As we kick off the new year, we asked our practice group leaders to reflect on technology trends they have seen in their industry in 2023 and what may lie ahead in 2024. Frank Smeekes, Managing Partner, Europe, and Sal DiFranco, Managing Partner, Global Technology Leader, met with industry leaders in various cities in Europe at the end of 2023 to discuss challenges and opportunities, like AI benefits, ESG, the impact of SaaS, and what business leaders should be thinking about to stay ahead in 2024.
Here are some lessons learned from talking to CEOs and CIOs from the tech and diversified manufacturing sectors in the UK, Germany, and Benelux:
- AI has helped interpret KPIs in a different way.
- Financial information has helped manufacturers understand how margins shift because of products.
- Robotics have increased productivity and how we look at manufacturing.
- AI has helped leaders to think differently about our products and services and what we do with waste or scrap materials.
- Digitalization has led to re-evaluating business models and relationships with suppliers, customers, internal processes, and getting more real-time and accurate information leads to more efficiencies and more insights. Relationships with clients grow into partnerships where one can anticipate better needs and discuss potential new needs or markets. Relationships with suppliers become more transparent and more insightful.
- People are key in the world of technology and transformation. It’s important to retain those who have proven to be interested and have helped to transform and grow with the company to maintain the legacy knowledge. It is also important to gain new, fresh outside perspectives to discuss the present status quo. Newly created roles like Chief Information Security Officer, Chief Digital Officer, and Chief Sustainability Officer have led the organization’s respective changes. However, Airfreight Carrier, Technology (SaaS), and Manufacturing clients have all benefited from the combination of “new leadership” with both existing team members as newly recruited.
- Boards and shareholders are monitoring the topic of ESG.
- Although technical skills are critical, transformation and change management executives are crucial to defining and executing the path forward.
- The majority of service companies are, in one shape or form, in transformation.
- From maintaining content to software solutions, SaaS models have become a better business concept.
- Moving to the cloud is not the holy grail; transitioning is the magic word.
- CISO and security roles are becoming more and more important.
- Not all solutions from outside are best.
- Yes, ESG is an important topic, but sometimes it’s used as an excuse.
Here are the trends that Frank expects industry leaders to face in 2024:
Illustrative Trends for 2024 based on our European Trip Q4 2023
AI Brings Many Benefits: AI allows organizations to be more agile, run more efficiently, and have quicker insights. Increased productivity, innovation, efficiency, and quality of life are all benefits of AI. However, AI also poses some challenges and risks, such as ethical, legal, social, and environmental implications and the impact on the future of work and skills. According to this study, 20% of respondents stated that AI will pose a steep learning curve and that new skills and training will be needed. AI has also triggered the need for a new role: Chief Data Officer. It is important to ensure that AI is human-centric, trustworthy, and aligned with the values and principles of the European Union (EU).
AI will pose a steep learning curve and new skills and training will be needed. AI has also triggered the need for a new role: Chief Data Officer. It is important to ensure that AI is human-centric, trustworthy, and aligned with the values and principles of the European Union (EU).
Increased SaaS Demand: Software as a Service, the business adoption of as-a-service software grows among companies, and providers will experience steady user demand. Another factor contributing to the growth of the SaaS market in 2023 is the rise of emerging technologies such as artificial intelligence, generative AI, and IoT. The SaaS 2023 Global Market Report states that companies with AI integrated into their toolkit can create a better user experience through predictive analytics, automate functions that were once manual requirements, and personalize the user features.
Predictions for 2024 in Europe
- Transformation Will Continue: 2024 will continue disruption and change at every level, as 2023 was for each European Country. As we get used to the new reality of continuous change, companies also realize they have to adapt and create roles and parts of the organization to continue to stay close to the respective markets. The dynamics around energy, supply chain in terms of resources, and reliability of the information on customers/suppliers/prospects have driven new roles to help organizations navigate into the future with new tools.
- Growing Investment in Artificial Intelligence: A report by Forrester predicts that 50% of large European firms will proactively invest in AI compliance in 2024 to enforce the EU’s Artificial Intelligence Act in 2025. The AI Act aims to establish a harmonized legal framework for developing, marketing, and using AI systems in the EU based on risk assessment and fundamental rights obligations.
In terms of talent, there has been an increased demand for governance/security and analytics/data roles across industries. Some roles include Chief Information Security Officers, Chief Security Architects, security managers, corporate security officers, and information security managers, depending on the company’s structure and existing titles. A Digital Officer (CDO) is charged with helping an enterprise use digital information and advanced technologies, such as the cloud, artificial intelligence (AI), machine learning, automation, IoT, mobile, and social media, to create business value. A Chief Data Officer also manages an organization’s data strategy, ensuring data quality and driving business value through data analytics and governance.
- ESG Access and Analysis of Data Will be Critical: 2024 will see companies emphasize their supply chains, both in supply chain mapping and scope three disclosures, and in establishing sustainable, ESG-focused procurement policies. Organizations are working with suppliers to improve data collection and environmental and social impact. The EU is introducing the Corporate Sustainability Reporting Directive, which will require non-EU and EU companies to conduct environmental and human rights due diligence across all operations, subsidiaries, and supply chains. If approved, this regulation will drive organizations to prioritize ethical material sourcing and fair labor treatment and reduce environmental damage across the supply chain.
ESG positions are getting more exposure and reporting directly to the CEO, which will be a key driver of shareholder value. As a result, the Board wants to know how the company is doing on ESG initiatives. Most companies will have ESG efforts clearly defined within one role. This person often holds the title of Chief Sustainability Officer (CSO) or Vice President of Sustainability. This business leader is an executive tasked with improving sustainability within the company. The role focuses on crafting a sustainability strategy to ensure sustainable business practices. Aspects of sustainability include community engagement, diversity, and corporate social responsibility.
The business environment in the EU is ever-evolving and challenging, and these factors will affect how organizations build their workforces and leadership teams. By staying up to date on the latest trends and developments, business leaders will be prepared to address these challenges and opportunities for continued success in 2024 and beyond.
Frank Smeekes and Sal DiFranco talk with business leaders from technology and diversified manufacturing industries about challenges and opportunities.
Managing Partner, Europe
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