This is the published version of Forbes’ CIO newsletter, which offers the latest news for chief innovation officers and other technology-focused leaders. Click here to get it delivered to your inbox every Thursday.
More than six in 10 large companies worldwide are using generative AI, and 74% of those are already seeing sizable returns on investment, according to new research from Google Cloud first shared with Forbes.
The report, based on a survey of more than 2,500 C-suite leaders of companies with more than $10 million in revenue, showed impressive gains from the technology. A total of 86% that implemented generative AI saw their revenue increase by more than 6%. More than three quarters (77%) saw their leads and customer acquisition improve. Nearly half (45%) saw employee productivity at least double. More than half (56%) reported improved cybersecurity, with 82% better able to identify threats, and 71% able to resolve issues faster. And 85% said user engagement has increased with generative AI.
“Generative AI is not just a technological innovation; it’s a strategic differentiator,” Oliver Parker, vice president of global generative AI go-to-market, Google Cloud, said in the study. “Organizations investing in gen AI today are the ones that will be best positioned to succeed in the coming decade.”
Just under half of respondents said their financial gains will be reinvested into AI, creating better solutions for more aspects of their companies. A total of 47% are investing in business and technology alignment to support change management for AI adoption. Almost the same amount said they plan to invest in upskilling their workforce and attracting new talent better versed in AI. And 43% are investing in data quality and knowledge management to ensure future generative AI systems have accurate and reliable data to work on.
Most companies, Google found, were able to get moving on generative AI quickly. A total of 84% said they moved from pilot to production in six months or less. And most of the 39% of organizations that don’t have AI systems up and running are working on it. Only 5% haven’t yet started.
This study provides tangible evidence of how investments in AI—both in terms of time and money—can really pay off. I talked more with Parker about how companies are making generative AI succeed, both through strategic alignment and smart applications. An excerpt from our conversation is later in this newsletter, and a longer transcript is available here.
POLICY + REGULATIONS
Google violated antitrust laws in order to maintain a monopoly for its search engine, a federal judge ruled this week. The U.S. Justice Department and 11 states sued the company, saying it illegally built its dominance by paying billions of dollars to companies including Apple and Samsung to feature Google as the default search engine on their devices.
The tech giant currently handles about 90% of all internet searches, and its name is officially a verb: “Googling.” The judge ruled that Google’s exclusive distribution agreements on devices have anticompetitive effects, allowing the company to earn monopoly-level profits.
The 286-page ruling doesn’t go into remedies, which will be decided later—though the Washington Post has already listed some possibilities. Google has vowed to appeal the ruling, while federal government officials have praised it for opening the door to more competition for consumers.
Many see this as the most significant tech antitrust decision since the 1999 ruling against Microsoft which said the tech giant had illegally used the dominance of its Windows operating system to block competitor web browsers. At the time, a federal judge ruled that Microsoft needed to be split up—a demand that was reversed on appeal, though Microsoft was prohibited from mandating restrictive contracts on industry partners, opening the door for other popular web browsers and applications. Ironically, some analysts say that if it holds, the decision against Google creates a big opportunity for Microsoft’s Bing search engine.
FROM THE HEADLINES
A month after a bad CrowdStrike update crippled thousands of enterprise computers running on Windows—which led to chaos for businesses including banks, airlines and health care—the cybersecurity company released a detailed root cause analysis. The problem, writes Forbes senior contributor Katie O’Flaherty, was caused by a glitch in a feature added in February to enhance visibility on Windows attacks. When last month’s update—pushed out to millions of users at once—was installed, a sensor in the new feature got more responses than it was programmed for, taking down systems.
While programming issues happen and glitches are commonplace, CrowdStrike admitted it should have found this error though internal testing first. CrowdStrike is changing its system, adding layers of internal testing before deploying updates, and hiring two independent third-party software security experts to examine the code and provide suggestions. CrowdStrike is also giving users more say in when and how they get updates. Users will get to choose when the updates are added, so it’s more convenient—and updates can be skipped if it appears they are causing problems with other computer systems.
The $3 billion annual revenue company has many more problems to deal with from the outage. Last week, a group of investors filed a class action lawsuit against the company, arguing they were misled by the company’s assurances that its solutions were “validated, tested and certified,” O’Flaherty wrote. Delta, which ended up canceling 5,500 flights because the CrowdStrike issue took down its systems, has threatened to sue the company. CrowdStrike maintains Delta refused its offers of help during the outage, and cannot be blamed for the airline’s IT choices, which may have made it take longer to get the system back.
ARTIFICIAL INTELLIGENCE
This week, Elon Musk revived a lawsuit against OpenAI that he had dismissed in June. Musk, an initial cofounder of OpenAI who left in 2018, accused the company, cofounder and CEO Sam Altman, and cofounder and President Greg Brockman of changing its mission. Instead of continuing as a company dedicated to AI for the benefit of humanity, the lawsuit says it has become dedicated to maximizing profit. Musk dropped the initial lawsuit without explanation the day before an expected judge’s ruling on whether it should be dismissed. Musk, who now has his own AI company xAI, does not appear to have posted about the revived lawsuit on X. In reaction, OpenAI pointed to a blog post it wrote about Musk’s accusations when he first sued the company in March.
BITS + BYTES
Google Exec Oliver Parker On The Key To ROI From Generative AI
Nearly three-quarters of early generative AI adopters are seeing a return on investment, according to a study Google Cloud published today and first shared with Forbes. How are these early adopters so successful? I talked to Oliver Parker, vice president for Global Generative AI Go-To-Market for Google Cloud, about working with executives on AI adoption. This conversation has been edited for length, continuity and clarity. A more complete version is available here.
What is the most important takeaway from the study?
Parker: It’s the continued theme of C-suite sponsorship and commitment. You can say the same thing nine different ways, but the net is senior sponsorship and engagement in the use of this technology is incredibly apparent. Where you see success, that is one of the key ingredients.
The second one is defining the use cases that will have the biggest impact—at least as an organization gets going—and the ones with solid ROI. What are the key metrics you’re using to measure opportunity? Is this for cost savings or around new revenue growth? Really defining the business case that actually supports the implementation of the use case.
The study showed 74% of enterprises using generative AI were receiving ROI already—and 86% were seeing revenue growth of 6% or more. Do you see that changing in 12 months?
For people who are putting these systems into production, that feels like the right kind of curve. What would happen going forward is that the volume of people doing it would be exponentially larger. I’d assert going forward that [those who already had] their first or second use case will see way more from their third, fourth, fifth, sixth, seventh, eighth to ninth.
Are you just having fun with this thing, or are you getting serious? I think there’s a phase in the middle. You’ve got experimentation, you’ve got production, and then you’ve got scale production: Rather than having one or two use cases that are really delivering value, you’ve got hundreds of use cases. I think this is what you’ll start to see. If we interviewed all those 2,500 leaders a year from now, it would be fascinating to see the explosion of use cases in production.
What wisdom would you share with a company that doesn’t have any AI applications in production but is working toward getting them in the future?
You have to do the due diligence on the way you think it can make a difference to your organization. Just firing up something to help you with emails could be helpful, but that may not be enough to show a true ROI. With our clients, we go look at their quarterly earnings. What are the priorities of the client? Then we’ll sit down and work with them.
Having senior leadership is absolutely instrumental. Lining it up to the business imperatives of the company is super important, because then when you sit down with the CFO and ask for investments in these new capabilities, you’re lining up to a strategic imperative of the company.
Having the tech skills and the talent in-house is really important. Where I’ve seen companies do very well, they have some technical capability within their engineering or IT org.
And then finally, where it starts at the top, you have to infuse a culture of experimentation. You’re building a set of muscles and capabilities where people feel that they can experiment and be creative. Some people will fail, but that’s the whole point. You have to go through this failure process to succeed at the same time.
FACTS + COMMENTS
Last week, Intel saw its stock price plummet and kicked off a major selloff of chip stocks after announcing a huge quarterly loss, suspended dividends and planned layoffs.
$1.6 billion: The company’s most recent quarterly loss
15,000: Number of jobs the company plans to cut, about 15% of its global workforce
‘Proactive steps to improve our profits and strengthen our balance sheet’: How CFO David Zinsnser described the company’s cost-cutting moves
STRATEGIES + ADVICE
As budgets tighten, it can be tempting to cut spending on customer experience interfaces. But that could hurt your future business for quarters to come.
The CrowdStrike outage reinforced why tech systems need to be resilient. Here are ways to strengthen the ones you depend on.
VIDEO
QUIZ
Which world leader endorsed expanding law enforcement’s use of live facial recognition technology this week?
A. U.K. Prime Minister Keir Starmer
B. Austrian Chancellor Karl Nehammer
C. Venezuelan President Nicolas Maduro
D. Israeli Prime Minister Benjamin Netanyahu
See if you got the answer right here.
