Freezing Projects to Fund AI/ML Investment 

A Sr. Cloud Architect Discusses Budget Strategy

ETR Research 

| March 28, 2024

ETR Insights presents an interview with the Senior Cloud Infrastructure Architect for a large manufacturing and tech enterprise, who discusses strategy around IT budget cuts; AI/ML and data analytics are being prioritized while other projects are frozen. The company strongly emphasizes securing intellectual property while harnessing AI technologies, noting its unique position within the government cloud. IT must educate business users on the importance of data quality for generative AI. Read on to learn more about the company's multi-cloud strategy, its shift to Power BI for data analytics, and how it manages a complex array of vendors to ensure operational efficiencies without disrupting business processes.

Vendors Mentioned: AWS / Atlassian (Jira, Confluence, Bitbucket) / Cisco / GitLab / Google (Mandiant) / IBM (Red Hat) / KnowBe4 / Microsoft (Azure, GitHub, Power BI, Defender) / OpenAI / Oracle / Palo Alto Networks / RSA / Salesforce (Slack) / ServiceNow / SolarWinds / Sophos / VMware (Carbon Black)

Industry Trends

Our guest revealed a significant tightening of budgets in Q2; senior leadership has mandated a 10% to 15% reduction in IT spending for the remainder of 2023 and indicates that this trend will continue into 2024. The cuts align with the industry trends, focusing on reducing contractor staff and hiring freezes. "We had a fairly large number of contractors for IT. That was the first to go, and then obviously, we also had quite a number of applications that were candidates and were on schedule to migrate over a couple-year time span, and essentially, that got put on pause as well." AI/ML and data analytics continue to see support due to their high business impact and value.

AI is front and center; the organization recognized early the productivity boon that AI could represent and formed an internal center of excellence aimed at ensuring secure and effective adoption. Protecting intellectual property is a priority. "You start hearing stories of people unknowingly or unassumingly putting their IP out there, so it was first and foremost, yes, this is a fantastic capability, but how do we harness it in a meaningful and secure way?" As a Microsoft shop, they are most interested in 365 Copilot, though this may not reflect broader commercial trends. "We're in the government cloud, so I think our use case is a little bit unique compared to most enterprises and organizations out there." IT departments must educate business users that generative AI heavily depends on the quality of the underlying data. "It's IT's responsibility to raise awareness that, yes, it's a fantastic tool in terms of technology, but a lot of it is also the classic: people, process, tools, technology."

ETR's data suggests that this organization is not the only company struggling to find a budget for ML/AI initiatives. In our most recent State of Gen AI report, ETR polled more than 1500 IT decision makers and found out that nearly half of respondents (44%) said their organizations were allocating budget to ML/AI from other areas within the company. As seen above, about 40% stated that budget was being shifted away from more traditional Business and Productivity applications. An additional 18% said that ML/AI budgets were being taken from non-IT departments.

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