2024 Cloud and AI Business Survey

Are we still in an AI hype cycle? It depends on who you ask. But regardless of whether they’re an AI skeptic, champion or realist, they’d likely agree that AI has already fundamentally changed business. It has reset expectations, enabled new cloud architectures and opened up a world of possibilities unimaginable just a few short years ago. As a maturing technology, we’ve moved from a focus on experimentation and singular AI use cases to an imperative to think bigger and bolder about its role in business reinvention. Organizations will soon be AI-first and cloud-powered — adopting these technologies not as tools, but as fundamental components at every level of the business, driving innovation, efficiency and competitiveness across the business landscape.

The question business leaders should be asking: What does success look like in an AI-led, cloud-powered economy that redefines how industries operate, compete and thrive? As leading companies are already proving, the decisions you make today will shape your organization’s future, determining whether you emerge as an industry leader or get left behind.

Our recent survey of more than 1,000 business and tech execs, conducted between June and July 2024, sheds light on this shift. We identified a select group of companies — 12% of those surveyed — that we call the “Top Performers.” These companies are already reaping the rewards of their investments in AI and cloud technologies, setting the pace for what it means to be a successful, modern enterprise. This isn’t just a fleeting trend. It’s a strategic trajectory toward becoming AI-first, much like the transition to cloud-first businesses before them.

As with any big opportunity, there’s risk. AI, for all its potential, carries inherent challenges —missteps in accuracy, organizational readiness and process optimization can derail progress. But the greater risk lies in doing nothing. Everything else can be addressed through hard work and Responsible AI practices, which can help mitigate risk while unlocking value.

In this report, we’ll look at what the Top Performers are doing right, the areas where they still have room to grow and where your company should focus its efforts to stay ahead in this rapidly evolving environment.

How to get more value from cloud and AI investments

To position your company as an AI-led, cloud-powered business, identify your business and technology needs and the investments that can help you see your goals met. The actions our Top Performers are taking provide a good framework. Drawing on our extensive experience working with Fortune 1000 companies to modernize their data, platforms and business strategies, we’ve broken down four things you can do right now to better position your organization as a leader in your industry.

1. Prioritize AI-powered cloud architectures to redefine strategy

As AI becomes ingrained in how companies do business, next-generation cloud architectures that take advantage of the latest AI capabilities are fueling modern business strategies. While most companies still think about AI as part of their technology strategy — or worse, spinning up disconnected AI initiatives across the business — Top Performers are going all-in, making it an integrated part of the business plan across functions. Two-thirds of Top Performers (67%) tell us they have a formalized strategy, including an approach to identifying, implementing and tracking the use of AI across the organization. Just 37% of other companies say the same.

While responsibility for technology architecture and cloud engineering typically falls to a company’s CIO and other tech leaders, the choices made establish a foundation that make AI-centric transformation and new business models possible — and that’s a CEO-level consideration. It’s crucial for CIOs to partner with their CEOs, perhaps in new ways, to make the right technology choices and inspire the rest of their organizations. Together, you can set expectations and continually demonstrate how various AI initiatives are fundamental to business strategy and growth.

Given AI’s applicability and impact to all areas of the business, every C-suite executive has an important role to play. In the near term, we expect more companies to appoint chief AI officers to help establish that vision and drive strategy together with senior leadership from across the business. We’re seeing this strategic teaming happen in many areas. In the front office, for instance, CIOs team with CMOs to focus on hyper-personalization and loyalty ecosystems. At the same time, we see chief revenue officers looking at how their sales teams leverage AI to accelerate deal cycles, curate proposals and presentations, and accelerate general time to market for products.

In the middle office, CIOs work with COOs and their teams — including procurement, customer service, risk and sustainability leads — using AI to modernize and streamline their processes, which in turn helps the front office better meet customers where they are. It also provides internal teams with the ability to run the business at a higher velocity with less tech debt and cumbersome systems. In the back office, CIOs and their IT teams can drive new ways of working and reinvent backend systems to accelerate delivery and drive business strategy.

Far and away, the biggest behavioral difference between Top Performers and other companies in our survey is that 72% of the former say they’ve achieved “all-in cloud adoption” when it comes to modernizing data, compared to just 33% of other companies. By moving their data to cloud and making it more easily ingestible by large language models (LLMs), Top Performers are more readily able to unlock new value from their data as they integrate new AI capabilities.

Top Performers are also more mature than other companies when it comes to other cloud engineering disciplines — by a factor of more than 2X. For example, they’re all-in on cloud — meaning they’ve broadly adopted cloud — for security (70% versus 37%), AI (60% versus 27%), migration (59% versus 25%), app modernization (57% versus 27%), native app development (57% versus 24%) and industry-specific solutions (54% versus 25%), among other areas.

To better understand where and how AI will impact your business and industry the most, begin by considering what’s possible now that couldn’t be done before. Think about what can be done differently and how you can better serve customers, with AI performing work in new ways alongside your employees. Many companies undertake a formal assessment to quantify potential revenue impacts to current business models while also identifying the areas most ripe for AI-driven growth. Then based on that high-level outlook, they’ll prioritize cloud modernization, AI capabilities and training and upskilling as they move toward an AI-centric operating model.

At the same time, it’s important to remember that you can’t always predict where the biggest impact could come from. Many companies we’ve worked with in the pharma industry, for example, started by using AI to improve data analysis and insights. This exploration ultimately led to wholly new approaches and a complete redesign of the clinical trials process — reducing time to market from 7–10 years to less than 2 years.

2. Double down on data modernization

That data is essential to success is nothing new, but GenAI raises the stakes. On the one hand, GenAI is helping companies do more with less. It can often find insights in unstructured data, whether customer phone call logs or holistic policy documents. It can also do more with more, like scanning and summarizing text, audio or imagery to find value in data sets that were too obscure, too poorly organized or too vast for employees to make use of.

As GenAI becomes a commodity product — with everyone using similar models from the same few vendors — it’s your data and specialty knowledge that will set you apart. Your data will allow you to customize models to help you offer unique products, services and experiences. To do that requires a new architecture and operating model, which includes an AI-ready data platform and appropriate governance.

Doing this hard work is an effective way to fully leverage AI and modern cloud architectures. Top Performing companies are already ahead of their competition here — 98% agree that their company is well equipped in terms of its data architecture and governance needed to leverage GenAI. More than two-thirds (69%) say they’ve already implemented data modernization to take advantage of GenAI (compared to just 31% of other companies). And they’re looking at all areas of the business. Eighty-two percent of Top Performers say most of their company’s front office data is in cloud, compared with 63% for other companies. Similarly, 74% have most of their middle-office data and 79% of back-office data in cloud. By comparison, other companies have just 52% of middle-office data and 61% of back-office data in the cloud.

Given that their data is more widely accessible, it’s no surprise that Top Performers are more than twice as likely to report being all-in on GenAI adoption across the business. Across the front, middle and back offices, they’re more than twice as likely as other companies to broadly use GenAI.

Some companies start in the front office, such as with customer call centers where AI has helped boost customer satisfaction and significantly reduced average call center handling time, call abandonment and misrouting. It’s a powerful example of the new way of working that will be the norm in AI-led businesses. We’ll see fewer human team members while AI agents or “AI team members” take on more tasks. Your employees will have a critical role to play in orchestrating the work of their AI counterparts and will focus on other aspects of the work.

Other companies are first applying this new operating model in back-office functions like finance and IT. Wherever you start, it’s crucial to think beyond singular use cases. Most GenAI use cases fall within six repeatable patterns. Consider the pattern of “deep retrieval” — applying a model to search for specific information within documents or data. If you successfully customize the model to extract key terms from legal contracts, you can then apply that same model to do the same for tax regulations, financial reports, employee resumes and so on. That can lead to exponential value creation.

To Top Performers, cloud and AI aren’t merely operational tools. They’re strategic assets that drive business success and produce value from data. Mirroring this thinking can help set your company up as a leader in the future AI-led, cloud-powered economy.

3. Evolve the IT function with AI to become a strategic powerhouse

With an AI-led company as the new North Star, reinventing IT is critical — and more feasible. The technology function’s role in driving new capabilities, products and services, and business models is contingent on embracing new ways of working through AI-powered workflows (also called agentic workflows). While this shift to a new operating model in which AI seamlessly performs work in concert with humans is happening across business functions, for many businesses IT is a natural place to start.

AI’s influence on the software development life cycle is drawing significant attention as it drives revolutionary changes across the discipline. Software developers work alongside AI agents that can autonomously take ideas and turn them into requirements, then turn requirements into user stories, user stories into test cases, test cases into code and code into documentation. It’s an early example in which companies are already seeing considerable payback, with efficiency gains upwards of 30%, along with enhanced quality and speed to market.

But other areas of IT can see similar gains. Top Performers in our survey understand this potential. Sixty-five percent say they’ve holistically adopted AI in IT, including in app development and app management. This compares with just 28% of all-in adoption for other companies in our survey. Looking more closely, across 15 different IT areas Top Performers are consistently more likely than other companies to have broadly adopted GenAI. Eighty-two percent have broadly adopted GenAI for modernization versus 53% of other companies. In software development, 75% of Top Performers have broadly adopted GenAI, compared with 51% of other companies. Across the 15 IT categories, the delta for broad adoption between Top Performers and everyone else averages 23 percentage points.

The ways AI is changing IT extend well beyond internal capabilities. Most companies look to third parties for at least some software and application development, application maintenance, help desk IT service management and cybersecurity. How these suppliers leverage AI can also be transformative for you. Across industries, AI has reduced the hours IT vendors need to provide high-quality services to their customers. Given this shift, tech leaders can identify efficiencies and other KPIs that vendors should be achieving. This might drive companies to renegotiate contracts or select new solutions and suppliers.

4. Reset cloud provider relationships and expectations

Even the most effective strategy can falter if you fail to maintain that same level of intention and engagement when dealing with suppliers and third parties. Cloud service providers (CSPs), from hyperscalers to LLM specialty vendors, are instrumental to your success as they continue to invest in and develop next-generation cloud and AI capabilities. They’re the bedrock that will make possible an AI-first economy, which could be here sooner than many of us expected.

With an abundance of providers and advanced tech offerings to choose from, how you manage your CSP strategy, contracts and interactions is key. That includes determining which and how many CSPs to employ based on your unique needs and industry requirements. CSP strategy was consistent from our last survey. A little over half of respondents, 56%, tell us they primarily use one CSP for more than half of their workloads and other CSPs for specialized tasks, up just a bit from 53% in 2022. Just over a quarter (27%) say they use one CSP exclusively, down from 34% in our last survey. Interestingly, Top Performers are more likely to say they use a single CSP (38%). About one-third (34%) report using public cloud in all areas of their businesses, and another half (51%) use it in at least some areas. Just 5% of all companies surveyed said they don’t use public cloud at all.

When asked about how well their primary CSPs were meeting expectations, most respondents rate them favorably, with Top Performers more likely to “strongly agree” that their CSPs are delivering. For example, they rate their CSPs favorably in providing them with KPIs and performance monitoring to get a handle on cloud usage (61% versus 39% for other companies), providing needed tech support (60% versus 46%) and engaging them around how the CSP is evolving its capabilities (61% versus 43%), along with similar sentiment in five other areas.

While that’s an indication that Top Performers are fairly engaged with their CSPs, our survey revealed a lot of room for growth in CSP and other IT service provider relationships — for both Top Performers and other companies. When asked about how they expect to change these crucial relationships, their responses are somewhat surprising. In most areas, only a minority of companies expect to evolve their relationships. One striking area is whether they plan to renegotiate pricing, contracts and SLAs. Just 35% of Top Performers (and 38% of other companies) say they’re doing so. With AI rapidly changing how tech services are deployed — at efficiencies of 20% to 40% — it’s an obvious area for discussion. That includes considering whether there are new AI-based solutions that might replace many existing ones. We’ve seen companies revisit their sourcing strategies and vendor management to recover significant value in the multi-millions — savings that can be invested in new AI capabilities and offerings.

The top CSP focus area for both Top Performers and other companies is around managing and monitoring security and compliance (55% and 52% respectively). One important factor is that multinational organizations should address global data residency, availability and privacy requirements, such as those specified in the General Data Protection Regulation (GDPR), Digital Operational Resilience Act (DORA) or the India Companies Act. CIOs and data leaders should make sure their CSPs provide hosting solutions that can accommodate those requirements. These requirements also affect a company’s ability to apply AI to this data, so it’s an important area to consider.

One area where Top Performers are notably more engaged than other companies is in assessing carbon footprint impact (39% versus 29%). This is an area that will become even more important as businesses focus on meeting net zero goals and new reporting requirements, at the same time as they look to build AI-centric businesses. Understanding and managing the carbon impacts of both CSP offerings and in-house data centers is also likely to become more important. Along with sustainability considerations, CIOs should be looking at how well positioned providers are to deliver the compute they’ll need to power next-generation architectures and capabilities. Looking more broadly, tech leaders are even starting to think about implications for the US power grid and business sustainability. They’ll also want to work closely with sustainability leaders and chief risk officers to make sure that their sustainability goals are considered when choosing providers.