI projects

Attendees agreed that AI should be embraced with curiosity and caution and used to augment, rather than replace human capabilities.

Organisations should encourage a culture of experimentation to learn and navigate AI integration.

ADAPT recently spoke with a CIO from a sports betting agency who discussed the need to start small and show value.

This CIO asked for $1 million to fund an AI initiative.

Their leadership team would only commit to spending $40,000 to prove it worked before they would consider providing the rest.

Low transparency and accountability in AI systems and data algorithms

Making sure there is accountability in AI frameworks and data algorithms is vital to build trust and manage risks.

ADAPT data shows that only 22% of organisations integrate AI risk management into ethical oversight practices.

Challenges such as privacy concerns, lack of governance, and inadequate skillsets hinder adoption.

A CIO in the airlines and transport sector underscores the difficulty in using AI due to fragmented data and emphasises the importance of evolving data foundations to align with corporate AI strategies.

Meanwhile, many technology vendors are offering generative AI capabilities in their products and services.

Australian CIOs are now exploring how generative AI and large language models can improve efficiency and reduce costs.

However, organisations face challenges in moving from consumerisation to the commercialisation of generative AI.

Often, it seems like a problem looking for a solution.

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Legacy technologies and cloud costs are impacting organisations’ plans to become data-first and AI-driven

ADAPT’s survey data has found that tech modernisation and simplification is the top outcome CIOs want to deliver in 2024.

But CIOs tell us that legacy systems remain. Their lack of interoperability with novel AI solutions are a major barrier to success.

Another factor causing issues is a lack of transparency around cloud costs for IT and engineering teams leading these AI projects.

To mitigate legacy infrastructure issues, organisations can use micro-services architectures to break up old monolithic apps with a set of lightweight services.

Many organisations are migrating their data to public cloud using the AI and data-based tooling offered by their cloud providers.

Interoperability via APIs between various cloud platforms will eventually help organisations share and consolidate data.

However, during this process there are hidden costs involved.

For instance, some AI tools are only free for a limited number of users and there is a different cost structure if a data lake service or containerisation service is required.

Meanwhile, this year, Australian CIOs are focusing on staying cyber resilient, integrating complex apps, digitising and automating processes, as well as uplifting API architectures.

These initiatives will enable CIOs to improve how well their organisations handle and use data assets, with better integration and governance from back-end ERP platforms to scalable analytics and ultimately, more informed decision-making.

However, there are several factors that will determine if these initiatives provide improved customer and employee experience at scale.

A fireside chat between TPG Telecom’s Mindy Rice and WalkMe’s Sam Parker revealed that, despite these aims, there’s a digital adoption gap.

This means we’re not using the full capabilities of these tools, so a lot of the expected value is never realised.

Parker says the causes of the digital adoption gap include:

• time wasted trying to flick through apps and difficulties with self-service
• challenges searching for intranet materials or finding the right person to ask
• frustration around these issues even before a service ticket is logged
• lack of a ‘single pane of glass’ needed to access knowledge, surface frictions and get support

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Organisations will move from focusing on industries to customer “domains” to enhance value and manage rising cost pressures

At CIO Edge, Dr Peter Weill from MIT’s Centre for Information Systems highlighted how some organisations have started focusing on “customer domains” to gain more value from their operations, customers and ecosystem partners.

Companies like Shopify, Domain Group, Schneider Electric have already made the shift to focus on end-to-end customer journeys in areas like shopping, security, financial wellbeing, energy efficiency and sustainability.

ADAPT’s research has found that over the last 12 months, CIOs are now capturing 41% more value from operations.

Just 27% of CIOs say they’re effective at capturing value from customers

When we talk about value, it’s not just revenues or profits.

Customer value also includes how easy it is to engage with an organisation to get the solutions that people need.

While IT is becoming more efficient, opportunities remain to drive costs out for the business and improve experiences for customers and colleagues.

In other words, technology should be ‘fit-for-purpose’ for customers.

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As Australian organisations navigate the challenges and opportunities of AI, legacy systems, and rising costs, it’s clear that technology vendors must evolve their approach.

By aligning with CIOs’ priorities—like modernisation, domain-focused strategies, and long-term value creation—vendors can position themselves as strategic partners in 2025.

Success lies in offering solutions that are not only innovative but also practical, scalable, and tailored to meet the complex needs of CIOs and their organisation.

Access the full research to understand key trends shaping CIO strategies and how vendors can align with their evolving priorities.

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