Technology industry outlook brighter than 12 months ago, with GenAI emerging as top opportunity for 2024

• GenAI integration is the No. 1 opportunity for technology businesses in the year ahead
• AI deals and partnerships in 2024 could shape the future industry landscape
• Urgency to act now on AI; 90% of organizations at earliest stages of AI maturity

Following a challenging start to 2023 for the technology sector, characterized by macroeconomic weaknesses and cost-savings, company strategies centered on generative artificial intelligence (GenAI) have triggered a rebound in confidence. It is against this backdrop that injecting GenAI into digital transformation strategies has debuted in poll position on annual EY ranking, Top 10 opportunities for technology companies in 2024.

According to the EY report, the top 10 opportunities in technology for 2024 are:

1. Inject GenAI into digital transformation strategies and establish a “control tower”
2. Experiment with GenAI in targeted front-office and back-office use cases
3. Invest in new forms of digital infrastructure in the burgeoning “edge economy”
4. Establish additional supply lines in emerging markets
5. Shape corporate investment strategy around the AI roadmap
6. Harness platform business models to industrialize and scale advancing technologies
7. Establish proactive and holistic responses to new and forthcoming tax burdens
8. Prioritize energy efficiency of data center in environmental efforts
9. Invest in advanced risk tools and revisit trade-offs between costs, risks, resiliency and agility
10. Deploy advanced technology to reduce current and future cyber risks

The report cautions, however, that most organizations (90%) are still at a nascent stage of AI maturity,[1] and urges companies to establish an “AI control tower” to support safe and ethical AI deployments, with humans at the center.

Ken Englund, EY Americas TMT Leader, says:

“In 2023 the technology industry navigated global economic headwinds and geopolitical tensions, while building widespread expectation around the potential of AI. The opportunity for the year ahead is clear. By putting AI at the center of their strategies, technology businesses could leapfrog competitors who were previously ahead, not only by accelerating their transformation journeys but also repositioning operations to capitalize on rapidly emerging technologies and business models.”

The opportunity to experiment with GenAI in front- and back-office use cases is another new entrant to the Top 10, ranked in second position. Rather than leveraging GenAI for all use cases, the report states that companies should target high-impact, high-value use cases and transformation opportunities. Examples include using GenAI in software coding (front-office); and deploying AI to attract and retain talent (back-office).

Indeed, Joongshik Wang, EY Asean Technology, Media & Entertainment and Telecommunications Sector Leader, observes that technology firms are experimenting with GenAI in targeted front-office and back-office use cases. Specifically, many technology companies are experimenting in areas where there is already proven track record, such as customer care, IT development, marketing and sales. More advanced players are attempting more ambitious technological breakthroughs, such as enterprise order fulfilling, digital twins, supply chain, optimization of energy efficiency and self-healing networks.

Wang says:

“While GenAI offers great opportunities to accelerate, complement or replace some of the traditional white-collar tasks, the outcome of GenAI-based solutions can be less predictable with the variations of answers and bring additional risks. Hence, careful solution design and additional controls are needed to achieve the desired level of product maturity.”

According to the report, industry leaders are acutely aware of AI’s potential to help run their businesses more efficiently, with 65% of technology CEOs interviewed stating that their organization must act now on GenAI to avoid giving competitors a strategic advantage.[2]

Wang shares that across Southeast Asia, leading technology players are exploring a GenAI-based transformation strategy, replacing the previous digital transformation. However, the lack of skilled talent is a major challenge.

Wang says: “There is a shortage of skilled GenAI talent across Southeast Asia. While technology companies are investing in GenAI training and reskilling programs for their management and staff, it takes time for people to be competent with GenAI for the organization to reap the benefit of the technology. However, getting a trained workforce is but a part of the equation. The key to successful adoption is to ensure that the board and management fully embrace the GenAI strategy.”

Buy or build?

In this landscape, it is little surprise that shaping corporate investment strategy around the AI roadmap features in this year’s Top 10 (fifth position). AI and large language model (LLM) usage is taking off at pace, and acquisitions, deals and partnerships can speed up development by helping companies overcome challenges including demand for hardware, costly training and adopting the requisite talent to deploy.

Olivier Wolf, EY-Parthenon Global TMT Leader, says:

“Notwithstanding regulatory hurdles associated with AI deals, huge potential remains. The platform nature of today’s technology businesses means there will be many attractive companies with business models based on existing AI ecosystems. The optimal way to expand would probably be through a blend of small- to medium-sized acquisitions, corporate investments and partnerships, that would help companies access intellectual property and the skills needed to develop new propositions quickly.”

To deal with the growing demand for GenAI, Wang observes the growth of “talent” ecosystems across Southeast Asia. He says: “Some technology companies are coming together with professional services organizations to form ecosystems that allow them to invest, recruit and train large pools of talent together. Such ecosystems allow the technology companies to leverage economies of scale to better meet their talent needs.”

Diversifying supply chains

In fourth place on this year’s ranking is the opportunity to establish additional supply chains in emerging markets. The risk of supply chain decoupling continues to loom, particularly for hardware-oriented businesses, and a race is underway in subsectors such as semiconductors to realign supply chains in a way that mitigates geopolitical disruption. The report highlights an emerging trend toward creating operations in emerging markets, including India and Southeast Asia,[3] helping expand operations away from regions exposed to trade conflicts.

AI demands energy action

Prioritizing energy efficiency of data centers also ranks in this year’s Top 10 – at eighth position. Data centers’ energy usage is imminently set to accelerate rapidly, triggered by the huge computing power required to train LLMs or run intelligent systems. Indeed, the report highlights that by 2027, AI could consume as much electricity as a country the size of the Netherlands.[4] The report suggests that businesses respond by collaborating with energy equipment providers to develop innovative ways to power data centers – helping reduce costs in both the short- and long-term.

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Notes to editors

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Report methodology

In order to gain deeper insights and create this year’s list of opportunities, EY teams supplemented initial research with additional insights and recommendations from EY client-serving teams across the globe based on their interactions with clients across the technology sector.

The top-10 ranking is designed to cover a wide array of areas of opportunity and a broad range of technology industry  subsectors. This means that not every opportunity is applicable     to every technology company, with the degree of relevance potentially depending on whether a company is consumer-facing, B2B, or hardware versus software or services.

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