CFO’s Are Rethinking GenAI

Companies are hitting the “pause” button on Generative AI.

Does the C-suite have second thoughts about Generative AI?

Technically, that answer is “yes,” according to a new study from Wakefield Research and operations management platform PagerDuty.

While senior executives still hope GenAI can lead companies to more productive and prosperous new heights, reality is setting in among chief financial executives, the report notes.

“As organizations increasingly discuss the promise of AI, tech executives at America’s largest companies are wary of security and moral implications,” the report noted. “A quarter of these executives do not trust GenAI (25%), according to a survey of 100 Fortune 1000 executives who report to a chief information officer.”

Major Concerns

What explicitly gives senior executives pause about GenAI inside their companies?

The Wakefield/Pager report cites significant concerns over cybersecurity, employee morale, cost, and copyright and legal issues, among other risks. Another big concern is the structure, guidance, and quality of company GenAI rollouts, which appear to be lacking in the eyes of executives.

Here’s a closer look at the study, along with specific examples of why so many companies are “pulling the plug” on GenAI implementations – at least temporarily.

Big brand image concerns

The report points to security risks that “could damage the company’s public image.”

So-called reputational risk is the coin of the realm in management suites, and executives don’t want to give it up so easily, especially when dealing with a technology they don’t fully understand. 50% of execs surveyed in the report list the risk of reputation loss due to GenAI malfeasance. That figure tops the list of specific technology concerns among decision-makers, Wakefield states.

The “rush to success” risk

C-suite executives are also growing wary of GenAI’s accelerated pace. In fact, the speed of implementation is so fast that company leaders feel they’re losing control of the bigger picture.

“Despite working in a business environment that values speed, tech executives have had to slow the rate of GenAI adoption at their companies,” the report noted. “Nearly all (98%) directed their teams to pause on GenAI while the company established guidelines and policies.”

A lack of formal guidelines

A clear majority of companies either implementing or have already implemented GenAI haven’t set up any guardrails for the technology, and that’s a big concern in the management ranks.

“Despite the emphasis and clear need, only 29% of companies have established formal guidelines,” the survey said. “Instead, 66% are currently setting up these policies, which means leaders may need to keep pausing on GenAI until they roll out a course of action.”

Mistakes are being made

Another big issue is misinformation, that political/corporate buzzword that throws a blanket over inaccuracies made by GenAI.

According to the study, 38% of management personnel point to GenAI malfunctions. The majority of survey respondents believe “inaccuracy is likely due to poor data quality or algorithms (69%) instead of human error (31%), the study stated.

A major job replacement risk

Underneath the surface, there’s a growing uneasiness about GenAI’s powerful capacity to dominate company processes and take people’s jobs—even in the executive realm.

“Nearly 2 in 5 Fortune 1000 executives believe GenAI will supplant their own job more than their colleagues’ in the next 10 years,” the study added. “Overall, 85% of these executives expect at least some jobs to be impacted within the next 10 years.”

Pulling On the Reins

In response to those concerns over generative AI, more executives are lobbying to take a more “cautious approach” with GenAI rollouts.

“42% are either still discussing GenAI internally or are experimenting and piloting it but have not rolled it out,” the report stated. “Another 51% are rolling it out and are getting feedback on its use.”

Another 51% of executives say their companies should only adopt GenAI “only after they have the right guidelines in place.”

“Tech executives are usually early adopters eager to deploy advanced technologies, but only if they can do it safely and within a company’s prescribed guidelines. Our survey shows there’s hesitation to experiment with genAI until they can trust the results,” said Eric Johnson, chief information officer at PagerDuty.

“Key to deploying genAI at scale is providing these organizations with the right technology and a solid foundation of trust that helps them experiment in a safer environment than today,” Johnson added.

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