Artificial intelligence will revolutionize a major expense area for corporate IT
Businesses shell out a tonne of cash to IT service providers to install and integrate new programs. We don’t yet know if AI will save costs or just make the job more efficient.
Generative AI has the potential to greatly improve the efficiency of the contractors that firms usually hire to build up and integrate new software systems for the company. This might lead to substantially faster implementation times.
Some CIOs are worried that systems integrators, who work as contractors, will charge their clients the same amount while benefiting financially from tools like coding assistants, which contractors claim can speed up certain jobs by 50%.
Are those savings going to me? Do they merely have access to a more favorable market? in the words of Marc Kermisch, chief digital and information officer of CNH Industrial, a supplier of agricultural and construction equipment. Kermisch mentioned that systems integrators might be quite costly for the company.
When businesses invest much in software, they often enlist the help of systems integrators. The intricate process of setting up the systems and connecting them with other firm software can take months, if not years, and is entirely their responsibility.
According to Brian Woodring, CIO of nonbank mortgage provider Rocket Mortgage, generative AI has the potential to greatly accelerate certain steps in the process, such as data mapping and code writing.
Worldwide spending on systems integration services will reach $153.8 billion in 2024, up 6.4% from 2023, and $183.42 billion by 2027, according to research firm International Data Corp.
According to Anil Malhotra, who was a chief information officer consultant before starting Safebox—a firm that offers due diligence and other services for IT M&As—integrator fees are usually as expensive as the product itself. In response, Malhotra suggested that CIOs push consultants to be more forthcoming about their teams and to question their pricing practices.
According to Bret Greenstein, data and AI leader at consultancy company PricewaterhouseCoopers, the impact of generative AI efficiencies on price will remain a contentious topic. Since AI-powered projects are both more efficient and more quickly completed, the cost could go up. On the other hand, prices might go down if AI-enabled integrators start vying for clients’ business.
According to Sunil Senan, who is in charge of data, analytics, and AI at Infosys, an IT consulting company that supplies some of these contractors, AI has the potential to reduce expenses in some areas while increasing them in others. A lot of money has to go into it, like R&D, for it to be used correctly.
According to Senan, Infosys constantly tells their customers that they use generative AI coding tools like GitHub Copilot and an in-house coding assistance to speed up the implementation process.
According to Liberty Mutual Insurance’s CIO Monica Caldas, she is keeping an eye on the results of generative AI. She stated that she would be prepared to pay for the value proposition if it meant that a systems integrator could use it to provide a better and faster outcome, since it would enhance her chances of success.
Still others believe that bringing more of the integration and implementation work in-house, utilizing generative AI, is the way to go.
Insurance and financial services provider Nationwide is relying on its in-house developers, who are now use GitHub Copilot, for more specialized work, according to chief technologist Jim Fowler.
The company’s in-house developers are now 20% more productive than they were in mid-2023, which contributes to the 20% drop in the contractor numbers. Contractors, according to Fowler, are now more amenable to price negotiations.
Since Rocket Mortgage develops and maintains a large portion of its own proprietary software, according to Woodring, the company has its own substantial internal systems integration practice. In order to help with this process, the company is now adopting generative AI, which he said has already resulted in early efficiency benefits of 50%.
According to Woodring, more businesses could opt to insource their implementations in-house instead of paying exorbitant amounts to third parties if they could reap benefits like these.
While Woodring acknowledged that there has been some development toward entirely automatic integrations, he also noted that individuals have been making similar promises for years.
