Artificial Intelligence & Machine Learning

High-Performance IT Strategy Drives Business Value From AI

As artificial intelligence continues to reshape the business landscape, organizations grapple with effectively implementing these technologies to drive tangible results. In Forrester's Q2 AI Pulse Survey 2024, 42% of generative AI decision-makers said gen AI adoption improved customer experience, 40% said it increased employee productivity and 34% reported that it increased revenues.

At a Forrester event in Mumbai, India, Forrester analysts explained how a high-performance IT strategy, or HPIT, can help companies take a structured approach to AI deployment. Enterprises are eager to adopt AI technologies and CFOs and CEOs are keen on determining how their AI investments will generate revenue, but they must avoid rushing into AI implementation without considering specific application areas.

In his presentation at the event, Ashutosh Sharma, vice president and research director at Forrester, underscored the importance of developing tailored IT strategies. "When it comes to IT, there's no one-size-fits-all strategy. What works for an organization today, in a given industry, may not work for the same organization a few years down the line - or even for other organizations," he said. "The only strategy that works for any organization is the one that helps them deliver their business outcomes and achieve their business goals. We call that high-performance IT."

To guide organizations in developing effective IT strategies, Sharma outlined three key principles: trust, alignment and adaptability. These principles form the foundation for successful HPIT implementation.

1. Alignment: CIOs and technology leaders have always aimed to ensure IT-business alignment, but achieving it proved challenging. Forrester's research indicated that firms with strong alignment grew 2.4 times faster than their peers and were twice as profitable.

   "Businesses often do not state their requirements clearly, and IT leaders struggle to understand them," Sharma said. "The ones that succeed see better financial performance for their organizations, and we have data to support that."

2. Trust: Business is based on trust, and companies that people trust can earn more loyalty and advocacy. Because technology is central to customer experience, trust is vital in HPIT. Forrester's data showed that people who trusted a company were 1.8 times more likely to recommend that company to friends and peers.

   "We have found that the companies that can create mutual trust between business and IT - and business and their customers - tend to outperform their peers in the market," Sharma said. Customers start trusting a company when it offers solutions that are secure, scalable and reliable.

3. Adaptability: Organizations need to keep pace with the rapid technological changes. The swift evolution of technology necessitated quick adaptation and scaling to meet unique and common business needs.

   "Alignment is ongoing. You need to change your technology skills, practices and even the technology itself," Sharma said.

Four Styles

Forrester introduced the concept of "four styles" in HPIT to provide a practical framework for implementing these principles. These styles address four business performance objectives: enabling, amplifying, cocreating and transforming. Represented in a quadrant with the scale of change on the vertical axis and the speed of change on the horizontal axis, these styles offered a comprehensive approach to IT strategy (see Image 1).

"This framework helps an IT leader or executive develop the business perspective that their business has," Sharma said.

1. Enabling: Located in the lower left quadrant, this style focuses on using AI to stabilize and modernize. It involves making incremental improvements and enhancing application security without substantial changes to the application process. While the companies using this style will not be able to prioritize scale and speed, enabling will help companies stabilize, operate and protect.

   An example is moving an application from on-premises to the cloud, making it more accessible and secure without adding new features.

2. Amplifying: This style involves modifying applications to add new capabilities and technologies, such as AI and automation. This style amplifies the business impact, and companies may need to change business processes. Amplifying optimizes business outcomes at scale.

3. Cocreating: In this quadrant, businesses can identify new revenue generation opportunities and markets. CIOs need to work with other teams to create new technology-enabled products, adding new capabilities. Cocreating involves delivering new products to enable business growth.

   "For instance, you might move an application from on-premises to the cloud in the enabling stage. But if you are using advanced cloud-native capabilities like microservices, you are cocreating," Sharma said. Another example could be a bank that wants to create a new mobile app or chatbot.

4. Transforming: Transformation occurs when both the pace and scale of change are high. Organizations in this quadrant focus on accelerating the adoption of certain technologies, such as AI, after their business value is realized and appreciated.

Applying the Four Styles

"A technology leader should look through this lens and identify which quadrant they should play in," Sharma said. "They should then select the appropriate skills, technology and practices in alignment with that."

Enterprises can implement the same technology differently across the four styles to drive various business outcomes. The example below shows how a business could implement AI using the four styles (see Image 2).

1. Enabling: At this stage, the CIO may use AI to gain insights and transparency into their operations.
2. Amplification: The technology leadership can then amplify the business impact of AI technology by using its advanced capabilities, including intelligent automation.
3. Cocreation: The business is considered to be at this stage if it can use the same AI to build a chatbot or LLM.
4. Transformation: At this stage, CIOs or technology leaders will use AI to innovate and create new models.

Forrester's research underscored the critical role of a well-structured, adaptable IT strategy in successfully deploying new technologies, including AI. As AI continues to evolve, organizations must adopt a strategic approach to IT implementation to harness its full potential and maintain a competitive edge in the digital landscape.