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CIOs geared up for AI but their organisations aren’t

  • Lenovo’s third annual global CIO report reveals AI as IT’s most urgent priority, matched only by cybersecurity.
  • CIOs concede that AI exploration and adoption is pulling resources and attention away from other key IT areas including cloud adoption/digital transformation, sustainability and employee compensation.

Businesses are still unready to make use of artificial intelligence despite AI being the top priority among tech leaders globally.

According to a third annual global CIO report by Lenovo Group – Inside the Tornado: How AI is Reshaping Corporate IT Today, revealed that while CIOs need to adopt and scale AI urgently, their ambitions are threatened by speed, security, and other organisational functions lagging in AI readiness.

Majority saw aspects like computing infrastructure and corporate policies on ethical use as not yet “AI-ready.”

In a stark contrast to previous years, CIOs are tabling non-traditional responsibilities to sharpen their focus on core IT functions. Slightly more than half (51 per cent) of CIOs feel AI/ML is an urgent priority to address, matched only by cybersecurity.

Research firm IDC forecasts that AI-centric spending to exceed $300 billion globally by 2026, underscoring the urgency for AI readiness.

“With AI poised to permeate every facet of business and life, CIOs must prepare for an ‘AI Everywhere’ future,” says Jyoti Lalchandani, IDC’s group vice president and regional managing director for the Middle East, Turkey, and Africa.

A tornado of innovation

John-David Lovelock, Distinguished VP Analyst at Gartner, said that technology providers are required to be a step ahead of this cycle and are already in the execution phase and are bringing GenAI capabilities to existing products and services, as well as to use cases being identified by their enterprise clients. 

 “We are seeing a cycle of story, plan and execution when it comes to GenAI. In 2023, enterprises were telling the story of GenAI and in 2024 we are seeing most of them planning for eventual execution in 2025.”

The Lenovo report revealed that 84 per cent of CIOs are being evaluated on business outcome metrics more than ever before.

“Today’s CIOs are working in a tornado of innovation. After years of IT expanding into non-traditional responsibilities, we’re now seeing how AI is forcing CIOs back to their core mandate,” said Ken Wong, President of Lenovo’s Solutions and Services Group.

“This is driven by the clear promise of AI adoption combined with the pressure that IT leaders face to prove the value of these investments and deliver measurable business outcomes.”

The report revealed that 80 per cent feel that breakthroughs and developments in AI will have a significant impact on their business. At the same time, CIOs see speed to adoption and security as the most significant barriers to scale AI.

“Large swathes of their organisations are not AI-ready, which is directly affecting IT’s ability to scale AI quickly. In particular, they called out: new product lines (78 per cent), corporate policy / ethical use (76 per cent), supply chain (74 per cent), IT’s technical skills (51 per cent).”

Focus on return on investment

What has remained consistent with previous years is IT’s ongoing challenge to measure impact. Sixty-one per cent of CIOs said they find it very or extremely challenging to demonstrate return on investment (RoI) with tech investments while 96 per cent of CIOs anticipate increased investment over the next 12 months, 42 per cent of respondents admit they do not expect to see positive ROI from AI investments for at least two to three years.

While 96 per cent of CIOs said they expect increased AI investments over the coming year, only 20 per cent expect overall IT budgets to grow by more than 10 per cent. CIOs concede that AI exploration and adoption is pulling resources and attention away from other key IT areas including cloud adoption/digital transformation (48 per cent), sustainability (38 per cent), and employee compensation (38 per cent).

“There’s a clear opportunity for us to help businesses make sense of AI, accelerate its scale, and advise on how the impact of these investments can be effectively measured,” Wong said.

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Northern Arc secures $80m funding from IFC

  • The investment comprises an equal split of equity and debt, each contributing around $40m.

Financial services platform Northern Arc has secured an $80 million in funding from the International Finance Corporation (IFC), a member of the World Bank Group.

“The investment marks the beginning of a long-term relationship with IFC and other multi-laterals who believe in the India story and Northern Arc playing an instrumental role in India’s growth story through financial inclusion,” Ashish Mehrotra, MD and CEO of Northern Arc, said in a statement.

The Chennai-based company said that the new funding from IFC will support the expansion of Northern Arc’s reach to end customers, fostering social impact through improved credit access to customers across its focused sectors.

“Our partnership with Northern Arc is a key component of our strategy to harness private sector expertise and finance in reaching millions of MSMEs and mid-market companies through innovative products,” said Wendy Werner, IFC India Country Head.

The investment comprises an equal split of equity and debt, each contributing around $40 million, demonstrating IFC’s confidence in Northern Arc’s scalable and sustainable business model and India’s expanding credit market, the company said.

As of September 30, 2023, Northern Arc has facilitated financing of over Rs1.5 trillion in credit through its technology platform using data insights derived from a large data repository and domain expertise, underscoring its role in the financial ecosystem.

Northern Arc handles assets under management of Rs10,081 crore. The firm is backed by equity investors including Sumitomo Mitsui Banking Corporation, LeapFrog, 360 ONE (formerly known as IIFL), Accion, Augusta Investments (known as Affirma Capital), Dvara Trust, and Eight Roads (a proprietary arm of Fidelity). Northern Arc Capital submitted preliminary papers to SEBI for an initial public offering in February.

The IPO will consist of fresh equity shares valued at Rs500 crore and an offer for sale of up to 2.1 crore equity shares by investor shareholders.


Nvidia set to acquire Run:ai for $700m

Nvidia is acquiring an Israeli-based Run:ai for $700 million for developers and operations teams to manage and optimise their AI hardware infrastructure.

The companies are in advanced talks and could see Nvidia pay upwards of $1 billion for Run:ai.

Run:ai is among Nvidia’s biggest acquisitions since its purchase  of Mellanox for $6.9 billion in March 2019.

The Israeli startup offers workload management and orchestration software, working off a platform on the Kubernetes open-source system.

“Run:ai has been a close collaborator with Nvidia since 2020 and we share a passion for helping our customers make the most of their infrastructure,” Omri Geller, Run:ai’s CEO, said in a statement.

“We’re thrilled to join Nvidia and look forward to continuing our journey together.”

Forging ahead

Run:ai raised $75 million in a Series C round in March 2022 led by Tiger Global Management and Insight Partners, who also led the previous Series B round.

The round included the participation of additional existing investors, TLV Partners, and S Capital VC, bringing the total funding raised to date to $118 million.

Nvidia added that the acquisition will help its customers make more efficient use of their AI computing resources.

IBM to buy HashiCorp for $6.4b to focus into hybrid cloud and AI

  • Acquisition would be funded by cash on hand and would add to adjusted core profit within the first full year of closing, expected by the end of 2024.

IBM will acquire HashiCorp for $35 per share in cash, representing an enterprise value of $6.4 billion, to focus deep into hybrid cloud and AI.

“Enterprise clients are wrestling with an unprecedented expansion in infrastructure and applications across public and private clouds, as well as on-prem environments. The global excitement surrounding generative AI has exacerbated these challenges and CIOs and developers are up against dramatic complexity in their tech strategies,” Arvind Krishna, IBM chairman and chief executive officer, said.

The rise of cloud-native workloads and associated applications is driving a radical expansion in the number of cloud workloads enterprises are managing. In addition, generative AI deployment continues to grow alongside traditional workloads.

Widescale adoption

IBM said the HashiCorp acquisition would be funded by cash on hand and would add to adjusted core profit within the first full year of closing, expected by the end of 2024.

California-based HashiCorp allows customers to establish and manage their infrastructures on the cloud.

HashiCorp boasts a roster of more than 4,400 clients, including Bloomberg, Comcast, Deutsche Bank, GitHub, J.P Morgan Chase, Starbucks and Vodafone.

HashiCorp’s offerings have widescale adoption in the developer community and are used by 85 per cent of the Fortune 500.

The boards of directors of IBM and HashiCorp have both approved the transaction. The acquisition is subject to approval by HashiCorp shareholders, regulatory approvals and other customary closing conditions.

Estuaries contain sources of sustainable “blue” osmotic energy

  • In a test, the team created a salt battery array and generated enough electricity to individually power a calculator, LED light and stopwatch.

Waters at Estuaries — where freshwater rivers meet the salty sea — contain different salt concentrations mix and may be sources of sustainable, “blue” osmotic energy, researchers discovered.

Researchers at American Chemical Society created a semipermeable membrane that harvests osmotic energy from salt gradients and converts it to electricity.

The new design had an output power density more than two times higher than commercial membranes in lab demonstrations.

Ye, Qin and their team members say their findings expand the range of ecological materials that could be used to make RED membranes and improve osmotic energy-harvesting performance, making these systems more feasible for real-world use.

Room for improvement

Osmotic energy can be generated anywhere salt gradients are found, but the available technologies to capture this renewable energy have room for improvement.

One method uses an array of reverse electrodialysis (Red in the picture) membranes that act as a sort of “salt battery,” generating electricity from pressure differences caused by the salt gradient.

An improved membrane (yellow line) dramatically increased the amount of osmotic power harvested from salt gradients, like those found in estuaries where salt water (left tank) meets fresh water (right tank).

To even out that gradient, positively charged ions from seawater, such as sodium, flow through the system to the freshwater, increasing the pressure on the membrane.

To further increase its harvesting power, the membrane also needs to keep a low internal electrical resistance by allowing electrons to easily flow in the opposite direction of the ions.

Higher ion conductivity

Previous research suggests that improving both the flow of ions across the red membrane and the efficiency of electron transport would likely increase the amount of electricity captured from osmotic energy.

So, Dongdong Ye, Xingzhen Qin and colleagues designed a semipermeable membrane from environmentally friendly materials that would theoretically minimise internal resistance and maximise output power.

The researchers’ red membrane prototype contained separate (i.e., decoupled) channels for ion transport and electron transport.

They created this by sandwiching a negatively charged cellulose hydrogel (for ion transport) between layers of an organic, electrically conductive polymer called polyaniline (for electron transport).

Initial tests confirmed their theory that decoupled transport channels resulted in higher ion conductivity and lower resistivity compared to homogenous membranes made from the same materials.

In a water tank that simulated an estuary environment, their prototype achieved an output power density 2.34 times higher than a commercial red membrane and maintained performance during 16 days of non-stop operation, demonstrating its long-term, stable performance underwater.

In a final test, the team created a salt battery array from 20 of their red membranes and generated enough electricity to individually power a calculator, LED light and stopwatch.

LLMs are highly error-prone when mapping medical codes

  • Researchers emphasise the necessity for refinement and validation of these technologies before considering clinical implementation
  • GPT-4 demonstrated the best performance, with the highest exact match rates and also produced the highest proportion of incorrectly generated codes.

Large language models (LLMs) have attracted significant interest in automated clinical coding but early data show that LLMs are highly error-prone when mapping medical codes.

In the study, published in the online issue of NEJM AI, researchers at the Icahn School of Medicine at Mount Sinai emphasised the necessity for refinement and validation of these technologies before considering clinical implementation.

They evaluated models from OpenAI, Google and Meta such as GPT-3.5, GPT-4, Gemini Pro, and Llama2-70b Chat performance and error patterns when querying medical billing codes.

The study extracted a list of more than 27,000 unique diagnosis and procedure codes from 12 months of routine care in the Mount Sinai Health System, while excluding identifiable patient data.

The investigation showed limited accuracy (below 50 per cent) in reproducing the original medical codes, highlighting a significant gap in their usefulness for medical coding. GPT-4 demonstrated the best performance, with the highest exact match rates for International Classification of Diseases, 9th edition, Clinical Modification (ICD-9-CM) (45.9 per cent), ICD-10-CM (33.9 per cent), and CPT codes (49.8 per cent).

GPT-4 also produced the highest proportion of incorrectly generated codes that still conveyed the correct meaning.

Large number of errors remain

For example, when given the ICD-9-CM description “nodular prostate without urinary obstruction,” GPT-4 generated a code for “nodular prostate,” showcasing its comparatively nuanced understanding of medical terminology.

However, even considering these technically correct codes, an unacceptably large number of errors remained.

The next best-performing model, GPT-3.5, had the greatest tendency toward being vague. It had the highest proportion of incorrectly generated codes that were accurate but more general in nature compared to the precise codes.

In this case, when provided with the ICD-9-CM description “unspecified adverse effect of anaesthesia,” GPT-3.5 generated a code for “other specified adverse effects, not elsewhere classified.”

“Our findings underscore the critical need for rigorous evaluation and refinement before deploying AI technologies in sensitive operational areas like medical coding,” study corresponding author Ali Soroush, MD, MS, Assistant Professor of Data-Driven and Digital Medicine (D3M), and Medicine (Gastroenterology), at Icahn Mount Sinai, said. “While AI holds great potential, it must be approached with caution and ongoing development to ensure its reliability and efficacy in health care.”

Additional refinement needed

One potential application for these models in the healthcare industry, say the investigators, is automating the assignment of medical codes for reimbursement and research purposes based on clinical text.

“Previous studies indicate that newer large language models struggle with numerical tasks. However, the extent of their accuracy in assigning medical codes from clinical text had not been thoroughly investigated across different models,” co-senior author Eyal Klang, MD, Director of the D3M’s Generative AI Research Program, said.

“Therefore, we aimed to assess whether these models could effectively perform the fundamental task of matching a medical code to its corresponding official text description.”

The study authors proposed that integrating LLMs with expert knowledge could automate medical code extraction, potentially enhancing billing accuracy and reducing administrative costs in health care. 

“This study sheds light on the current capabilities and challenges of AI in health care, emphasising the need for careful consideration and additional refinement before widespread adoption,” co-senior author Girish Nadkarni, MD, MPH, Irene and Dr. Arthur M. Fishberg Professor of Medicine at Icahn Mount Sinai, Director of The Charles Bronfman Institute of Personalized Medicine, and System Chief of D3M, said.

The researchers caution that the study’s artificial task may not fully represent real-world scenarios where LLM performance could be worse.

Next, the research team plans to develop tailored LLM tools for accurate medical data extraction and billing code assignment, aiming to improve quality and efficiency in healthcare operations.