How tech companies can turn the promise of AI into bottom line reality

Artificial intelligence (AI) pilots and deployments within technology companies often fall short of expectations due to a lack of preparedness for the significant costs and transformative changes required. To truly succeed in this landscape, tech companies must shift their focus from merely integrating AI into traditional business processes to fundamentally rethinking and reinventing their operations for an AI-first era.

In this context, the Irish private sector has increasingly embraced technology and software services. However, organisations that are not inherently AI-native must critically assess their services and business models. Many will need to adapt swiftly to remain competitive against well-funded US startups that are leveraging AI to disrupt markets.

As we look ahead to the coming year, tech companies in Ireland should seize the opportunity to explore 10 key areas that can drive value creation through AI. By doing so, they can not only enhance their own capabilities but also strengthen their position within the evolving landscape as the future won’t wait.

1. Transform potential into performance

Tolerance for low returns on AI investments has reached breaking point and organisations across all sectors are looking for tangible, positive yields from their AI spending. Tech companies need to establish clear frameworks to measure the operational and financial impact of their AI solutions. This will enable them to demonstrate quantifiable business value and return on investment thereby differentiating their products in an increasingly crowded market.

2. Drive growth through an agentic AI future

Agentic AI can execute complex tasks independently, potentially transforming how tech companies and their customers operate their businesses. Unlike current forms of GenAI, agentic AI doesn’t need prompts, it can autonomously execute complex sequences of steps without human intervention and complete tasks from beginning to end. From relatively simple use cases like organising and booking all elements of an overseas business trip to more complex applications such as creating individualised product and service offers for customers without human intervention, agentic AI has the potential to upend current business models.

Tech companies must capitalise on the opportunities presented by agentic AI to secure an early mover advantage for themselves and their customers. The emergence of AI agents that enhance an organisation’s workforce could provide a viable solution for Irish companies seeking to avoid relocating their headquarters abroad, such as to the US, to attract a broader talent pool, as has occurred in the past. Consequently, these agents could enable Irish organisations to scale operations within Ireland, ultimately benefiting the domestic economy.

3. Adopt outcome-based pricing models to augment subscription offerings

Pricing needs to move on from pure Software as a Service (SaaS) subscriptions to outcome-based models that align to customer value expectations. Customers are increasingly expecting provable success from products purchased. Simply providing access or usage will no longer be sufficient to justify a charge, a clear outcome will be required. The move to outcome-based pricing will neither be simple nor easy. Demonstrating outcomes and communicating them to customers will require a major shift in current practices. However, tech companies will likely not have a choice as customer demand will be the key driver of the change.

4. Tap into the power of an AI-first operating model

The competitive advantage enjoyed by born-digital tech companies over legacy organisations is now being outstripped by AI-born companies and their distinctive structures and operating cultures. Simply bolting AI on to an existing operating model will not be sufficient to bridge the competitive gaps. Organisations will need to rethink and reimagine their structures and operating models to become more like their new wave competition. 

5. Unlock the value of AI expertise

Tech companies have an opportunity to position themselves as key partners in their customers’ AI transformation journeys by offering tailored solutions that address both the infrastructure and operational aspects of AI adoption. Customers will increasingly ask for AI offerings that do not involve costly replacement of legacy IT infrastructure and architecture, and this presents an opportunity for those tech companies that can provide such solutions.

6. Develop new skill sets for the AI era

Tech companies can help drive growth by equipping their workforce with future-ready skills through targeted training programmes. By embracing more immersive training and learning environments like virtual and augmented reality, tech companies can better assess skill gaps, provide on-the-job support, and ensure employee capabilities are fit for purpose. Today’s employees are increasingly demanding continuous learning in and through the use of emerging technologies. Embedding generative AI (GenAI) in learning and development activity will help to meet those expectations.

7. Involve finance, tax and legal functions early in AI transformation programmes

Changes in tax, trade and regulatory requirements should be anticipated and addressed up front. In a rapidly shifting global tax and regulatory environment treating tax or local regulatory issues as an afterthought – particularly when pursuing a transaction or making an AI-driven operating model shift – is an approach that’s fraught with risk. Finance, tax and legal professionals should be involved in the process from the very outset so that decisions can be made without creating unforeseen financial, tax or legal liabilities.

8. Use AI to bolster cyber defences

The EY 2024 Global Cybersecurity Leadership Insights Study found that AI delivered a 40% increase in cybersecurity teams' efficiency¹. The technology offers more effective and comprehensive cybersecurity through the automation of threat and vulnerability detection and response. The built-in learning and adaptation capabilities of AI help organisations stay ahead of the next major threat. However, the same tools are available to the cyber bad actors who can use AI to amplify by an order of magnitude their ability to identify vulnerabilities and penetrate their systems. This makes it all the more important for organisations to meet the heightened threat by using AI to strengthen defences and maximise incident response when breaches do occur.

Whilst there are many good cyber education programmes in Ireland, widespread adoption of AI as a cyber defence tool remains rare. The Irish government is actively promoting cyber security programmes and Enterprise Ireland provides grants to the companies it has invested in to bolster cyber defences. 

9. Explore ways to free up capital to invest in emerging technologies

While investments in AI capabilities are driving higher valuations for many tech companies, the cost of such investments is placing many of the companies concerned under strain. The capital-intensive nature of AI investments may require tech companies to consider divestiture of non-core elements of their operations and underperforming assets. Such sales will not only provide a fresh source of capital for AI investment but create more streamlined and profitable businesses. 

Historically, large technology companies that constitute the foundation of Ireland’s foreign direct investment (FDI) landscape have primarily expanded through acquisitions rather than divestitures. If these big tech companies consider divesting, it could impact their operations in Ireland. How any new buyer decides to manage the business would depend on their overall strategy, which could result in keeping, expanding, or scaling back their presence in Ireland.

10. Engage with regulators

The EU’s AI Act, Digital Services Act, and General Data Protection Regulation (GDPR) are just a few examples of the regulations governing tech companies in Europe. Governments around the world are also engaged in the development of policies and regulations on topics that affect tech companies. Regardless of size, tech companies can seek to influence the regulatory direction of travel by collaborating with industry groups national government agencies. The aim should be to seek a more harmonised global regulatory environment which supports innovation while protecting citizens and addressing societal concerns.