2024 CIO Survey Reveals IT Budgets, AI Priorities For Life Sciences Companies

By Peter Tzefronis and James Savage, Clarkston Consulting

In recent years, the life sciences landscape has undergone a series of seismic shifts, marked by the relentless adaptation to and mitigation of global challenges ranging from supply chain disruptions to inflationary pressures and geopolitical instability.

Due to this unprecedented change and disruption, the spotlight has intensified on IT departments, underscoring their indispensable role in the life sciences sector when it comes to strategic planning and organizational resilience, particularly for pre-commercial companies. In a time when resources are lean and life sciences organizations are pressed to innovate quickly in an extremely regulated environment, the imperative to optimize IT strategies and investments has never been more pressing.

To better understand the challenges, opportunities, and priorities that CIOs across various industries, including the life sciences, are facing within the IT landscape, Clarkston Consulting conducted its third annual CIO Survey.¹

The five key objectives for the 2024 CIO Survey were to:  

1. Understand the overall relationship between IT and other departments within the company.
2. Understand current IT budget distribution, technologies/platforms used, and sources for technology-specific learning and development.
3. Identify attributes that are important in selecting outsourcing or managed services partners, a professional services provider, or a technology platform/vendor.
4. Determine priorities for the coming year, including if and how companies are investing in artificial intelligence (AI).
5. Identify any changes in responses since the 2022 CIO Survey² and the 2023 CIO Survey.³ 

While the findings from this year’s report provided invaluable insight into the current relationship between IT and other departments, the enterprise resource platforms in which companies are investing, and the most valuable attributes when selecting outsourcing or managed services partners — among other key findings — two key themes stood out among the rest: IT budget allocation and AI usage.

Below, we highlight key findings from this year’s CIO Survey related to IT budgets and AI usage:

IT Budget Allocation

The 2024 CIO Survey provided invaluable insight into how CIOs are budgeting within their IT departments. Overall, the survey found that IT budgets are expected to increase in the coming year or at least stay the same: 57% of respondents anticipate a surge in budgets and 27% expect budgets to remain steady. This represents a significant uptick from previous years, when only one-third of respondents projected an increase in IT budgets.

As CIOs navigate the allocation of these augmented budgets, they face the challenge of distributing resources across various functional areas. While the distribution is anticipated to be equitable across different domains, the introduction of AI-related initiatives adds a new dimension to budgetary considerations. Interestingly, the survey suggests a redirection from traditional areas like production, operations, and administration to fund AI initiatives.

This reallocation highlights a strategic pivot toward leveraging artificial intelligence technologies to speed up operations, decision-making, and innovation; however, this relocation should be approached with caution. Organizations must find a balance between innovation-driven initiatives, like AI integration, and the maintenance of foundational elements within their operations, ensuring they don't overlook (or underfund) the fundamental pillars that uphold their technological capabilities. Instead, they need to follow a framework for responsibly scaling and investing in AI⁴ to stay competitive and profitable in the current landscape.

AI Investment And Implementation

As mentioned above, the 2024 CIO Survey indicates that CIOs are directing more funding toward AI platforms and technologies than in years prior. A quarter of respondents, 25%, earmark their highest investment for AI initiatives, signaling a sustained commitment to harnessing the potential of artificial intelligence. Moreover, the pervasiveness of AI adoption within organizations is evident, with approximately eight in 10 affirming their utilization of AI technologies.

One report shows that the life sciences market size for AI investment is expected to reach nearly $10 billion before 2032.⁵ We’ve already seen pharma giants like Novo Nordisk and Pfizer invest in advanced technologies for demand forecasting and inventory planning, with Novo Nordisk reaching a 50% reduction in forecast errors and millions of dollars in annual savings, and Pfizer achieving a 25% increase in supply chain efficiency in addition to costs savings.⁶

Within organizations leveraging AI, its applications extend beyond mere adoption to encompass pivotal functions like automating routine tasks. Between two-thirds and three-quarters of respondents affirm AI's multifaceted role in data analysis and modeling (including trend prediction and demand forecasting), security and fraud detection, and inventory management.

However, CIOs are also mindful of the pressing concerns that underscore the complexity of integrating AI technologies into their operations, including:

• Data privacy (55%), marking a heightened awareness of the importance of safeguarding sensitive data.
• High cost of implementation (52%), highlighting the need for mindful planning to ensure the viability and sustainability of AI initiatives within organizations.
• Lack of skilled staff (50%), underscoring the importance of talent acquisition, upskilling, and reskilling to cultivate a workforce equipped with the requisite skills to drive AI innovation and implementation.
• Difficulty integrating with existing systems (46%), demonstrating further complexity with aligning AI technologies to existing systems and processes without larger disruption to production or operations.

There are also larger considerations around the practicality of AI within a life sciences landscape, particularly when it comes to ensuring safety and effectiveness. For example, if a firm wants to incorporate AI into its GxP processes,⁷ what are the practical applications for product quality and GxP compliance, and how does the organization ensure minimal risk? Further, this may have implications from a validation perspective; even with the use of AI, organizations will need to develop robust validation practices to ensure the continued safety and effectiveness of any AI-driven systems or solutions.

As CIOs consider their long-term investments in AI, they’ll need to be mindful of both their return on investment and their ability to safely and effectively implement and scale these technologies into their existing landscapes moving forward.

Concerns Surrounding Ethical AI Usage

CIOs reported they’re also proactively addressing concerns surrounding the ethical usage of AI, with 63% of respondents indicating ethical concerns as their top concern, followed by AI bias (65%) and job displacement (61%). To combat these, CIOs said they are being proactive in their approach to mitigate risks and concerns, highlighting key themes like:

• Training employees specifically on how to apply AI or providing education around the topic.
• Setting up boards or committees to oversee how AI is applied/used.
• Tasking specific groups with creating AI usage guidelines for the organization.
• Employing monitoring/auditing or other tracking systems to ensure proper use.
• Looking for ethical vendors who are aligned with their approach to AI usage and thoroughly vetting them.

Looking Ahead

As the landscape and complexity of AI within the life sciences sector continue to evolve, CIOs will need to be mindful of their investments — whether in the short or long term — in these innovative technologies. While these technologies offer immense potential and opportunity across a variety of functional areas for an organization, CIOs can’t forget the value of setting up strong foundational processes and practices to ensure smooth implementation and adoption to realize the most return on those AI investments.

References

1. Tzefronis, P. (2024, March 1). 2024 Clarkston Consulting CIO Survey Summary Report. https://clarkstonconsulting.com/insights/2024-cio-survey/
2. Tzefronis, P. (2022, June 6). 2022 Clarkston Consulting CIO Survey Summary Report. Clarkston Consulting. https://clarkstonconsulting.com/insights/2022-cio-survey/
3. Tzefronis, P. (2023, January 31). 2023 Clarkston Consulting CIO Survey Summary Report. Clarkston Consulting. https://clarkstonconsulting.com/insights/2023-cio-survey/
4. Mackiewicz, L. (2023, October 26). Setting an Organizational Strategy for AI to Drive Business Transformation. https://clarkstonconsulting.com/insights/setting-an-organizational-strategy-for-ai/
5. Towards Healthcare. (n.d.). AI in Life Sciences Market. Towards Healthcare. https://www.towardshealthcare.com/insights/ai-in-life-sciences-market
6. Bates, A. (2023, August 9). AI-based Supply Chain Optimization To Cut Costs In Pharma. https://www.linkedin.com/pulse/ai-based-supply-chain-optimization-cut-costs-pharma-dr-andr%C3%A9e-bates/
7. Dougherty, J. & Birbeck, I. (2023, July 24). Applications of Generative AI for Product Quality and GxP Compliance. https://clarkstonconsulting.com/insights/generative-ai-for-product-quality-and-gxp-compliance/

About The Authors:

Peter Tzefronis is an associate partner at Clarkston Consulting. He has more than 20 years of experience leading large-scale transformational IT initiatives for clients in the consumer products and life sciences industries. In addition to transformational IT initiatives, he has specific experience in developing comprehensive IT strategies, supporting sell side divestiture transactions, performing IT governance audits, and developing business cases for investments leveraging process improvements and technology. He received his MBA in finance from the Weatherhead School of Management at Case Western Reserve University and earned a B.B.A. in accounting from Georgia State University.

James Savage is a manager at Clarkston Consulting. He works with prospective clients to discover and dissect the pressing challenges facing their organization and develop services and strategies to address their needs. As a technologist, James’ passions lie in developing IT and technology strategies and implementing technologies that will help his clients to not just solve their challenges but give them a competitive advantage. James received his Bachelor of Science in biomedical engineering and a minor in engineering & business from the Georgia Institute of Technology.