The technology industry outlook is brighter than 12 months ago, with generative artificial intelligence (GenAI) emerging as top opportunity for 2024, EY said Thursday.

Following a challenging start to 2023 for the technology sector, characterized by macroeconomic weaknesses and cost-savings, company strategies centered on GenAI have triggered a rebound in confidence, the consulting firm said in a report.

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 percent) are still at a nascent stage of AI maturity, and urges companies to establish an “AI control tower” to support safe and ethical AI deployments, with humans at the center.

“In 2023 the technology industry navigated global economic headwinds and geopolitical tensions, while building widespread expectation around the potential of AI,” said Ken Englund, EY Americas TMT Leader.

“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,” he added.

According to the report, 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.

“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,” Wang said.

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

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.

“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,” he said.

However, he noted 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,” he added.

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.

“Notwithstanding regulatory hurdles associated with AI deals, huge potential remains,” said Olivier Wolf, EY-Parthenon Global TMT Leader.

According to him, 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,” he added.

To deal with the growing demand for GenAI, Wang observes the growth of “talent” ecosystems across Southeast Asia.

“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,” he added.

Lenovo Study: 94 percent of ASEAN+ CIOs deem AI critical for business in 2024; only 11 percent invest in GenAI