Bloomberg Línea — Latin America’s productivity has been insistently questioned recently, especially after the economic crisis unleashed by Covid-19, since after two years of rebound and growth (in 2021 and 2022), the region is returning to its path of “low growth”, according to the OECD and other international organizations, and which have lowered the region’s GDP outlook for 2023.
A recent article in The Economist highlighted that although the region does not lack workers and the proportion of people of working age has more than doubled in the last 30 years, Latin America’s growth continues to underperform compared to other economies, emphasizing the region’s “unproductiveness”.
A new global IBM study has found that for nearly half of CEOs in Latin America (48%), productivity or profitability is their top business priority and concern, followed by modernization through technology (45%), and customer experience (44%).
The role of technology and AI in productivity
“Business leaders globally have jumped on the wave of generative artificial intelligence (AI) implementation, and Ecuador is no exception,” Luis Fernando Padilla, IBM’s lead consultant for Latin America, said. “That’s why technology modernization remains a priority for CEOs in the region, as half of them are betting on AI as a key enabler to deliver results. However, organizations still face significant hurdles in implementing AI, and we see CEOs increasingly relying on their technology leaders as strategic decision makers,” he added.
Additionally, the study titled CEO decision making in the age of AI, Act with intention, also shows that more than 63% of Latin American CEOs believe that cloud computing is the key technology that will help them deliver results in the next three years, followed by advanced analytics (53%) and AI (53%), including generative AI.
At the same time, it is evident that the influence of technology leaders in decision-making is growing, as 36% of Latin American CEOs point to Chief Information Officers (CIOs), followed by Chief Technology or Chief Digital Officer (28%) as those who make the most crucial decisions in their organization.
The study is based on a survey of 3,000 CEOs from 30 countries and 24 industries, carried out between March and May 2023.
The common errors committed by companies in their modernization drive
A global report commissioned by Kyndryl and carried out by Forrester Consulting shows that, today, only 55% of organizations are able to effectively scale operations as needed, 52% are able to respond quickly to disruptions, and only 48% can easily adapt to unforeseen events.
“What we have seen in our consulting is that after an exponential investment in technology over the last three years, and driven by the global pandemic, many companies struggle with integrating and optimally managing their technology resources in favor of their business,” Gerardo Osío, general manager of Kyndryl Colombia and Ecuador, told Bloomberg Línea.
He said that, according to IDC, 80% of organizations estimate that they have up to 1,000 business applications in their operations, which leads to an increasingly complex and difficult-to-centralize technology management.
Thus, faced with the large amount of technology offerings, companies find themselves in a state of inexperience to keep up with the pace of IT modernization.
He also pointed out the most common points of attention for which this process can fail in companies:
- Not giving the required importance to the corporate culture. This can be improved and adapted to turn the company into an efficient and data-driven business
- Not being prepared for hybrid and digital work environments with effective strategies that impact employee productivity and work agility
- Failure to upgrade the legacy infrastructure repository and use legacy configurations. This should be done to meet business needs and improve operations
- Using outdated ROI methods, which fail to reflect the long-term value of IT modernization projects
- Failure to evaluate and consider different approaches to modernizing and optimizing mainframe environments or other traditional platforms, seeking the most effective and efficient solution for your organization
- Lack of a prepared and adequate team and/or ecosystem to implement modernization, as modernization cannot be achieved alone. This requires external partnerships to help guide companies through the change management, skills enhancement and platform integration that are necessary for a complete modernization
Obstacles to including AI in a business
When considering the views on generative AI of 200 US-based CEOs of companies that are multinationals, 75% of them said that having a competitive advantage will depend on who has the most advanced generative AI.
However, executives are also weighing potential risks or technological barriers such as bias, ethics and security. More than half (57%) of US CEOs surveyed are concerned about data security and 48% are concerned about data bias or accuracy.
Likewise, there was evidence of a disconnect between these CEOs and their teams when it comes to AI readiness.
Half (50%) of CEOs report that they are already integrating generative AI into products and services, and 43% of them state that they are using generative AI to inform strategic decisions. Less than one-third of their executive teams agree that they have the internal expertise or organizational readiness to adopt generative AI.
Read more: Latin America’s top CEOs