Why capability, not capital will define technology leadership in 2026

The role of the CIO / CTO has rarely been so demanding. Since the survey began in 2022, expectations on technology leaders have continued to rise while room for manoeuvre has narrowed. Technology leaders in Ireland are contending with the risk of an energy crisis-driven economic downturn while being expected to roll out AI across the enterprise and strengthen existing technology estates to support the added demand. They are expected to move faster and deliver more value while carrying greater risk even as long‑standing challenges around cybersecurity, talent and legacy systems persist.

Against this backdrop, the findings of the EY Ireland Tech Leaders Outlook Survey 2026 reveal a clear tension. Over a third expect budgets to increase by 3% - 9%, while 11% anticipate increases of more than 10%. Almost half (46%) expect spending to remain flat. Yet budget limitations have emerged as one of the most pressing challenges facing technology leaders.

Almost a third cite limited budgets as a key concern, up sharply from 19% in 2025. At the same time, improving efficiency and reducing costs was identified as a key priority by only 32% of respondents, down from 47%.

Budgets may be stable but demands to do more within them are increasing. Technology leaders, therefore, need to build on efficiencies gained through new AI tools.

Transformation continues but with a note of conservatism: Against this backdrop of tighter budgets and rising expectations, technology leaders are recalibrating their approach to transformation. Organisations are increasingly differentiating between where bold change is essential and where stability must be preserved.

While almost half of the respondents said their organisations had either an aggressive or a measured approach to transformation, one-third favoured cautious risk managed change. 

This cautious lens suggests a deliberate effort to balance value creation with resilience, particularly in an environment marked by geopolitical volatility, cost pressures and disrupted markets. In such conditions, technology leaders appear focused on avoiding irreversible or high‑cost decisions while maintaining momentum where it matters most.

The rapid rise in AI investment can obscure broader IT spending patterns. Looking at non‑AI technology investment on its own provides clarity. There is little evidence in our survey to suggest that investment in non-AI technology is being cut back in favour of AI. Only 14% of respondents believe AI spending will negatively impact non-AI technology investment, down from 17% last year.

This reflects the reality that AI and non‑AI spending are not in direct competition. Many organisations will need to increase non-AI technology spend if they are to successfully adopt and implement AI across the enterprise.

Technology leaders are dealing with a sprawl of data and systems, often with deep-rooted legacy debt making them incompatible with the implementation of AI. Difficulty in upgrading or migrating from legacy infrastructure was identified as a material barrier to executing CTOs’ agendas by 27% of respondents, up from just 6% last year. This increase likely reflects the dual demands on technology leaders to introduce AI while modernising legacy systems to ensure AI adoption delivers measurable value.

One of the most striking non-AI related findings in this year’s survey is the growing focus on integrating IT and operational technology (OT). Over the next two years, 32% of respondents plan to prioritise IT‑OT integration, up from 12% last year. This points to a stronger ambition among technology leaders to systemise all processes and drive value creation across the full breadth of the organisation.

Technology cost and complexity remain real constraints. High costs and unclear returns from implementation of new applications and infrastructure were cited by 27% of respondents, while 14% pointed to the difficulty of integrating or connecting multiple systems.

AI is now a leading investment priority for organisations, with 37% having an AI strategy and a further 45% exploring the possibilities presented by the technology. Only 18% report that they are not currently investing in AI, a sharp fall from 56% last year and 64% the year before.

The findings point to a step change in attitudes over the past 12 months. AI is now shifting from pilots and isolated use cases to delivering measurable commercial outcomes, particularly in areas such as sales, customer engagement and decision-making. Real-world applications are increasingly demonstrating how AI can drive revenue growth and improve effectiveness across core business functions: How AI helped enhance B2B sales in a telecom company | EY - Ireland

Similar tipping points have been seen with other transformative technologies such as the worldwide web and mobile telephony. In the case of AI, recent developments have made solutions more accessible and more practical for everyday business use. 

Growing confidence in the technology is reflected in the outlook for future investment. AI ranks highest among emerging technologies expected to deliver the greatest value over the next two years.

The finding on agentic AI indicates increased adoption intentions, up from 6% last year.

AI deployment is unsurprisingly highest for employee productivity, industry specific solutions and customer engagement.

Agentic AI is quite low at 7%. This may relate to the relative infancy of the technology rather than any reluctance to deploy it. As noted earlier, it was identified by respondents as a key value creating technology and the release of new applications in recent months is likely to drive strong if not exponential growth in agentic AI deployments over the coming year.

Encouragingly, most organisations are already seeing tangible outcomes from their AI investments. Only one in five respondents report that they are not yet seeing meaningful value. The benefits most commonly cited relate to improved productivity and efficiency and enhanced customer experience. Improved decision‑making and access to industry‑specific AI capabilities are also emerging as areas of value. Cost reduction through automation appears far less prominent, cited by just 7% of respondents. 

This suggests that the current focus of AI investment is centred on value creation and performance improvement, rather than near‑term cost savings.

Increased investment in AI is exposing a capability lag. Almost one fifth of respondents (19%) now identify an inability to adopt AI and other emerging technologies as a key concern, up from 12% last year.

This highlights the growing requirement for organisations to build the skills, capabilities and operating models needed to keep pace as AI becomes more embedded across the business. The next wave is likely to be less about the technology itself and more about how organisations and people adapt to it.

The single most significant barrier to executing technology leaders’ agendas is the shortage of skilled employees to implement new technologies. Over a third of respondents cite skills shortages as their primary challenge, a sharp increase from last year.

What are the most significant data and technology barriers to executing your CTO agenda?

This is reinforced by a parallel rise in concerns about internal capacity: 16% of respondents now point to insufficient internal capability to drive change compared with just 6% in the prior year. At the same time, succession planning and talent development have moved up the IT leadership agenda, identified as a priority by 18% of respondents, up from 5% last year.

In consequence, 36% expect to increase internal IT function capacity and capability this year, almost double the proportion reported in 2025 (19%). A majority (59%) nevertheless expect capacity to remain broadly unchanged. Whether these intentions hold in the context of heightened geopolitical and economic uncertainty following the Middle East conflict remains to be seen.

Technology leaders appear more confident in their ability to scale teams. Difficulty attracting and retaining talent has continued to decline as a perceived constraint, cited by 28% of respondents, down from 45% in 2023 and 37% last year.

Skills shortages are now concentrated in emerging and highly specialised domains, most notably AI. By contrast, demand for more traditional IT skillsets has eased following the post‑pandemic hiring surge.

Seeking support from third parties may not offer a solution where skills shortages exist. 

This likely comes from the same underlying skills gaps affecting internal teams. In emerging areas such as AI, training alone is insufficient without practical, applied experience. This is something the market has not yet had time to build at scale, either internally or within service providers.

From a societal perspective, the news that AI does not appear to be having any real impact on hiring plans will be welcome. Only 6% believe AI adoption will reduce recruitment, while 3% contend it will drive an increase. 84% anticipate no impact on recruitment levels, underscoring the early-stage nature of adoption. Most AI tools currently deployed act as productivity enablers, particularly employee assistants, enhancing output rather than displacing roles.

As agentic and more autonomous forms of AI mature and adoption accelerates, the scale and composition of the workforce may change. Organisations that fail to build future-ready talent models risk widening existing capability gaps and missing the opportunity to translate AI investment into long-term business value.

Beyond talent and organisational capacity, technology leaders are also facing growing execution risk within their core platforms. Nowhere is this more evident than in cloud infrastructure, where cost predictability, control and scalability are becoming just as critical to AI success as skills and capability.

According to our survey, investment in infrastructure and supporting technologies such as cloud has fallen sharply as a stated priority this year. Just 27% of respondents cited cloud as an investment focus, down from 48% after a jump in 2025.

This may suggest that much of the large‑scale cloud migration effort is already complete. However, the data points to a more complicated reality. Less than half of the respondents said they have full or high visibility on cloud costs, while one‑third acknowledge having no visibility at all. This lack of transparency is concerning at a time when budget constraints are increasingly cited as a material challenge.

The potential cause of that visibility is also relevant. Cloud costs have increased noticeably over the past two years and that has caused some resentment among customers. Those costs are expected to rise further due to the extreme tightening in energy markets caused by the latest conflict in the Middle East among other factors, and this will likely fuel further discontent.

AI adoption is compounding these pressures. 

Cloud decisions are increasingly pragmatic. They are shaped by legacy dependencies, organisational skills and operating models as well as regulatory and data‑residency requirements.

Continued increase in cloud consumption will drive demand for additional datacentre capacity. Ireland has clear opportunities arising from strong datacentre engineering expertise and a unique European private-wire energy policy.

Summary

A new phase is emerging for business and technology leadership in Ireland with clear messages for the C-suite. AI is gaining traction but spend will not deliver tangible value without investment in capability, both in terms of people and technology. In this new environment, legacy technology estate modernisation is no longer an option, it is a prerequisite. Talent strategy is therefore becoming a core competitive lever, not an HR issue. Similarly, cyber resilience is an enterprise risk issue, not an IT issue. The winners in this changed landscape will be those organisations that strengthen core capabilities to support the successful deployment of AI.

About the Survey

The EY Ireland Tech Leaders Outlook Survey 2026 was conducted during March and April 2026. The study was conducted using Computer‑Aided Telephone Interviews (CATI) with 150 senior technology leaders across Ireland, including individuals with strategic decision‑making accountability, technology or data responsibilities, and innovation or transformation leadership roles. The survey encompassed a diverse range of sectors that included Government and Infrastructure, Consumer and Health, Industrial and Energy, and Telecommunications and Technology.