Among a range of factors leading to a wave of tech sector layoffs in 2026 is the rapid rise of artificial intelligence and automation. Companies are reconfiguring their workforces to leverage AI for increased efficiency and reduced operating costs. This realignment and reduction is implemented even by companies reporting strong financial performance.

But it’s not just AI leading to workforce cuts. Complementing this technological shift are ongoing economic uncertainty, inflation, and higher interest rates, compounded by a chip shortage and rising energy costs. This mix is driving companies to cut costs and streamline operations for increased efficiency.

According to data compiled by Layoffs.fyi, an online tracker that keep tabs on job losses in the technology sector, 123,941 tech employees were laid off at 269 companies in 2025. The site also reports that 71,981 government employees were laid off by DOGE alone, with 182,528 total federal workers laid off.

Here is a list — to be updated regularly — of some of the most prominent technology layoffs the industry has experienced recently.

Notable tech layoffs in 2026

• Monday.com
• Microsoft
• Meta
• Cisco
• Cloudflare
• Oracle
• Atlassian
• Salesforce
• Amazon
• Ericsson

July 22, 2026: Monday.com cuts 20% of its workforce to restructure for the AI era

The company says the decision to cut 620 jobs isn’t about margins, but about creating a flatter organization built around AI agents, autonomous teams, and deeper customer engagement.

July 6, 2026: Microsoft cuts 4,800 jobs, primarily in sales and Xbox teams

As the company trims thousands of jobs, it’s also investing in embedded engineering teams and AI infrastructure. The layoffs come several weeks after the company offered 8,750 US employees voluntary retirement buyouts.

June 5, 2026: Tech industry cut 38,242 jobs in May, worst since 2024

AI was blamed for 40% of the job cuts in May, up from 7% in January, according to research by employment placement company Challenger, Gray & Christmas.

May 20, 2026: Meta cuts 8,000 jobs, around 10% of workforce

The cuts are expected to expected to hit Meta’s engineering and product teams the hardest, arriving as Meta pivots toward AI to boost efficiency across its organization, according to Yahoo Tech.

May 13, 2026: Cisco to cut nearly 4,000 jobs despite strong growth in AI, enterprise networking

Despite reporting positive financial news — including record third-quarter revenue of $15.8 billion, a 12% year-over-year increase — Cisco said it will eliminate almost 4,000 jobs.

May 7, 2026: Cloudflare to cut 1,100 jobs in AI-focused restructuring

About 20% of Cloudflare’s global workforce will be culled as the company pivots for the agentic AI era, Reuters reported.

April 1, 2026: Oracle to cut up to 30,000 jobs globally, putting enterprise support and roadmaps at risk

Oracle began laying off employees on March 31 in what could be the largest workforce reduction in the company’s history. Employees received termination emails at 6 a.m. local time with immediate system lockouts and no prior warning. (Note: in June, CNBC put the final layoff tally at 21,000.)

March 12, 2026: Atlassian cuts 1,600 jobs to fund AI and enterprise expansion

Atlassian will reduce its global workforce by approximately 10%, eliminating around 1,600 roles, as the collaboration software maker redirects capital toward artificial intelligence development and enterprise sales.

March 11, 2026: Tech layoffs surpass 45,000 in early 2026

A recent analysis by RationalFX found 45,363 job cuts globally so far this year—with roughly 68% or more than 30,000 occurring in the U.S. — highlighting ongoing workforce cuts even as many tech companies report strong revenue growth.

February 10, 2026: Salesforce lays off staffers as executive leadership churn continues

Salesforce has reduced close to 1,000 roles earlier this month across teams, including marketing, product management, data analytics, and its Agentforce AI unit, Business Insider reported, quoting employees familiar with the matter.

January 23, 2026: Amazon layoffs expected to disproportionately hit AWS and tech talent

As the market slows down, AWS and other Amazon units are preparing for another round of layoffs, which is expected to overwhelmingly impact tech talent. An email from HR leader Beth Galetti on Jan. 28 confirmed 16,000 job cuts.

January 15, 2026: Ericsson plans to shed 1,600 jobs in Sweden

 Ericsson lans to cut some 1,600 jobs in Sweden, the telecommunications equipment maker said doubling down on recent cost-saving measures that have helped it weather a prolonged downturn in telecoms spending, Reuters reports.

January 13, 2026: Meta plans to cut around 10% of employees in Reality Labs business

Meta plans to cut around 10% of the employees in its Reality Labs division who work on products including the metaverse, according to three people with knowledge of the discussions, according to The New York Times.

Layoffs in 2025

• Cisco
• Oracle
• Windsurf
• Intel
• Microsoft
• Crowdstrike
• HPE
• Autodesk
• HPE
• CISA
• Workday
• Salesforce
• Meta

Global tech-sector layoffs surpass 244,000 in 2025

Economic uncertainty, elevated interest rates, and AI adoption have driven workforce reductions across tech companies worldwide, according to a RationalFX report.

October 28, 2025: Amazon to cut 14,000 jobs across company

Amazon will reduce its overall workforce by 14,000, cutting layers of management across the company and hiring in some areas to support its “biggest bets”.

August 18, 2025: Cisco and Oracle to cut hundreds of Bay Area jobs

Tech companies Cisco and Oracle are cutting hundreds of jobs across the Bay Area. Cisco will eliminate 221 positions at its Milpitas and San Francisco offices, effective Oct. 13. Oracle is reducing 101 positions in Santa Clara on the same date 

August 5, 2025: 3 weeks after acquiring Windsurf, Cognition offers staff the exit door

Cognition, the AI coding startup that acquired rival company Windsurf three weeks ago, laid off 30 employees last week and is offering buyouts to the roughly 200 remaining employees on the team, reports The Information.

July 25, 2025, Intel to lay off 22% of workforce, CEO Tan signals ‘no more blank checks’

Intel will reduce its workforce to 75,000 employees by the end of 2025 as new CEO Lip-Bu Tan implements sweeping changes designed to transform the struggling chipmaker

July 8, 2025, Intel layoffs begin: Chipmaker is cutting many thousands of jobs

Intel has begun laying off employees across the company. CEO Lip-Bu Tan told workers back in April to expect major layoffs at Intel in the coming months as the chipmaker slashes costs and overhauls its organization after years of technical setbacks and falling sales.

July 2, 2025: Microsoft will cut 9,000 workers

Microsoft will lay off about 9,000 employees, a source familiar with the workforce cut told CNBC.  The cuts will reportedly affect less than 4% of Microsoft’s global workforce and will impact different teams, geographies and levels of experience. This is the latest in a string of cuts the tech giant has made this year.

June 17, 2025: Intel looks to factory layoffs to return to profitability

Intel will lay off up to 20% of its manufacturing sector employees starting in July, according to media reports, as the company looks for options as it seeks a return to profitability. The cuts reportedly will be made around the world, but some of the layoffs will be closer to home, according to a report in The Oregonian citing an internal company memo from Intel manufacturing Vice President Naga Chandrasekaran.

May 7, 2025: CrowdStrike to lay off 5% of staff

CrowdStrike announced a plan to cut about 500 roles, roughly 5% of its workforce, to streamline operations and reduce costs. The cybersecurity company will incur about $36 million to $53 million in charges related to the layoffs

March 6, 2025: HPE cuts 2,500 jobs, remains committed to Juniper buy

CEO Antonio Neri told Wall Street analysts that HPE would begin implementing a cost-cutting program involving layoffs of about 2,500 employees over the next 18 months. HPE employs about 61,000 people worldwide.

Feb. 27, 2025: Autodesk to lay off 9% of workforce

Software maker Autodesk is laying off 1,350 staff. With the rise of subscription and multi-year contracts billed annually, and self-service enablement, it finds it needs fewer sales staff, CEO Andrew Anagnost said in a message to employees. And with its cloud, platform, and AI products proving most profitable, it’s concentrating its staff and investments there.

Feb. 27, 2025: HP to lay off 2,000 more

As part of an ongoing restructuring, HP plans to lay off up to another 2,000 workers. In recent weeks, the company has tried — unsuccessfully — to do away with telephone support staff by forcing callers to wait for at least 15 minutes if they refuse to use self-service support resources online. The company swiftly backtracked, but wider job cuts are still on.

Feb. 21, 2025: CISA lays off 130

Government employees get laid off too: In this case, 130 workers at the US Cybersecurity and Infrastructure Security Agency are being shown the door as a result of a DOGE decision. Cybersecurity experts are concerned that the cuts will harm the international collaborations that CISA has fostered, quite apart from their concerns about the security of the DOGE layoff process itself.

Feb. 5, 2025: Workday lays off 1,750

As it moves to invest more in AI and international growth, Workday is laying off 8.5% of its workforce and disposing of unused office space. Some analysts fear the cutbacks will affect the company’s customer service — unless AI can pick up the slack.

Feb. 4, 2025: Salesforce lays off over 1,000

At the same time as it’s hiring sales staff for its new artificial intelligence products, Salesforce is laying off over 1,000 workers across the company, according to Bloomberg. As of June, 2024, the company had over 72,000 employees, according to its website. Salesforce did not comment on the report. In 2024 the company reportedly laid off around 1,000 staff too, in two waves: January and July.

Jan. 14, 2025: Meta will lay off 5% of workforce

Mark Zuckerberg told Meta employees he intended to “move out the low performers faster” in an internal memo reported by Bloomberg. The memo announced that the company will lay off 5% of its staff, or around 3,600 staff, beginning Feb. 10. The company had already reduced its headcount by 5% in 2024 through natural attrition, the memo said. Among those leaving the company will be staff previously responsible for fact checking of posts on its social media platforms in the US, as the company begins relying on its users to police content.

Tech layoffs in 2024

• Equinix
• AMD
• Freshworks
• Cisco
• General Motors
• Intel
• OpenText
• Microsoft
• AWS
• Dell

Nov. 26, 2024: Equinix to cut 3% of staff

Despite intense demand for its data center capacity, Equinix is planning to lay off 3% of its workforce, or around 400 employees. The announcement followed the appointment of Adaire Fox-Martin to replace Charles Meyers as CEO and the departures of two other senior executives, CIO Milind Wagle and CISO Michael Montoya.

Nov. 13, 2024: AMD to cut 4% of workforce

AMD will lay off around 1,000 employees as it pivots towards developing AI-focused chips, it said. The move came as a surprise to staff, as the company also reported strong quarterly earnings.

Nov. 7, 2024: Freshworks lays off 660

Enterprise software vendor Freshworks laid off around 660 staff, or around 13% of its headcount, despite reporting increased revenue and profits in its fourth fiscal quarter. The company described the layoffs as a realignment of its global workforce.

Sept. 17, 2024: Cisco lays off 6,000

After laying off around 4,200 staff in February, Cisco is at it again, laying off another 6,000 or around 7% of its workforce. Among the divisions affected were its threat intelligence unit, Talos Security.

Aug. 20, 2024: General Motors lays off 1,000 software staff

More than 1,000 software and services staff are on the way out at General Motors, signalling that it could be rethinking its digital transformation strategy. In an internal memo, the company said that it was moving resources to its highest-priority work and flattening hierarchies.

August 1, 2024: Intel removes 15,000 roles

Intel plans to cut its workforce by around 15% to reduce costs after a disastrous second quarter. Revenue for the three months to June 29 stagnated at around $12.8 billion, but net income fell 85% to $83 million, prompting CEO Pat Gelsinger to bring forward a company-wide meeting in order to announce that 15,000 staff would lose their jobs. “This is an incredibly hard day for Intel as we are making some of the most consequential changes in our company’s history,” Gelsinger wrote in an email to staff, continuing: “Our revenues have not grown as expected — and we’ve yet to fully benefit from powerful trends, like AI. Our costs are too high, our margins are too low. We need bolder actions to address both — particularly given our financial results and outlook for the second half of 2024, which is tougher than previously expected.”

July 4, 2024: OpenText to lay off 1,200

OpenText said it will lay off 1,200 staff, or about 1.7% of its workforce, in a bid to save around $100 million annually. It plans to hire new sales and engineering staff in other areas in 2025, it said.

June 4, 2024: Microsoft lays off staff in Azure division

Microsoft laid off staff in several teams supporting its cloud services, including Azure for Operations and Mission Engineering. The company didn’t say exactly how many staff were leaving.

April 4, 2024: Amazon downsizes AWS in a fresh cost-cutting round

Amazon announced hundreds of layoffs in the sales and marketing teams of its AWS cloud services division — and also in the technology development teams for its physical retail stores, as it stepped back from efforts to generalize the “Just Walk Out” technology built for its Amazon Fresh grocery stores.

April 1, 2024: Dell acknowledges 13,000 job cuts

Dell Technologies’ latest 10K filing with the US Securities and Exchange Commission disclosed that the company had laid off 13,000 employees over the course of the 2023 fiscal year; it characterized the layoffs and other reorganizational moves as cost-cutting measures. “These actions resulted in a reduction in our overall headcount,” the company said. A comparison to the previous year’s 10K filing, performed by The Register, found that Dell employed 133,000 people at that point, compared to 120,000 as of February 2024. Dell announced layoffs of 6,650 staffers on Feb. 6, but it is unclear whether those cuts were reflected in the numbers from this year’s 10K statement.

See news of earlier layoffs.

Traditional phishing techniques are in decline as a result of the disruption of the Tycoon2FA phishing-as-a-service (PHaaS) platform, Microsoft said in a new report, “Email threat landscape: Q2 2026 trends and insights”.

“Phishing volume linked to the platform fell 92% from pre-disruption averages, including QR code phishing and CAPTCHA-gated phishing both declining from their March highs,” the company wrote in the report.

The takedown reduced activity across multiple phishing categories, forcing attackers to shift to newer delivery methods.

Riding this shift in were a few notable phishing campaigns, including an automated business email compromise (BEC) campaign that reached 42,000 organizations in under three hours, and a multi-stage phishing campaign that used nested email (EML) files, calendar invitations, and a Microsoft authentication redirect to deliver malware.

To counter phishing attacks, Microsoft recommends blocking emails containing known bad URLs/ subject fields, enabling password-less authentication methods, or moving to MFA for accounts that still require passwords.

Tycoon2FA disruption sent attackers exploring

The take-down of Tycoon2FA forced its operators to abandon portions of their infrastructure and rework hosting, domain registrations, and delivery mechanisms.

“After falling 15% in March and another 22% in April, Tycoon2FA-linked phishing volume dropped 74% in May to just 1.5 million messages, then fell another 20% in June to 1.2 million, by far the lowest monthly volumes observed in at least a year,” Microsoft said.

The decline extended to QR Code lures and fake CAPTCHA pages, two phishing techniques in which Tycoon2FA accounted for 12% and 14% of industry activity in June, respectively. This indicated that the platform’s customer base had not been able to migrate to a replacement infrastructure.

But cutting off one head of the hacker hydra only gave rise to new tactics elsewhere.

The adaptation came in the form of using Microsoft Teams as a social engineering channel. Attackers established conversations to build trust before attempting credential theft or delivering malicious payloads. “Teams-based phishing volume climbed steadily throughout Q2, with the average number of detected attacks rising 19% from March to April, holding roughly flat into May (+1%), then increasing another 10% into June,” Microsoft said.

Microsoft also observed a highly automated BEC campaign that reached over 67,000 users using scripted emails, Amazon Simple Email Service (SES), and engagement tracking, alongside a separate phishing campaign targeting 107,000 users that abused Microsoft’s authentication flow and trusted cloud services, including Teams archive recording and ICS calendar invite, to disguise malware delivery behind legitimate infrastructure.

Phishing changes but the defense doesn’t

While QR Code and Captcha-based phishing attacks dropped significantly in the second quarter, business email compromise (BEC) charted jumped 121% between March and April, before dropping down again in May.

QR Code phishing represented 8.3 million attacks in June 2026, down from a peak of 18.7 million in March. Similarly, Captcha-gated phishing fell from 12 million attacks in March to 2.2 million in June.

BEC attacks hit 9 million in March, falling to 3.9 million in June.

But even as these phishing classics lost momentum and newer techniques emerged, Microsoft’s defensive advice remained rooted in the basics. It noted organizations should complement email filtering with phishing-resistant authentication such as passkeys and phishing-resistant MFA to reduce the effectiveness of credential theft campaigns.

The company also recommended strengthening Exchange Online Protection and Microsoft Defender for Office 365 with capabilities such as Safe links and Zero-hour Auto Purge (ZAP), in which malicious emails already delivered to mailboxes are removed before they are read, alongside enforcing password-less authentication methods like Windows Hello, FIDO keys, and Microsoft Authenticator.

Microsoft concluded its report with a list of indicators of compromise (IoCs) from the threats observed in the quarter to support detection efforts.

This article first appeared on CSO.

Every CIO I speak with today is wrestling with some version of the same question: How do we move faster with AI and deliver on our commitments?

It’s an understandable concern. Boards and CEOs are asking about AI. Business leaders are experimenting with use cases. Employees are discovering tools daily, while technology vendors promise unprecedented gains in productivity, innovation, and competitive advantage.

After hundreds of conversations with technology executives over the past year, I’ve become convinced that speed isn’t the real issue. The organizations pulling away from the pack aren’t necessarily adopting AI faster than everyone else. They’re executing more effectively — a subtle distinction that represents one of the defining leadership challenges of the AI era.

Technology has never been the hardest part of transformation. People, priorities, culture, and operating models are the biggest challenges. The ability to translate bold boardroom aspirations into thousands of thoughtful decisions made every day by architects, engineers, product managers, analysts, and business leaders is where competitive advantage is created. AI may be accelerating the pace of change, but it hasn’t changed that fundamental truth.

I’ve met plenty of executives who are exceptional in the boardroom. They know how to frame a vision, influence a board, and build confidence among investors and business leaders. I’ve also met remarkable technologists who instinctively understand the architectural decisions, engineering tradeoffs, and implementation details that determine how great ideas become reality. Modern CIOs, however, must move comfortably between both worlds. Afshean Talasaz is one who stands out among this rare breed.

Long before becoming CIO of Colonial Pipeline, Talasaz built his career from the ground up as a business professional, data scientist, and technologist. He has designed enterprise platforms, built AI capabilities, led technology organizations, and partnered closely with executive leadership teams on business transformation. Today, as an executive in residence with our Practitioners for Practitioners (P4P) community, he helps CIOs and business leaders navigate one of the most significant technology shifts of our generation.

While Talasaz brings deep knowledge of data and AI to the table, his greatest strength is his ability to create strategy and connect it with execution. He can spend the morning discussing enterprise reinvention with the board and the afternoon debating architectural principles with the teams responsible for bringing that vision to life.

That versatility gives Talasaz a unique lens on how CIOs can deliver value with AI.

Software companies have a term for engineers who understand every layer of the technology stack: full-stack developers. Listen to Talasaz and it becomes evident that the AI era requires something similar from technology leaders: a full-stack CIO.

The full-stack CIO: Leading with clarity

A full-stack CIO understands how every layer of the enterprise influences the next. They recognize that every strategic priority becomes a portfolio investment, every investment shapes an operating model, every operating model influences architecture, every architecture choice informs product decisions, every product decision shapes engineering priorities.

The best CIOs understand both ends of that journey. The extraordinary ones understand everything in between.

And those who execute best lead with clarity, Talasaz says.

“Everyone, from executives to middle managers to the people writing code, should be able to explain what we’re trying to achieve,” he emphasizes. “Clarity isn’t that we’ve handed out the PowerPoint. It’s that people genuinely understand where we’re going and can articulate it in their own language.”

One of the unintended consequences of the AI boom is that organizations are beginning to confuse activity with alignment. They have AI councils, AI governance committees, AI innovation labs, AI centers of excellence, AI pilots, and AI roadmaps. Yet if you stop ten people in the hallway and ask a deceptively simple question, What business problem are we actually trying to solve? you’ll often hear ten different answers.

As a result, architects optimize for one objective while product teams optimize for another. Business units pursue opportunities that seem perfectly reasonable from their perspective. Engineers make thoughtful technical decisions based on the information available to them. Individually, none of those decisions are necessarily wrong. Collectively, however, they create organizational drift. AI doesn’t create that problem. It simply accelerates the consequences.

And while AI can be a force multiplier for the positive when every decision is guided by a shared understanding of where the organization is headed, it can also be a force multiplier for the negative, resulting in an organization simply moving faster in different directions.

“When we have the fundamentals right, the tech infrastructure, the operating models, the nuances of how our business actually runs, we get the impacts of AI in a positive way,” Talasaz says. “When we don’t have those in place, AI can amplify the gaps or mute the benefits.”

At a time when so much of the conversation surrounding AI is focused on algorithms, agents, and automation, it’s an important reminder that organizations don’t execute strategy; people do.

Reducing organizational friction

Most executives are familiar with the concept of VUCA that characterizes today’s business environment. But Talasaz stresses the importance of turning this concern inward: “If the world outside our organizations is becoming more volatile, uncertain, complex, and ambiguous, what are we, as leaders, doing to the inside of our organizations?”

Leaders spend enormous amounts of time helping their organizations respond to external disruption but comparatively little time asking whether they are inadvertently re-creating those same conditions internally in response to those external needs. Are we reducing uncertainty or introducing more of it? Are we simplifying work or adding unnecessary complexity? Are we helping people focus on what matters most, or asking them to navigate competing priorities and shifting expectations?

Talasaz refers to this phenomenon as double VUCA — something I’ve witnessed repeatedly while working with CIOs over the past decade. Organizations often assume they’re struggling because of technology limitations when the real constraint is organizational friction. Teams wait for decisions. Priorities shift faster than roadmaps. Governance grows heavier. New committees are formed to solve problems created by existing committees. Everyone is working harder, yet the organization somehow feels slower.

AI amplifies both outcomes. Organizations with clarity become dramatically more effective because AI accelerates good decisions. Organizations without clarity simply accelerate confusion.

Operating model as strategy enabler

AI governance is one way to achieve greater clarity, but as Talasaz says, governance shouldn’t primarily exist inside policy manuals that few people read.

Instead, AI governance should be embedded in the daily rhythms of the organization, shaping how teams collaborate, how decisions are made, how products move from ideas into production, and how innovation happens safely without requiring constant escalation. In other words, it’s all about your operating model.

“If you had to pick one thing that isn’t technology, your operating model is the most important element for executing data and AI at scale,” he says.

The best operating models create enough clarity that capable people can make thousands of decisions independently and confidently, without having to wait for permission. By embedding good governance into the way it works, the organization becomes faster.

This advice echoes something I’ve heard repeatedly from some of the world’s most respected CIOs: High-performing organizations aren’t built on tighter control; they’re built on greater trust, supported by clear principles, shared expectations, and operating models that enable responsible decision-making at every level of the enterprise.

Talasaz points out that technology leaders tend to speak in terms of transformation. He suggests CIOs consider a different word: reinvention.

As he explains, transformation implies replacing what exists today with something new. Reinvention starts with a more clear-eyed and practical premise: Some things absolutely must change; others represent years, sometimes decades, of accumulated expertise, customer trust, operational discipline, and competitive advantage.

Reinvention is about building on those strengths while also creating new ways to deliver value. The leaders making the greatest progress in their AI journeys seem to recognize that it’s less about abandoning the past than thoughtfully preparing the organization for the future.

Closing the gap between strategy and execution

Full-stack CIOs must be able to map out the various layers of execution and planning that need to be done at every level of the organization to be successful. To help with this, Talasaz has developed a data and AI framework that draws on his own experiences “from the keyboard to the boardroom.”

As Talasaz sees it, too many organizations have been doing good work in isolation. “They’re doing a lot of the right things,” he says. “They’re just not connected.”

Boards may be discussing growth while business leaders redesign customer experiences. Product teams may be prioritizing new capabilities while architects modernize platforms. Data teams may be improving quality while engineers focus on delivery. Every group makes meaningful progress within its own domain, yet somewhere between strategy and execution, the connective tissue begins to disappear. Talasaz’s framework brings those connecting points to the forefront.

Crucially, the framework doesn’t begin with technology or AI or even with data. It begins with the experiences the organization hopes to create for its customers, employees, or partners. Many AI initiatives start with the question, “What can this technology do?” And indeed, we need to be inspired by the possibilities and challenged to think differently by what the technology can do. But, Talasaz emphasizes, we also need to ask what experiences we need to deliver for our business and how the technology can make that a reality.

The framework challenges CIOs to answer that question first. Only after the experiences are clearly defined does the conversation move to the capabilities required to deliver it, the business activities that support those capabilities, the AI and data products that enable them, and finally the data foundation that makes everything possible.

This shift in perspective ensures that, rather than allowing technology investments to search for business value, the business experience defines the technology required to deliver it. For CIOs, that’s more than a planning exercise. It’s a fundamentally different way of leading.

Over the coming months, the P4P community will be convening a series of small CxO roundtables to explore these issues and work more deeply with Afshean Talasaz’s 6×6 Data and AI Framework. CIOs and other enterprise leaders interested in participating are welcome to reach out to me directly.

I haven’t slept much in the past few weeks. Not because of some theoretical cyber risk that keeps many executives awake, but because reality just delivered a real wake-up call to our industry — a call that every executive must answer, now.

Imagine this: A major global enterprise, a company most of us interact with indirectly every single day, wakes up to find its entire digital environment obliterated. Thousands of employees in dozens of offices and remote locations are suddenly offline. Customers are cut off, supply chains grind to a halt and regulators are notified with a chilling admission: “We have no idea when we’ll be back.”

This wasn’t ransomware. There was no negotiation, no decryption key to buy, no easy way out. It was destruction — deliberate, coordinated and geopolitically motivated — not monetary.

As a chief customer officer who’s worked with countless customers on cyberattack risks, my perspective hits a bit differently than a CISO or a CTO. I see the aftermath, not just the attack surface. I see the faces behind the tickets, the operations team locked out of their own systems, the support agent answering panicked calls at dawn. And I ask: How many organizations have actually stress-tested their response to this scenario — not a hypothetical, but this very real, lights-out event? Here’s what every leader needs to confront today:

Recovery is not just a technical exercise

The first assumption to break during a real crisis is the belief that recovery is purely technical.

Many organizations have done tabletop exercises and have a backup and recovery playbook, so they feel prepared. They can point to backup windows, retention schedules and immutability controls. The moment a true blackout happens, a different reality surfaces. The people who own the recovery steps either do not know each other, lack the authority to make decisions without supervisor approval or need guidance from offline systems.

The reality is that technical infrastructure almost always holds up better than human infrastructure. Organizations have built their recovery strategy around the assumption that someone competent will be awake, available and empowered when a cyber event happens.

Still, backups are only as good as their independence. Let’s be blunt: If your recovery infrastructure shares identity, authentication or network trust with your Microsoft tenant (such as Azure, Microsoft 365 or Teams), you don’t actually have a recovery plan; you have a false sense of one — and a liability. A recent survey found that while 90% of organizations express confidence in their ability to recover from a cyber incident, fewer than one in three ransomware victims fully recovered their data.

True resilience means immutable, air-gapped backups, untouchable by the same compromise. Anything less is an illusion. I talk to customers about their recovery plans constantly. The customers who have rehearsed all scenarios sleep soundly. Those who haven’t? They’re rolling the dice.

Most business continuity plans ignore ‘total blackout’

I’ve reviewed hundreds of business continuity plans. Almost all assume partial failures — a region, an application, a data center. But what if every system, in every country, goes dark simultaneously? That’s an entirely different playbook. If your team hasn’t run a drill for a global, simultaneous outage, you’re not prepared. The probability is low, but the cost of being unready is existential.

Connected devices, OT systems, field hardware, partner integrations — they all plug into your enterprise network. When the core collapses, it’s not just IT at risk. It’s operational technology, physical safety systems and in regulated sectors, potentially human lives. Understanding and testing those interdependencies is non-negotiable.

This is also where boards need to change the conversation. A study found that only 5% of companies have cybersecurity experts on their board of directors. Recovery time objectives (RTOs) should not be buried in technical appendices. It’s all jargon to boards. That makes translation essential. RTOs must be explained in terms of business impact. “We can recover in four hours” is a technical statement. “Every hour of downtime costs us $2.3M and creates regulatory exposure in three jurisdictions” is a board statement.

That is the level of clarity leaders need.

The most prepared organizations do not wait for an incident to educate the board. They bring the conversation forward proactively. They frame recovery in business terms: revenue, regulatory standing, customer trust and brand reputation.

The most effective framing is often simple. Show the most critical systems. Show what happens if each one is down for one hour, four hours, 24 hours and 72 hours. Show the current recovery capability against each and then show the gap.

If your board is not demanding real answers, your business continuity strategy is likely underfunded and your business is exposed. This is a risk conversation worth forcing because the consequences do not stay inside IT. They can show up in customer churn or missed revenue and ruin an organization’s reputation.

Threat intelligence must be actionable, not archived

Geopolitical attacks, hacktivist campaigns and nation-state targeting aren’t abstract threats. They are active risks, and that intelligence cannot languish in the security team’s inbox. Executive leadership must be looped in — and immediately — so gaps can be closed before they’re exploited. Too often, intelligence enters the security operations function and never reaches the teams responsible for recovery infrastructure or executive decision-making.

If a threat actor is targeting a specific class of backup agents, the team responsible for those agents needs to know now, not two weeks from now. If intelligence suggests destructive activity against a sector, recovery owners need to validate isolation, access paths and restoration procedures immediately. If geopolitical tension increases the likelihood of targeting, executive leadership needs to understand what exposure exists and what actions are being taken. The organizations that survive aren’t just the best at incident response. They’re the ones who anticipated, rehearsed and invested before the attack.

Part of investing in a recovery strategy requires closing the loop between signal and action. The most prepared organizations have already mapped their critical recovery dependencies to specific threat categories. When intelligence touches one of those categories, there is a named owner and a clear set of actions. No guessing or forwarding emails into the void is needed because the distance between the warning and the employees’ ability to do something is shortened.

Looking ahead, the conversation will continue to evolve beyond traditional cyber response. Because in an AI-enabled enterprise, the new question is whether the data within those systems can still be trusted. When AI systems make decisions based on enterprise data, the attack surface becomes the data’s accuracy. A threat actor who quietly corrupts a dataset over 90 days before a recovery event has done more damage than just downtime. They can poison the inputs driving decisions across the business.

Regardless of how AI will change threat intelligence and cyber response, these principles remain the same. Know your problem, whether structural or technological. Ensure your human infrastructure keeps pace with your technical infrastructure, with clear cross-functional ownership and the tools and knowledge to act autonomously. Communicate with your boards often — and correctly.

Let’s not wait for the next headline to ask, “Are we ready?” Have those conversations now. Test your assumptions. Close your gaps. Because in today’s threat landscape, resilience isn’t IT’s job — it’s everyone’s mandate.

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The traditional methods of measuring success no longer tell the full story. Here’s what should replace them — and why.

In brief:

• AI is transforming software as a service (SaaS), and the old ways of keeping score no longer apply.
• Smart companies are evolving new metrics that provide deeper insight into how AI-native software is performing in a new marketplace.
• These changes impact everything from pricing to valuations.

The transformation of the software-as-a-service (SaaS) industry toward AI-native operating companies is rapidly changing the unit of value across the industry.

The traditional metric of seats — which measured access — is rapidly giving way to credits designed to measure work performed. This evolution is upending the industry in multiple ways, impacting everything from pricing to enterprise valuations.

While many companies still cling to seat-based metrics to measure growth, efficiency and durability, the future is likely to be one in which companies utilize a credit-centric metrics framework, with seats and outcomes as the bookends of a spectrum.

Why do software companies need new metrics?

Why the rethink, and why now? There are five major forces that are driving this shift:

1. The unit of value is changing. Seats measured who could access software, and credits measure what the software actually does. But in an AI-native world, agents don’t have seats; they have workloads. Over the past 18 months, every major SaaS platform has moved to some forms of credit or consumption unit.
2. The cost of goods sold (COGS) is exploding. AI inference adds real per-unit costs that scale with usage. In an AI-native world, software companies can’t scale to infinite users at near‑zero marginal cost as before.
3. Buying is moving up the org chart. AI-native applications shift purchasing to higher-level operators — such as line-of-business leaders or chief operating officers — which expands the market from software budgets to labor budgets. And because AI agents replace services as well as software, the total market opportunity is 3x to 10x larger than traditional SaaS.
4. Time to value (TTV) is collapsing. With AI-native tools, customers start seeing meaningful results in weeks rather than quarters. Onboarding and setup are fast, workflows are pre-built, and there’s no need for extensive customer success or professional services — dramatically reducing implementation time and costs.
5. Retention is bifurcating. AI forces clarity in a way that traditional SaaS couldn’t. Products that can provide value become even “stickier” and retain customers. Those that don’t churn faster. In an AI-native marketplace, the middle disappears.

How this shift is impacting pricing

Given how AI-native software is transforming the market, the shift to more variable pricing options is inevitable.

Seats won’t go away completely. Subscription pricing based on the number of users is stable and predictable and will continue to work for some customers. Tokens — the use of pass-through pricing for underlying compute — will fit those customers where the AI feature is commoditized or the buyer wants transparency into costs.

Credits will likely become the dominant architecture because they provide a simple metric for both customers and providers. The vendor sets the conversation ratio between credits and underlying compute, shielding the customer from inference cost details. Credits are easy to understand and can be packaged into annual contracts for multiple features and products.

Finally, the industry will likely see some move toward outcome-based pricing for results such as resolved tickets, recovered revenue or qualified leads. This strategy will mostly be limited to verticals where it is easy to prove AI impacted the result.

Where a software vendor sits on this spectrum is a signal of differentiation and pricing power. Credits are where most defensible AI-native businesses are landing because they balance customer predictability with vendor margin control.

How AI upends classic SaaS metrics

When SaaS was in its infancy, companies settled on key metrics designed to answer a small set of core questions. Are we growing? Are customers using the product? Are we retaining and expanding accounts?

But as AI upends software itself, it is also requiring companies to adopt new metrics to track success. These new metrics fall into three primary buckets, rebuilt around the pricing spectrum described earlier and the trend toward credits as the primary frame:

Revenue composition

• Committed credit annual recurring revenue (ARR) vs. burndown ARR: Measuring the credits sold on annual commitment vs. those consumed and replenished. This is the single most important split for valuation. Committed credits behave like subscription and burndown behaves like usage.
• Credit utilization rate: The percentage of purchased credits consumed per period. This is a leading indicator of renewal sizing.
• Credit burn velocity: How fast is a customer consuming their credits, and is that consumption increasing or decreasing quarter over quarter? This metric predicts expansion or contraction before it shows up in ARR.
• Effective price per credit: The real revenue per credit after discounts, overage and rollover, which can detect revenue leakage and help companies set smarter guide rails.

Margin reality

• Credit margin: The gross profit the company earns per credit after subtracting inference costs. This is the core economic unit for AI-native, usage-based businesses — the replacement for gross margin per seat used in SaaS.
• Inference-adjusted gross margin: By carving out AI inference costs separately in the P&L statement, you can see true AI margins, avoid hiding deterioration inside blended SaaS margins, and clearly distinguish AI economics from legacy SaaS economics.
• Compute leverage ratio: This metric measures how efficiently the business converts compute spend into revenue. It shows whether your AI margins are improving as you scale.
• AI-adjusted “Rule of 40”: This updated metric recalibrates the traditional growth and profitability benchmark to account for AI’s lower gross margins and variable inference costs, giving a more accurate picture of business health for AI-native companies.

Behavioral and value signals

• Time-to-first outcome: Replaces traditional onboarding metrics. Tracks how fast a customer reaches their first measurable result.
• Adoption: AI-native adoption is measured by workflow penetration and active agent density, not seat count. As AI replaces human-driven usage, the unit of adoption shifts from people to automated workflows and agents.
• Net credit retention (NCR): Credit-volume retention across the customer base, tracked separately from net recurring revenue to avoid price-change impact.

Along with these new metrics, the industry’s transformation is prompting companies to retire or recalibrate old SaaS measures, including per-seat ARR as a primary key performance indicator (KPI), traditional magic number calibrated to subscription dynamics, unadjusted Rule of 40, customer success metrics tied to human touchpoints, and blended gross margin without AI COGS carve-outs.

What does this mean for enterprise value calculations?

As the internal metrics of success change, so do the ways the investment community measures growth and long-term viability.

Increasingly, a company’s valuation multiple depends on whether its revenue behaves like committed subscription ARR or volatile usage ARR, and the commit‑to‑burndown ratio is the metric investors use to decide where the company fits.

For example, a business with 80% committed credit ARR could trade closer to subscription comps and one with 80% burndown could trade closer to usage comps even though both have the same types of customers. Being able to proactively explain the commit‑to‑burndown mix can help companies avoid undervaluation.

In addition, utilization is expected to replace net promoter scores and seat usage as the primary predictor of churn or expansion. Low utilization guarantees downsizing at renewal, so companies must track utilization cohorts the same way SaaS tracks logo retention cohorts today.

We’re also seeing an inversion of the operating model, with R&D and COGS moving up the P&L and sales and marketing (S&M) and customer success (CS) moving down or sideways. The net operating leverage profile is structurally different from classical SaaS, and the cost-to-scale curve looks different too.

Finally, credit margin engineering is a hidden value-creation lever. The gap between price per credit and cost per credit is set by the software vendor and can be optimized. Most operators have barely started managing this rigorously, and the ones who do will pull away on margin.

What this means for leaders, boards and investors

The shift from classic SaaS metrics to new AI‑native measures isn’t cosmetic. It represents the seismic change the industry is experiencing as AI matures and transforms products and organizations.

While these metrics — and perhaps others yet to be determined — may evolve over time, there is no doubt they are already changing how AI companies allocate capital, price products, incent sales teams, evaluate performance and communicate with investors.

It’s important to remember that SaaS metrics were practical tools for a specific era of software. As that era draws to a close, winning companies will choose new metrics that shape behavior and drive smart decision-making.

The views reflected in this article are the views of the author and do not necessarily reflect the views of Ernst & Young LLP or other members of the global EY organization.

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Google CEO Sundar Pichai has sought to allay concerns over the delayed release of the Gemini 3.5 Pro large language model. He dodged questions about it in Google’s quarterly earnings call on Wednesday by focusing on the company’s next frontier AI model, Gemini 4, and plans to release subsequent LLMs at an almost monthly cadence.

His comments came a day after Google unveiled Gemini 3.6 Flash and 3.5 Flash Cyber but offered no update on the release of Gemini 3.5 Pro, the company’s delayed flagship reasoning model that many developers had expected to arrive weeks earlier.

Google introduced the Gemini 3.5 family at its annual I/O conference, promising to release the Pro model in June. That timeline has since slipped, with Bloomberg suggesting Gemini 3.5 Pro is months late because the model’s coding performance is falling short of internal expectations, especially when compared to better performance by similar models from OpenAI and Anthropic.

Instead of revisiting the Gemini 3.5 Pro timeline, Pichai used the earnings call to shift the discussion toward Gemini 4, when asked about how his company planned to navigate an increasingly competitive race to release frontier AI models by to Barclays Investment Bank analyst Ross Sandler.

“We are creating a baseline on top of which you will see us rapidly iterate on subsequent model releases. And so picking up pace and releasing models almost at a monthly cadence is part of our road map as we are building Gemini 4 as well,” Pichai said during the call.

Sandler’s question followed one from JPMorgan Chase & Co analyst Douglas Anmuth, who asked Pichai if Google was releasing frontier AI models frequently enough to keep pace with rivals OpenAI and Anthropic.

Pichai had responded to Anmuth’s question that Google remained confident of competing at the frontier and was investing heavily in a larger Gemini 4 base model.

Analysts, though, aren’t as confident as Pichai.

While delays to Google’s frontier model roadmap have not triggered an exodus of existing customers, either because of high switching costs or because many enterprises already running multi-model architectures, they have made CIOs evaluating AI platforms more cautious about making new commitments, said Bhupendra Chopra, chief revenue officer at IT consulting firm Kanerika.

A monthly model release cadence could prove to be a double-edged sword for enterprises and their CIOs.

While a monthly release cadence could help enterprises gain faster access to improvements in model performance, cost and capabilities, it will also require CIOs to invest more heavily in testing, governance and version management to safely adopt those updates, said Sanchit Vir Gogia, chief analyst at Greyhound Research.

Similarly, Pareekh Jain, principal analyst at Pareekh Consulting, said enterprises will embrace a faster release cadence only if each successive model delivers measurable improvements in performance, cost or safety, rather than simply changing version number.

The challenge for CIOs, Jain said, is not just keeping up with model releases; it’s deciding whether each new version is worth the cost of validating it.

This article first appeared on InfoWorld.

I have worked alongside enterprise technology for more than 30 years and watched AI evolve from a lab experiment into the modern boardroom’s core focus. However, the last few years of implementing AI alongside our customers have delivered our most profound reality checks.

The initial hype has faded, leaving CIOs to drive real enterprise value. Based on my experience implementing Google, OpenAI and Anthropic technologies, here are the fundamental, technology-agnostic lessons every leader must anchor their strategy around.

AI as a leadership multiplier

The most common tactical error we see is treating AI as an isolated technology project. What I have observed among our customers is that true success does not come from organizations that define a standalone “AI strategy,” but rather from those leaders that integrate AI into their business strategy.

When our customers isolate AI and define an AI strategy, it inevitably treats it like a “technological toy” to experiment with. This approach yields fragmented, orphaned initiatives that fail to scale because they are fundamentally disconnected from their core corporate objectives. What I learned is that AI is not the ultimate destination; it is a powerful catalyst. We have replaced “What can AI do for our customers?” with a more strategic question, “How does AI accelerate their existing business goals?”

Think of AI like electricity. No modern corporation designs a standalone “electricity strategy.” Instead, all companies route it invisibly across the entire organization to illuminate offices, power production lines and drive communication. AI must be woven into the enterprise fabric in the exact same way, acting as an underlying utility that supercharges your existing operational model.

Integrating AI into the broader business strategy also dictates how we measure success. It forces a shift away from short-term tech vanity metrics and anchors the technology into a long-term roadmap.

When AI remains trapped within the IT department of our customers, we notice that it is relegated to a mere “software experiment.” To become a true competitive advantage, we observed that AI requires intense cross-functional orchestration. This perspective does not diminish the merit of the technical team; their expertise is fundamental for establishing the architecture, data governance and tools your enterprise requires. However, while IT builds the foundational infrastructure, it lacks the organizational authority to decide what should be built on top of it. Only the CEO or the owner of the company can step in to ensure AI leaves the “toy project” phase and integrates into the DNA of the organization.

The requirement for top-down, executive ownership stems from three critical realities observed in the field:

• Silo-smashing and data collaboration: True enterprise AI is data-hungry and that data lives across disparate business lines, finance, operations, marketing and customer service. Only the CEO possesses the cross-functional authority to demand that data silos be dismantled.
• Cultural transformation and fear mitigation: AI triggers widespread anxiety over job displacement across all industries and hierarchies. When relegated to an “IT project,” resistance spikes as teams view it as a threat to their livelihoods. When I saw the CEO lead this cultural shift directly is when I noticed the best results.
• C-Suite education and strategic alignment: The mandate for AI capability cannot just be delegated downward; the transformation must begin at the very top. I have conducted more than 70 presentations for the Board of Directors and C-Level teams. These people need to be actively educated not on technical code, but on specific business use cases, return on investment (ROI) frameworks and how AI resolves core organizational bottlenecks.

PwC’s data found that only 12% of enterprises have achieved both cost and revenue benefits from AI. Those elite 12% succeeded precisely because their CEOs embedded AI extensively across strategic decision-making and cross-functional workflows. AI is simply too disruptive and too critical to be left exclusively in the hands of technical experts. If AI is not on the CEO’s weekly agenda, it is fundamentally missing from the company’s true strategy.

AI as a new operational framework

Traditional IT systems have operated on strict algorithmic certainty: if you input a specific set of data, the system executes an immutable line of code and guarantees the same, predictable output every single time.

AI completely breaks this paradigm. Because modern AI is built on probabilistic models, it does not execute static formulas; instead, it predicts the most likely correct response based on mathematical probabilities. This means that AI solutions carry an inherent, small percentage of uncertainty and variability. A prompt entered today might yield a slightly different, though contextually valid, output tomorrow.

Executive leadership and organizational cultures must be actively educated to accept and navigate this fundamental shift. Traditional quality assurance frameworks for software are designed for a 100% success rate. Applying this rigid standard to AI will paralyze your initiatives, keeping 80% of your projects trapped eternally in the pilot phase. This happened to us in a food and beverage company in Latin America a couple of years ago. After this experience, we started to include conditions in our contracts that tolerate statistical margins of error and still define the project as a success.

In terms of cost calculation, we had to teach CIOs and business managers to forget the monthly subscription model for AI and learn to manage the primary unit of exchange in modern AI: the token.

To understand AI costs, executives must understand how large language models process data. AI models do not read full words; instead, they break text, images or code down into “pieces” called tokens. As a baseline, every 100 words process as approximately 130 to 140 tokens. Because the major AI providers use the token as their currency, your business is billed dynamically based on the exact volume of tokens consumed by every query submitted (input) and every response generated (output).

Many leaders believe AI costs are fixed due to flat-rate enterprise tiers ($25–$30/user). This is a temporary illusion. These venture-capital-subsidized rates mask true operational costs and come with dynamic usage limits. Modeling long-term ROI on them guarantees a severe budget shock when true consumption pricing takes over.

The solution is not to halt AI adoption; doing so means losing your competitive edge. Instead, the cost per token must cease to be treated as a technical footnote relegated to the IT department. It must be elevated to a core business variable.

Risks in the AI adoption model

Since the beginning of the AI boom, I have seen all our customers making a critical tactical error that could cost them heavily in the medium term: they are focusing only on operational efficiency (reducing costs with AI).

I have observed that an alarmingly high percentage of companies remain trapped in pilot phases focused exclusively on short-term cost reduction. Bain & Company’s global Automation and AI Pathfinder Survey found that the largest share of companies measuring their AI initiatives (exactly 40%) realized cost reductions of 10% or less, heavily missing their internal targets. Our customers are putting too many resources and effort into marginal financial gains and in doing so, they are jeopardizing their most valuable assets: service quality, resilience and customer trust.

Utilizing AI solely to slash headcount or cut operational corners is a dangerous trap that introduces severe field liabilities. A financial service organization in Latin America announced that they saved $1 million in customer support by replacing humans with AI chatbots. However, the mid-term reality revealed a different story: a damaged brand reputation due to AI errors and an influx of frustrated clients fleeing because the automated system cannot handle special cases.

Putting a company on an extreme AI diet might make it look leaner on next quarter’s financial statement, but over-indexing on cost-cutting will ultimately leave the business too weak to compete when market dynamics shift. We are now inviting our customers to change the question from “How much money will AI save us?” to “How will we leverage AI to exponentially increase the long-term value of our enterprise?”

Deploying enterprise AI is a marathon, not a sprint, and the terrain changes with every mile. The organizations that thrive in this next era will be those that transition from fascination to discipline, treating AI not as a magic bullet for immediate savings, but as a core capability that demands rigorous governance, architectural foresight and cultural maturity. Navigating this shift requires moving past the theoretical hype and anchoring decisions in raw, field-tested reality.

As we continue to deploy these technologies across industries, the blueprint for success is being rewritten in real time. Let’s keep this conversation going as we map out the future of business intelligence together.

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Late in a large enterprise SAP transformation, the strategic governance conversations began to drift. Instead of executive decisions, we found ourselves debating whether the program needed dedicated testing, whether cutover required a full weekend, whether twenty Agile teams really needed coordination support and whether offshore resources were adding value at all.

The questions were not coming from the delivery teams. They were coming from the executive sponsor.

The sponsor had recently been elevated into a senior leadership role and had never sponsored a technology transformation at this scale. The challenge was not authority. The sponsor had every right to ask any question they wanted. The challenge was that strategic governance had quietly turned into a debate about delivery practices, because the sponsor did not yet have the transformation context to focus the conversation anywhere else.

This is not a story about a bad sponsor. The executive in this case was a capable senior leader with strong judgment and authentic intent. They had been placed into a role they had not yet been prepared for, and the pattern that followed was structural, not personal. It is one of the more common patterns I have observed across enterprise transformation programs, and one of the most consistently misdiagnosed.

Most program failures are not execution failures. They are sponsor mismatches.

When governance becomes a debate about delivery practices

When the sponsor does not understand what an enterprise transformation actually requires, governance forums stop functioning as decision bodies and start functioning as practice debates.

You see it in the questions that get asked. Why do we need a dedicated testing phase? Can the Build timeline be compressed? Why does cutover need a full weekend? Why do we need more Scrum Masters across 20 product teams? Can the US team simply work longer hours instead of using offshore resources? On one program, the sponsor suggested shifting the entire project’s working hours to India time, despite roughly 85 percent of the delivery organization being based in the United States.

None of these questions are unreasonable in isolation. Each one targets a real cost or timeline pressure. The problem is what is missing underneath them: an understanding of the operational risks the original choices were designed to mitigate.

When sponsors ask delivery-practice questions without that context, the program leadership team ends up defending the work instead of advancing it. Decision velocity drops. Trust between the program and its sponsor erodes. Senior delivery talent disengages from governance forums where the conversation never reaches the decisions they need made. What looks from the outside like an active sponsor producing engagement is, from inside the program, an active drain on the cycles needed to deliver.

The compounding cost is not unique to any single program. PMI’s research on executive sponsorship consistently identifies sponsor engagement quality, rather than sponsor presence alone, as one of the strongest predictors of project success. The visible symptom is debate. The actual cost is unmade decisions.

Authority is rarely the issue. Literacy is

When transformations stall under a mismatched sponsor, the diagnostic instinct is to question the sponsor’s authority. Are they senior enough? Do they have the cross-functional reach? Can they unblock?

In most of the programs I have led or advised, authority was not the limiting factor. The sponsor in the SAP program above had ample authority. They could unblock any decision the program needed. What had not been developed was the transformation literacy to know which decisions mattered, which were technical noise and which were execution risks that should not be optimized away.

This is what I have come to think of as the literacy problem. Sponsors elevated into transformation roles often have deep functional expertise (finance, operations, business unit leadership) but limited exposure to the distinct functions of PMO, organizational change management, agile delivery, testing and cutover, and how each one reduces a specific category of implementation risk. They are not expected to be SAP configuration experts. But they need enough transformation literacy to recognize which questions actually belong in a steering committee.

Harvard Business Review’s research on effective executive sponsorship has emphasized that sponsorship effectiveness depends as much on judgment as on authority. Judgment is where literacy becomes operational. A sponsor with authority but limited transformation literacy will optimize for speed and cost in ways that consistently underestimate risk. A sponsor with both will make the tradeoffs the program actually needs.

Prosci’s longstanding benchmark studies on change management have ranked active and visible executive sponsorship as the single greatest contributor to change success for two decades. The word that matters in that finding is active. Active sponsorship without transformation literacy can introduce real cost. Not because the sponsor is acting against the program, but because the optimization choices they make are based on incomplete information about what the program is built to protect against.

Shift the conversation from delivery practices to business risk

When the sponsor relationship is already in place and cannot be changed, the program leadership team has one move that consistently works: shift the conversation.

On the SAP program above, we stopped explaining why the testing phase existed. We started explaining the business risk of reducing it. We stopped debating the number of Scrum Masters. We started connecting delivery capacity to coordination across more than twenty Agile teams and the business cost of losing that coordination. We reframed offshore support as a way to maintain delivery momentum around the clock rather than asking the U.S. team to sustain fifteen-hour days.

The shift is from defending delivery practice to explaining business risk. The sponsor does not need to understand why testing takes the time it does. They need to understand what the program is exposed to if testing is compressed. They do not need to know how many Scrum Masters are statistically optimal for twenty Agile teams. They need to know what coordination breaks when the number is wrong.

This reframing accomplishes two things. First, it brings the conversation back to the level at which sponsors actually make decisions: tradeoffs between business outcomes and business risks. Second, it builds transformation literacy in the sponsor over time, almost as a byproduct. By the third or fourth iteration of business-risk-framed conversations, the sponsor begins to ask the right questions on their own.

In practice, this happens through small but deliberate moves. When the sponsor asks why a phase needs the time it takes, the program lead names two or three things that could go wrong if the time is cut and what each would cost the business. When the sponsor asks why a role is needed, the program lead names the work that would not get done without it. Every delivery-practice question gets converted into a business-risk answer.

The program leadership team’s job is not to make the sponsor an expert in SAP delivery. It is to provide enough transformation context so that executive decisions reflect both business priorities and implementation realities.

There are a few phrases I have used with executive sponsors over the years that capture the underlying issue. The sharpest one:

If the decision has to go above the sponsor, they are not the sponsor.

Sponsorship is defined by what the sponsor can decide without asking someone else. That is the test. Anything else is the appearance of sponsorship, not the substance.

For CIOs supporting enterprise transformation, the implication is direct. Sponsor selection, or sponsor preparation when selection is not an option, is not a hierarchy question. It is a transformation capability question. The same execution discipline that goes into defining decision rights, structuring governance and protecting delivery momentum should apply, with equal rigor, to assessing sponsor fit and building sponsor literacy before the program begins.

A sponsor does not need to be the technical expert. They do need to know when to trust the people who are.

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Four months of Claude Code — that’s all it took for Uber to burn through its entire annual budget for AI. Token after token, engineers embraced the platform with few control mechanisms tying costs to outcomes. The result was a budget runaway and a clear case study in how limited oversight snowballs into an AI blowout.

This is a phenomenon I like to call “shadow tokens” — AI credits paid for by the company but largely invisible to decision-makers. Too many engineers have the final say over how much they consume and, therefore, what it costs. This all-you-can-eat attitude is part of the reason why Microsoft is reportedly winding down many internal licenses across key engineering teams and why one in five organizations is missing its AI spend forecast by more than 50%.

And the trend is only accelerating. By 2028, Gartner predicts that AI coding costs (driven by this kind of ungoverned consumption) will be as much per developer as the salary companies pay that person.

LLMs and agents introduce a new class of variable cost that scales with behavior rather than headcount, putting enterprises on the hook for tools that balloon with workload. I don’t see this as enterprises overspending because they’re reckless — it’s down to a lack of managerial oversight, budget alignment that demands a proven return on investment, and engineer education on how much is too much.

Going forward, CIOs need to thread the AI needle between governance that encourages transparency and reasonable spend without stifling innovation.

When shadow tokens result in real costs

The issue is that AI isn’t a traditional line item. Previously, enterprise leaders onboarded software-as-a-service (SaaS) with a good idea of the total cost. An allocated software seat or annual contract was a known quantity. The cloud added some variation (with fluctuations depending on hosting size), but instances were still modelable. AI flips this status quo on its head — the unit of consumption is behavior and the cost is exponential.

And these specifics aren’t immediately apparent at pilot. Tools can appear inexpensive in controlled experiments yet unpredictably scale depending on session length, context window size, model selection and whether agents run in parallel. This is the fallacy of the $20-per-seat enterprise plan — tokens are charged separately at API rates with no ceiling. The final dollar value of any session is set by factors that finance can’t always model in advance, particularly when these decisions usually rest with the engineers themselves.

According to Deloitte, only 21% of organizations deploying agents have a mature governance model, a real concern because they’re token-eating machines. This is what was happening at Uber — Claude Code in agentic mode was autonomously reading codebases, planning changes across dozens of files and opening pull requests. Each step quickly adds up, with Anthropic’s own documentation noting that agents consume approximately seven times as many tokens as standard sessions.

This is shadow IT and shadow AI, evolved. This time, however, many leaders approved the tool in question without guardrails governing consumption. AI hype adds fuel to the fire and normalizes long sessions. Uber’s CTO, for example, described a company-wide shift toward “agentic software engineering” with employees “who are quietly experimenting, quietly shipping and quietly pushing things forward”. This is an exciting way to test the limits of what’s possible, certainly, but it’s also a position that goes a long way to explaining how the company spent its annual AI budget by April.

Shifting the culture from usage to yield

Engineers haven’t done anything wrong here. In fact, they’re adopting and experimenting as instructed, with Uber creating leaderboards and ranking users by token consumption. More use led to a better ranking, reflecting a culture that lauds new ways of doing things. This behavior is known as “tokenmaxxing,” and its principal knock-on effect is shadow tokens — quantity-over-quality processes that leaders struggle to control until they’re fully realized in the budget. Of course, if management treats adoption metrics as performance metrics, then engineers can’t be blamed for using more tokens. The tension is that the teams driving adoption aren’t the ones managing spend.

None of this is meant to dismiss AI’s productivity possibilities and potential return on investment. Developers save 3.6 hours per week, achieve 60% higher pull request throughput and cut onboarding time in half with automation. Meanwhile, Uber shared that roughly 11% of live backend updates were written by agents with no human in the loop. However, these wins aren’t the problem — it’s that too many teams aren’t connecting input to output. I’ve spoken to admins who discovered their token spend had tripled in a single quarter after using heavier models or accidentally doubling up on agentic applications. Nobody knew until the financial damage was done.

Automation needs to happen sustainably with an eye on the bottom line. In my view, a much better metric for achieving this is AI yield — the measurable business or engineering output generated per dollar spent on tokens. Otherwise, without a feedback loop, even genuinely productive teams are flying blind.

Stopping token waste before an AI blowout

Creating that throughline between AI investment and token consumption starts with established financial metrics. This is possible via maximum spend limits (dictated by spend tagging, workload tiering and cost-per-output benchmarks) per team or project. Then, any additional allocation requires approval, closing the loop between the engineers spending the tokens and the leaders paying for them. AI isn’t cheap and teams should demonstrate a bang for their buck.

This is something we do with our engineering team at Hexnode. Resource allocation for Claude Code and Cursor is tied directly to ROI rather than letting consumption run open-ended. Given the pay-as-you-go nature of these tools, a firm usage limit per team offers simple but essential control.

Similarly, there’s room to apply some of the governance principles IT uses for device management. Things like policy enforcement, role-based access, real-time monitoring and automated alerts can flag usage behavior in advance. Uncovering such insights at the token layer works to identify power users and prevent excessive spending.

We also need to encourage cultures that praise outputs that actually achieve efficiency. AI applications that result in shipping faster, reducing rework and cutting review cycles are gains that should be celebrated. If your company hosts leaderboards, frame unnecessary token burn as wasteful rather than valuable. The organizations creating healthier consumption habits work with their engineers to understand not just how to use AI, but what responsible use looks like and what it costs.

This is a conversation teams need to have now. Anthropic just ended flat-rate pricing for programmatic workloads from June 15. Now, agents, continuous integration pipelines and automated workflows draw from a dedicated monthly credit pool billed separately from the subscription. Once that pool is exhausted, agent tasks either stop entirely or overflow to extra billing. Work can either get very expensive or grind to a halt for teams that aren’t prepared.

Getting a grip on shadow tokens means better rules and tools connecting spend to outcomes. Only by building the financial and cultural infrastructure that encourages sustainable adoption can leaders see what they’re spending, connect it to what they’re getting and course-correct before the costs become a crisis. Ultimately, shadow tokens are only invisible if we choose not to look.

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Agentic AI has advanced from the promises-and-pilots phase of 2025 to reality and rollouts in 2026. In the process, agentic AI is transforming virtually every aspect of customer relationship management (CRM), the platform that manages sales, marketing, and customer service.

“Last year, everybody was dipping their toes into the water,” says Keith Kirkpatrick, research director at The Futurum Group. This year, agentic AI has built momentum from the boardroom down, with companies recognizing that having an AI strategy is imperative. “They feel like if they don’t embrace it now, their competitors will.”

Harry Datwani, a principal at Deloitte Digital, adds that enterprise CRM customers have transitioned from “proof of concept” to “scale and execution.”

“Across sales, service, marketing, even in the commerce space, enterprises are really using AI and agentic,” he says.

“CRM in 2026 is undergoing a structural shift, not just an incremental evolution,” says Forrester analyst Kate Leggett, noting that AI is becoming a core part of CRM infrastructure, not just a feature or an add-on. According to Forrester data, around 70% of companies are already using AI in their CRM systems, she says.

Here are the hot AI-driven trends in CRM this year.

CRM becomes an action hero

CRM platforms have traditionally served as passive, static systems of record. Now, agentic AI is transforming CRM into a powerful, real-time solution that can act autonomously.

“Organizations that rethink CRM as a real-time, AI-powered system of action — and embrace agentic AI to handle complex, unpredictable work — are better positioned to deliver exceptional customer experiences,” says IDC analyst Neil Ward-Dutton. “This approach not only enhances satisfaction and loyalty but also drives operational efficiency and business agility.”

Forrester’s Leggett says that AI-powered CRM platforms have advanced from simple data capture to real-time decision-making and execution. Standard capabilities include next-best action recommendations, call summaries, automated updates, generated emails, knowledge creation, predictive forecasting, and deal scoring.

She adds that AI agents can now execute workflows, such as routing cases, sending follow-ups, and updating records (with human oversight). They can also handle end-to-end service and sales tasks autonomously, including case resolutions and sales development activities.

Agentic drives workforce changes

AI use in CRM systems is also impacting workforce strategies.

“We used to hire for deep expertise,” says Constellation Research analyst Liz Miller. “AI has commoditized expertise because I can take all that data from my CRM and train my AI models to go deep, to know everything about any product I’ve ever sold, from what has worked, what hasn’t, every price, every sale.”

Now, instead of hiring candidates with deep expertise, organizations are looking for candidates who can go wide. “I can train a model to have deep expertise. What I can’t train for is experience, because experience is what happens when a person has gone broad across a lot of different scenarios and faced complexity across that broad scenario,” says Miller.

For example, AI systems can automate many aspects of marketing, Miller notes, but there’s no substitute for creativity: people who can interrogate the data and come up with innovative marketing campaigns that connect with customers.

Terence Chesire, group vice president of ServiceNow CRM and industry workflows, says that organizations are using agentic AI to free up team members from repetitive, lower-value activities. Those employees have now moved to higher-level roles “where they’re working on transformational deals rather than just building a spreadsheet.”

“That’s what we’re seeing as super-exciting as organizations not just free up people, but the speed and effort reduction and the friction reduction in what they can do,” he adds.

Data layer takes center stage

AI’s promise to deliver actionable customer and marketing intelligence has placed even greater emphasis on the importance on sound data management practices for CRM.

“The light bulb has flashed on very brightly for our clients,” says Deloitte’s Datwani. “Everyone is talking about AI agents, but your ability to really extract value is inextricably linked to the quality of your data and the ability to make that data accessible. What we’re finding is that despite large investments over time our clients still have fragmented data. And so, they are data rich and insight poor.”

The good news, says Datwani, is that AI agents themselves can help clean up and organize data. And vendors such as Snowflake and Databricks, along with the traditional CRM powerhouses, are offering powerful data analytics solutions. “Everyone is battling for that data layer,” Datwani says.

Forrester’s Leggett adds that CRM platforms are converging with customer data platforms (CDPs), real-time event streams, and external data sources to create connected customer data networks. These real-time, connected data models can help organizations deliver hyper-personalization at scale.

Agentic ushers in pricing complexity

The shift from license- or subscription-based pricing to an outcome or consumption pricing model has the potential to help CIOs tie their CRM costs to specific business metrics, such as the number of customer service calls resolved per hour. But it has also introduced a new level of complexity when it comes to budgeting for CRM costs.

For example, Chesire says ServiceNow’s CRM pricing plan starts with a baseline subscription model, and on top of that, customers get a certain number of AI tokens per user and can buy additional tokens as AI usage ramps up.

Meanwhile, Salesforce has rolled out pay-per-resolution pricing with its recently unveiled AI Help Agent and last month acquired usage-based billing specialist m3ter. Oracle is also piloting outcome-based AI pricing.

All these approaches undercut the predictability of the subscription model, which will complicate CIOs’ cost calculus, Deloitte’s Datwani says. “Now, as you start to think about consumption and tokens, costs might look different. As folks are opening up the architecture with things like headless CRM, what will the cost model look like for API calls or MCP server calls? So, there’s many more variables,” he adds.

The rise of multi-agent orchestration

To act autonomously, agents need to access multiple data sets and software platforms seamlessly. As a result, the proliferation of agents, some embedded within specific vendor platforms and some created in-house, is going to require an orchestration layer, Futurum’s Kirkpatrick says.

He points out that organizations need to monitor and manage agents, enforcing the same type of policy-based access control that exists for people. Organizations also need to set limits on what domains a specific agent can get into, what types of data they can access, what lines can’t they cross.

Kirkpatrick predicts that a new class of orchestration tools will emerge, although it’s not clear whether that orchestration layer will be provided by the leading CRM vendors, hyperscalers, or third parties.

Datwani agrees. “The orchestration layer is an interesting area, where the traditional vendors are in on it, the hyperscalers are also offering it, and there are third parties. It’s my belief that there’s not going to be a clear winner.”

The interface becomes conversational

Enterprise users who have traditionally had to manually wrangle with CRM systems are likely to find the ability to employ voice commands using a natural language interface to be a game changer. For starters, a salesperson can say, “I have a meeting today with Customer X. Help me prepare.” The agent will collect relevant data, ingest it, and provide a summary with recommendations.

ServiceNow’s Chesire says voice-enabled CRM systems have an “almost magical” ability to record, transcribe, and understand the content of a call between a salesperson and a customer or potential customer. The system can then “build a quote” based on that conversation.

On the customer service side of the equation, AI-driven voice technology enables customers to speak to an AI agent, describe the problem using natural language, and get a response. The agent has the capability to, for example, solve a credit card dispute, order a replacement product, send out a service rep, or do whatever is needed to resolve the issue, says Chesire.

Beyond that, agentic technology is capable of understanding the underlying business process flaws that led to the product snafu, and make recommendations for ways to fix whatever led to the issue in the first place, he adds.

Agentic drives business process transformation

With the emergence of outcome-based pricing, organizations are taking a fresh look at how they measure the benefits of CRM systems. That conversation is leading to an even more important analysis of underlying business processes. Or, as Constellation’s Miller says, “The old adage of applying new technology to old processes only gets you more expensive old processes.”

“When we survey customers, we hear time and time again that the reason why they want to apply AI into their organizations is to foster exponential opportunity and exponential growth,” she says. “How do we get there with CRM has started to become the new conversation.”

According to Miller, AI systems breach the walls of siloed data and can take a fresh look at legacy workflows. They also don’t get sucked into turf wars between marketing and sales teams. As a result, they often recommend new actions that can lead to better processes. “I think it’s starting to happen. You’re starting to see applications where AI is beginning to accelerate decision-making and decision velocity,” she says.

“The next phase of maturity is going to be, how do we start to spread AI across our platforms so that we are seeing that holistic end-to-end relationship that we have always wanted to optimize. How do we thread that across platforms and across solutions. We’re starting to see organizations on the leading edge really start to pull those strategies together,” says Miller.

Cisco and AMD have expanded their partnership with a new package of hardware and security software that’s designed to help enterprise customers protect, deploy, and manage distributed AI resources.

During AMD’s Advancing AI event this week, Cisco’s president and chief product officer Jeetu Patel took to the stage during AMD CEO Lisa Su’s keynote to talk about how AI inference will be widely distributed and will require an architectural stack of software and tools that Cisco and AMD are partnering to develop.

The joint architecture combines AMD’s compact, high-performance Ryzen AI Halo hardware and a variety of Cisco networking, observability, governance, and security technologies. “AMD provides the deskside/local AI platform. At the foundation is AMD Ryzen AI Halo hardware, an isolated agent sandbox and the services needed for local-first inferencing, including model routing and token limits via AMD’s Semantic Router and local inference on Lemonade,” wrote Cisco’s Yash Sheth, senior director, engineering and research, in a blog post about the new package.

Ryzen AI Halo (pictured below) is designed to support local AI inference on an AI PC using its CPU, GPU, and XDNA neural processing unit (NPU), according to AMD. A resilient AI platform should continue delivering useful AI services even when connectivity is limited, models need to change, or workloads shift, AMD stated.

Cisco then wraps that platform in a secure harness that includes its Splunk Agent Observability plus Splunk Infrastructure Monitoring to provide full-stack observability, tracking agent behavior, tokenomics and compute operation, according to Sheth.

Cisco also brings its AI Defense for model and agent security; DefenseClaw for security policy enforcement, so guardrails are enforced directly on-device, within the agent harness; and Cisco Cloud Control offering a single pane of glass for unified policy and control, Sheth stated.

“To make deskside and local AI computing work at enterprise scale, every AI node must be treated as a secure, managed node in the enterprise network,” Sheth wrote.

“The need for token efficiency and data sovereignty is driving a new class of computing, deskside computing, with users and teams putting AI agents right by their sides,” Sheth wrote. “Inference is moving to a hybrid architecture with thousands of ambient deskside agents in an enterprise helping employees have 24×7 productivity. That’s an extraordinary opportunity. It’s also a brand-new operating challenge.”

As agentic AI moves from experimentation to real enterprise workflows, organizations need more than powerful endpoints. AI agents can run continuously and act on enterprise data, but create new requirements for network infrastructure, tokenomics, agent behavior, and security, according to a statement from AMD.

“Running more AI locally can help improve responsiveness, keep sensitive data closer to users, and reduce dependence on cloud-only approaches, but enterprises also need a way to monitor and manage these systems at scale. AMD and Cisco are addressing that gap by collaborating to pair high-performance local AI compute with the observability, governance, and control infrastructure needed for enterprises to deploy it responsibly,” AMD stated.

“By combining AMD Ryzen AI Halo systems and our broader local AI software capabilities with Cisco’s enterprise networking, observability and security technologies, we are helping customers deploy AI in a way that is performant, secure, observable and manageable at scale,” said Jack Huynh, senior vice president and general manager, computing and graphics group with AMD, in a statement.

A few other interesting statistics and trends cited in AMD CEO Su’s keynote include:

• AI adoption is accelerating across all industries, with agentic AI driving a surge in compute demand and shifting workloads from training to inference, which accounts for 60% of global AI compute capacity in 2026.
• AI is moving beyond the cloud, with edge and personal devices becoming critical for real-time, distributed intelligence.
• The AI accelerator market is projected to reach $1.4 trillion by 2030, nearly tripling previous forecasts, with GPUs expected to dominate but CPUs gaining new growth vectors due to agentic AI.
• Server CPU market is forecasted to grow over 50% to $200 billion by 2030, fueled by rapid agentic AI adoption and the need for massive CPU infrastructure.

Four months of Claude Code — that’s all it took for Uber to burn through its entire annual budget for AI. Token after token, engineers embraced the platform with few control mechanisms tying costs to outcomes. The result was a budget runaway and a clear case study in how limited oversight snowballs into an AI blowout.

This is a phenomenon I like to call “shadow tokens” — AI credits paid for by the company but largely invisible to decision-makers. Too many engineers have the final say over how much they consume and, therefore, what it costs. This all-you-can-eat attitude is part of the reason why Microsoft is reportedly winding down many internal licenses across key engineering teams and why one in five organizations is missing its AI spend forecast by more than 50%.

And the trend is only accelerating. By 2028, Gartner predicts that AI coding costs (driven by this kind of ungoverned consumption) will be as much per developer as the salary companies pay that person.

LLMs and agents introduce a new class of variable cost that scales with behavior rather than headcount, putting enterprises on the hook for tools that balloon with workload. I don’t see this as enterprises overspending because they’re reckless — it’s down to a lack of managerial oversight, budget alignment that demands a proven return on investment, and engineer education on how much is too much.

Going forward, CIOs need to thread the AI needle between governance that encourages transparency and reasonable spend without stifling innovation.

When shadow tokens result in real costs

The issue is that AI isn’t a traditional line item. Previously, enterprise leaders onboarded software-as-a-service (SaaS) with a good idea of the total cost. An allocated software seat or annual contract was a known quantity. The cloud added some variation (with fluctuations depending on hosting size), but instances were still modelable. AI flips this status quo on its head — the unit of consumption is behavior and the cost is exponential.

And these specifics aren’t immediately apparent at pilot. Tools can appear inexpensive in controlled experiments yet unpredictably scale depending on session length, context window size, model selection and whether agents run in parallel. This is the fallacy of the $20-per-seat enterprise plan — tokens are charged separately at API rates with no ceiling. The final dollar value of any session is set by factors that finance can’t always model in advance, particularly when these decisions usually rest with the engineers themselves.

According to Deloitte, only 21% of organizations deploying agents have a mature governance model, a real concern because they’re token-eating machines. This is what was happening at Uber — Claude Code in agentic mode was autonomously reading codebases, planning changes across dozens of files and opening pull requests. Each step quickly adds up, with Anthropic’s own documentation noting that agents consume approximately seven times as many tokens as standard sessions.

This is shadow IT and shadow AI, evolved. This time, however, many leaders approved the tool in question without guardrails governing consumption. AI hype adds fuel to the fire and normalizes long sessions. Uber’s CTO, for example, described a company-wide shift toward “agentic software engineering” with employees “who are quietly experimenting, quietly shipping and quietly pushing things forward”. This is an exciting way to test the limits of what’s possible, certainly, but it’s also a position that goes a long way to explaining how the company spent its annual AI budget by April.

Shifting the culture from usage to yield

Engineers haven’t done anything wrong here. In fact, they’re adopting and experimenting as instructed, with Uber creating leaderboards and ranking users by token consumption. More use led to a better ranking, reflecting a culture that lauds new ways of doing things. This behavior is known as “tokenmaxxing,” and its principal knock-on effect is shadow tokens — quantity-over-quality processes that leaders struggle to control until they’re fully realized in the budget. Of course, if management treats adoption metrics as performance metrics, then engineers can’t be blamed for using more tokens. The tension is that the teams driving adoption aren’t the ones managing spend.

None of this is meant to dismiss AI’s productivity possibilities and potential return on investment. Developers save 3.6 hours per week, achieve 60% higher pull request throughput and cut onboarding time in half with automation. Meanwhile, Uber shared that roughly 11% of live backend updates were written by agents with no human in the loop. However, these wins aren’t the problem — it’s that too many teams aren’t connecting input to output. I’ve spoken to admins who discovered their token spend had tripled in a single quarter after using heavier models or accidentally doubling up on agentic applications. Nobody knew until the financial damage was done.

Automation needs to happen sustainably with an eye on the bottom line. In my view, a much better metric for achieving this is AI yield — the measurable business or engineering output generated per dollar spent on tokens. Otherwise, without a feedback loop, even genuinely productive teams are flying blind.

Stopping token waste before an AI blowout

Creating that throughline between AI investment and token consumption starts with established financial metrics. This is possible via maximum spend limits (dictated by spend tagging, workload tiering and cost-per-output benchmarks) per team or project. Then, any additional allocation requires approval, closing the loop between the engineers spending the tokens and the leaders paying for them. AI isn’t cheap and teams should demonstrate a bang for their buck.

This is something we do with our engineering team at Hexnode. Resource allocation for Claude Code and Cursor is tied directly to ROI rather than letting consumption run open-ended. Given the pay-as-you-go nature of these tools, a firm usage limit per team offers simple but essential control.

Similarly, there’s room to apply some of the governance principles IT uses for device management. Things like policy enforcement, role-based access, real-time monitoring and automated alerts can flag usage behavior in advance. Uncovering such insights at the token layer works to identify power users and prevent excessive spending.

We also need to encourage cultures that praise outputs that actually achieve efficiency. AI applications that result in shipping faster, reducing rework and cutting review cycles are gains that should be celebrated. If your company hosts leaderboards, frame unnecessary token burn as wasteful rather than valuable. The organizations creating healthier consumption habits work with their engineers to understand not just how to use AI, but what responsible use looks like and what it costs.

This is a conversation teams need to have now. Anthropic just ended flat-rate pricing for programmatic workloads from June 15. Now, agents, continuous integration pipelines and automated workflows draw from a dedicated monthly credit pool billed separately from the subscription. Once that pool is exhausted, agent tasks either stop entirely or overflow to extra billing. Work can either get very expensive or grind to a halt for teams that aren’t prepared.

Getting a grip on shadow tokens means better rules and tools connecting spend to outcomes. Only by building the financial and cultural infrastructure that encourages sustainable adoption can leaders see what they’re spending, connect it to what they’re getting and course-correct before the costs become a crisis. Ultimately, shadow tokens are only invisible if we choose not to look.

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I have worked alongside enterprise technology for more than 30 years and watched AI evolve from a lab experiment into the modern boardroom’s core focus. However, the last few years of implementing AI alongside our customers have delivered our most profound reality checks.

The initial hype has faded, leaving CIOs to drive real enterprise value. Based on my experience implementing Google, OpenAI and Anthropic technologies, here are the fundamental, technology-agnostic lessons every leader must anchor their strategy around.

AI as a leadership multiplier

The most common tactical error we see is treating AI as an isolated technology project. What I have observed among our customers is that true success does not come from organizations that define a standalone “AI strategy,” but rather from those leaders that integrate AI into their business strategy.

When our customers isolate AI and define an AI strategy, it inevitably treats it like a “technological toy” to experiment with. This approach yields fragmented, orphaned initiatives that fail to scale because they are fundamentally disconnected from their core corporate objectives. What I learned is that AI is not the ultimate destination; it is a powerful catalyst. We have replaced “What can AI do for our customers?” with a more strategic question, “How does AI accelerate their existing business goals?”

Think of AI like electricity. No modern corporation designs a standalone “electricity strategy.” Instead, all companies route it invisibly across the entire organization to illuminate offices, power production lines and drive communication. AI must be woven into the enterprise fabric in the exact same way, acting as an underlying utility that supercharges your existing operational model.

Integrating AI into the broader business strategy also dictates how we measure success. It forces a shift away from short-term tech vanity metrics and anchors the technology into a long-term roadmap.

When AI remains trapped within the IT department of our customers, we notice that it is relegated to a mere “software experiment.” To become a true competitive advantage, we observed that AI requires intense cross-functional orchestration. This perspective does not diminish the merit of the technical team; their expertise is fundamental for establishing the architecture, data governance and tools your enterprise requires. However, while IT builds the foundational infrastructure, it lacks the organizational authority to decide what should be built on top of it. Only the CEO or the owner of the company can step in to ensure AI leaves the “toy project” phase and integrates into the DNA of the organization.

The requirement for top-down, executive ownership stems from three critical realities observed in the field:

• Silo-smashing and data collaboration: True enterprise AI is data-hungry and that data lives across disparate business lines, finance, operations, marketing and customer service. Only the CEO possesses the cross-functional authority to demand that data silos be dismantled.
• Cultural transformation and fear mitigation: AI triggers widespread anxiety over job displacement across all industries and hierarchies. When relegated to an “IT project,” resistance spikes as teams view it as a threat to their livelihoods. When I saw the CEO lead this cultural shift directly is when I noticed the best results.
• C-Suite education and strategic alignment: The mandate for AI capability cannot just be delegated downward; the transformation must begin at the very top. I have conducted more than 70 presentations for the Board of Directors and C-Level teams. These people need to be actively educated not on technical code, but on specific business use cases, return on investment (ROI) frameworks and how AI resolves core organizational bottlenecks.

PwC’s data found that only 12% of enterprises have achieved both cost and revenue benefits from AI. Those elite 12% succeeded precisely because their CEOs embedded AI extensively across strategic decision-making and cross-functional workflows. AI is simply too disruptive and too critical to be left exclusively in the hands of technical experts. If AI is not on the CEO’s weekly agenda, it is fundamentally missing from the company’s true strategy.

AI as a new operational framework

Traditional IT systems have operated on strict algorithmic certainty: if you input a specific set of data, the system executes an immutable line of code and guarantees the same, predictable output every single time.

AI completely breaks this paradigm. Because modern AI is built on probabilistic models, it does not execute static formulas; instead, it predicts the most likely correct response based on mathematical probabilities. This means that AI solutions carry an inherent, small percentage of uncertainty and variability. A prompt entered today might yield a slightly different, though contextually valid, output tomorrow.

Executive leadership and organizational cultures must be actively educated to accept and navigate this fundamental shift. Traditional quality assurance frameworks for software are designed for a 100% success rate. Applying this rigid standard to AI will paralyze your initiatives, keeping 80% of your projects trapped eternally in the pilot phase. This happened to us in a food and beverage company in Latin America a couple of years ago. After this experience, we started to include conditions in our contracts that tolerate statistical margins of error and still define the project as a success.

In terms of cost calculation, we had to teach CIOs and business managers to forget the monthly subscription model for AI and learn to manage the primary unit of exchange in modern AI: the token.

To understand AI costs, executives must understand how large language models process data. AI models do not read full words; instead, they break text, images or code down into “pieces” called tokens. As a baseline, every 100 words process as approximately 130 to 140 tokens. Because the major AI providers use the token as their currency, your business is billed dynamically based on the exact volume of tokens consumed by every query submitted (input) and every response generated (output).

Many leaders believe AI costs are fixed due to flat-rate enterprise tiers ($25–$30/user). This is a temporary illusion. These venture-capital-subsidized rates mask true operational costs and come with dynamic usage limits. Modeling long-term ROI on them guarantees a severe budget shock when true consumption pricing takes over.

The solution is not to halt AI adoption; doing so means losing your competitive edge. Instead, the cost per token must cease to be treated as a technical footnote relegated to the IT department. It must be elevated to a core business variable.

Risks in the AI adoption model

Since the beginning of the AI boom, I have seen all our customers making a critical tactical error that could cost them heavily in the medium term: they are focusing only on operational efficiency (reducing costs with AI).

I have observed that an alarmingly high percentage of companies remain trapped in pilot phases focused exclusively on short-term cost reduction. Bain & Company’s global Automation and AI Pathfinder Survey found that the largest share of companies measuring their AI initiatives (exactly 40%) realized cost reductions of 10% or less, heavily missing their internal targets. Our customers are putting too many resources and effort into marginal financial gains and in doing so, they are jeopardizing their most valuable assets: service quality, resilience and customer trust.

Utilizing AI solely to slash headcount or cut operational corners is a dangerous trap that introduces severe field liabilities. A financial service organization in Latin America announced that they saved $1 million in customer support by replacing humans with AI chatbots. However, the mid-term reality revealed a different story: a damaged brand reputation due to AI errors and an influx of frustrated clients fleeing because the automated system cannot handle special cases.

Putting a company on an extreme AI diet might make it look leaner on next quarter’s financial statement, but over-indexing on cost-cutting will ultimately leave the business too weak to compete when market dynamics shift. We are now inviting our customers to change the question from “How much money will AI save us?” to “How will we leverage AI to exponentially increase the long-term value of our enterprise?”

Deploying enterprise AI is a marathon, not a sprint, and the terrain changes with every mile. The organizations that thrive in this next era will be those that transition from fascination to discipline, treating AI not as a magic bullet for immediate savings, but as a core capability that demands rigorous governance, architectural foresight and cultural maturity. Navigating this shift requires moving past the theoretical hype and anchoring decisions in raw, field-tested reality.

As we continue to deploy these technologies across industries, the blueprint for success is being rewritten in real time. Let’s keep this conversation going as we map out the future of business intelligence together.

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Traditional phishing techniques are in decline as a result of the disruption of the Tycoon2FA phishing-as-a-service (PHaaS) platform, Microsoft said in a new report, “Email threat landscape: Q2 2026 trends and insights”.

“Phishing volume linked to the platform fell 92% from pre-disruption averages, including QR code phishing and CAPTCHA-gated phishing both declining from their March highs,” the company wrote in the report.

The takedown reduced activity across multiple phishing categories, forcing attackers to shift to newer delivery methods.

Riding this shift in were a few notable phishing campaigns, including an automated business email compromise (BEC) campaign that reached 42,000 organizations in under three hours, and a multi-stage phishing campaign that used nested email (EML) files, calendar invitations, and a Microsoft authentication redirect to deliver malware.

To counter phishing attacks, Microsoft recommends blocking emails containing known bad URLs/ subject fields, enabling password-less authentication methods, or moving to MFA for accounts that still require passwords.

Tycoon2FA disruption sent attackers exploring

The take-down of Tycoon2FA forced its operators to abandon portions of their infrastructure and rework hosting, domain registrations, and delivery mechanisms.

“After falling 15% in March and another 22% in April, Tycoon2FA-linked phishing volume dropped 74% in May to just 1.5 million messages, then fell another 20% in June to 1.2 million, by far the lowest monthly volumes observed in at least a year,” Microsoft said.

The decline extended to QR Code lures and fake CAPTCHA pages, two phishing techniques in which Tycoon2FA accounted for 12% and 14% of industry activity in June, respectively. This indicated that the platform’s customer base had not been able to migrate to a replacement infrastructure.

But cutting off one head of the hacker hydra only gave rise to new tactics elsewhere.

The adaptation came in the form of using Microsoft Teams as a social engineering channel. Attackers established conversations to build trust before attempting credential theft or delivering malicious payloads. “Teams-based phishing volume climbed steadily throughout Q2, with the average number of detected attacks rising 19% from March to April, holding roughly flat into May (+1%), then increasing another 10% into June,” Microsoft said.

Microsoft also observed a highly automated BEC campaign that reached over 67,000 users using scripted emails, Amazon Simple Email Service (SES), and engagement tracking, alongside a separate phishing campaign targeting 107,000 users that abused Microsoft’s authentication flow and trusted cloud services, including Teams archive recording and ICS calendar invite, to disguise malware delivery behind legitimate infrastructure.

Phishing changes but the defense doesn’t

While QR Code and Captcha-based phishing attacks dropped significantly in the second quarter, business email compromise (BEC) charted jumped 121% between March and April, before dropping down again in May.

QR Code phishing represented 8.3 million attacks in June 2026, down from a peak of 18.7 million in March. Similarly, Captcha-gated phishing fell from 12 million attacks in March to 2.2 million in June.

BEC attacks hit 9 million in March, falling to 3.9 million in June.

But even as these phishing classics lost momentum and newer techniques emerged, Microsoft’s defensive advice remained rooted in the basics. It noted organizations should complement email filtering with phishing-resistant authentication such as passkeys and phishing-resistant MFA to reduce the effectiveness of credential theft campaigns.

The company also recommended strengthening Exchange Online Protection and Microsoft Defender for Office 365 with capabilities such as Safe links and Zero-hour Auto Purge (ZAP), in which malicious emails already delivered to mailboxes are removed before they are read, alongside enforcing password-less authentication methods like Windows Hello, FIDO keys, and Microsoft Authenticator.

Microsoft concluded its report with a list of indicators of compromise (IoCs) from the threats observed in the quarter to support detection efforts.

This article first appeared on CSO.

Traditional phishing techniques are in decline as a result of the disruption of the Tycoon2FA phishing-as-a-service (PHaaS) platform, Microsoft said in a new report, “Email threat landscape: Q2 2026 trends and insights”.

“Phishing volume linked to the platform fell 92% from pre-disruption averages, including QR code phishing and CAPTCHA-gated phishing both declining from their March highs,” the company wrote in the report.

The takedown reduced activity across multiple phishing categories, forcing attackers to shift to newer delivery methods.

Riding this shift in were a few notable phishing campaigns, including an automated business email compromise (BEC) campaign that reached 42,000 organizations in under three hours, and a multi-stage phishing campaign that used nested email (EML) files, calendar invitations, and a Microsoft authentication redirect to deliver malware.

To counter phishing attacks, Microsoft recommends blocking emails containing known bad URLs/ subject fields, enabling password-less authentication methods, or moving to MFA for accounts that still require passwords.

Tycoon2FA disruption sent attackers exploring

The take-down of Tycoon2FA forced its operators to abandon portions of their infrastructure and rework hosting, domain registrations, and delivery mechanisms.

“After falling 15% in March and another 22% in April, Tycoon2FA-linked phishing volume dropped 74% in May to just 1.5 million messages, then fell another 20% in June to 1.2 million, by far the lowest monthly volumes observed in at least a year,” Microsoft said.

The decline extended to QR Code lures and fake CAPTCHA pages, two phishing techniques in which Tycoon2FA accounted for 12% and 14% of industry activity in June, respectively. This indicated that the platform’s customer base had not been able to migrate to a replacement infrastructure.

But cutting off one head of the hacker hydra only gave rise to new tactics elsewhere.

The adaptation came in the form of using Microsoft Teams as a social engineering channel. Attackers established conversations to build trust before attempting credential theft or delivering malicious payloads. “Teams-based phishing volume climbed steadily throughout Q2, with the average number of detected attacks rising 19% from March to April, holding roughly flat into May (+1%), then increasing another 10% into June,” Microsoft said.

Microsoft also observed a highly automated BEC campaign that reached over 67,000 users using scripted emails, Amazon Simple Email Service (SES), and engagement tracking, alongside a separate phishing campaign targeting 107,000 users that abused Microsoft’s authentication flow and trusted cloud services, including Teams archive recording and ICS calendar invite, to disguise malware delivery behind legitimate infrastructure.

Phishing changes but the defense doesn’t

While QR Code and Captcha-based phishing attacks dropped significantly in the second quarter, business email compromise (BEC) charted jumped 121% between March and April, before dropping down again in May.

QR Code phishing represented 8.3 million attacks in June 2026, down from a peak of 18.7 million in March. Similarly, Captcha-gated phishing fell from 12 million attacks in March to 2.2 million in June.

BEC attacks hit 9 million in March, falling to 3.9 million in June.

But even as these phishing classics lost momentum and newer techniques emerged, Microsoft’s defensive advice remained rooted in the basics. It noted organizations should complement email filtering with phishing-resistant authentication such as passkeys and phishing-resistant MFA to reduce the effectiveness of credential theft campaigns.

The company also recommended strengthening Exchange Online Protection and Microsoft Defender for Office 365 with capabilities such as Safe links and Zero-hour Auto Purge (ZAP), in which malicious emails already delivered to mailboxes are removed before they are read, alongside enforcing password-less authentication methods like Windows Hello, FIDO keys, and Microsoft Authenticator.

Microsoft concluded its report with a list of indicators of compromise (IoCs) from the threats observed in the quarter to support detection efforts.

Late in a large enterprise SAP transformation, the strategic governance conversations began to drift. Instead of executive decisions, we found ourselves debating whether the program needed dedicated testing, whether cutover required a full weekend, whether twenty Agile teams really needed coordination support and whether offshore resources were adding value at all.

The questions were not coming from the delivery teams. They were coming from the executive sponsor.

The sponsor had recently been elevated into a senior leadership role and had never sponsored a technology transformation at this scale. The challenge was not authority. The sponsor had every right to ask any question they wanted. The challenge was that strategic governance had quietly turned into a debate about delivery practices, because the sponsor did not yet have the transformation context to focus the conversation anywhere else.

This is not a story about a bad sponsor. The executive in this case was a capable senior leader with strong judgment and authentic intent. They had been placed into a role they had not yet been prepared for, and the pattern that followed was structural, not personal. It is one of the more common patterns I have observed across enterprise transformation programs, and one of the most consistently misdiagnosed.

Most program failures are not execution failures. They are sponsor mismatches.

When governance becomes a debate about delivery practices

When the sponsor does not understand what an enterprise transformation actually requires, governance forums stop functioning as decision bodies and start functioning as practice debates.

You see it in the questions that get asked. Why do we need a dedicated testing phase? Can the Build timeline be compressed? Why does cutover need a full weekend? Why do we need more Scrum Masters across 20 product teams? Can the US team simply work longer hours instead of using offshore resources? On one program, the sponsor suggested shifting the entire project’s working hours to India time, despite roughly 85 percent of the delivery organization being based in the United States.

None of these questions are unreasonable in isolation. Each one targets a real cost or timeline pressure. The problem is what is missing underneath them: an understanding of the operational risks the original choices were designed to mitigate.

When sponsors ask delivery-practice questions without that context, the program leadership team ends up defending the work instead of advancing it. Decision velocity drops. Trust between the program and its sponsor erodes. Senior delivery talent disengages from governance forums where the conversation never reaches the decisions they need made. What looks from the outside like an active sponsor producing engagement is, from inside the program, an active drain on the cycles needed to deliver.

The compounding cost is not unique to any single program. PMI’s research on executive sponsorship consistently identifies sponsor engagement quality, rather than sponsor presence alone, as one of the strongest predictors of project success. The visible symptom is debate. The actual cost is unmade decisions.

Authority is rarely the issue. Literacy is

When transformations stall under a mismatched sponsor, the diagnostic instinct is to question the sponsor’s authority. Are they senior enough? Do they have the cross-functional reach? Can they unblock?

In most of the programs I have led or advised, authority was not the limiting factor. The sponsor in the SAP program above had ample authority. They could unblock any decision the program needed. What had not been developed was the transformation literacy to know which decisions mattered, which were technical noise and which were execution risks that should not be optimized away.

This is what I have come to think of as the literacy problem. Sponsors elevated into transformation roles often have deep functional expertise (finance, operations, business unit leadership) but limited exposure to the distinct functions of PMO, organizational change management, agile delivery, testing and cutover, and how each one reduces a specific category of implementation risk. They are not expected to be SAP configuration experts. But they need enough transformation literacy to recognize which questions actually belong in a steering committee.

Harvard Business Review’s research on effective executive sponsorship has emphasized that sponsorship effectiveness depends as much on judgment as on authority. Judgment is where literacy becomes operational. A sponsor with authority but limited transformation literacy will optimize for speed and cost in ways that consistently underestimate risk. A sponsor with both will make the tradeoffs the program actually needs.

Prosci’s longstanding benchmark studies on change management have ranked active and visible executive sponsorship as the single greatest contributor to change success for two decades. The word that matters in that finding is active. Active sponsorship without transformation literacy can introduce real cost. Not because the sponsor is acting against the program, but because the optimization choices they make are based on incomplete information about what the program is built to protect against.

Shift the conversation from delivery practices to business risk

When the sponsor relationship is already in place and cannot be changed, the program leadership team has one move that consistently works: shift the conversation.

On the SAP program above, we stopped explaining why the testing phase existed. We started explaining the business risk of reducing it. We stopped debating the number of Scrum Masters. We started connecting delivery capacity to coordination across more than twenty Agile teams and the business cost of losing that coordination. We reframed offshore support as a way to maintain delivery momentum around the clock rather than asking the U.S. team to sustain fifteen-hour days.

The shift is from defending delivery practice to explaining business risk. The sponsor does not need to understand why testing takes the time it does. They need to understand what the program is exposed to if testing is compressed. They do not need to know how many Scrum Masters are statistically optimal for twenty Agile teams. They need to know what coordination breaks when the number is wrong.

This reframing accomplishes two things. First, it brings the conversation back to the level at which sponsors actually make decisions: tradeoffs between business outcomes and business risks. Second, it builds transformation literacy in the sponsor over time, almost as a byproduct. By the third or fourth iteration of business-risk-framed conversations, the sponsor begins to ask the right questions on their own.

In practice, this happens through small but deliberate moves. When the sponsor asks why a phase needs the time it takes, the program lead names two or three things that could go wrong if the time is cut and what each would cost the business. When the sponsor asks why a role is needed, the program lead names the work that would not get done without it. Every delivery-practice question gets converted into a business-risk answer.

The program leadership team’s job is not to make the sponsor an expert in SAP delivery. It is to provide enough transformation context so that executive decisions reflect both business priorities and implementation realities.

There are a few phrases I have used with executive sponsors over the years that capture the underlying issue. The sharpest one:

If the decision has to go above the sponsor, they are not the sponsor.

Sponsorship is defined by what the sponsor can decide without asking someone else. That is the test. Anything else is the appearance of sponsorship, not the substance.

For CIOs supporting enterprise transformation, the implication is direct. Sponsor selection, or sponsor preparation when selection is not an option, is not a hierarchy question. It is a transformation capability question. The same execution discipline that goes into defining decision rights, structuring governance and protecting delivery momentum should apply, with equal rigor, to assessing sponsor fit and building sponsor literacy before the program begins.

A sponsor does not need to be the technical expert. They do need to know when to trust the people who are.

This article is published as part of the Foundry Expert Contributor Network.
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Earlier this month, Nokia provided an AI-RAN platform update that brings an AI-native and programmable compute which is projected to double spectral efficiency by 2028. This increases speed, but more importantly, it can allow mobile operators to create some actual monetization beyond connectivity.

With this release, Nokia is introducing what it calls the industry’s first commercial AI-RAN platform, built on its AI‑native anyRAN software and Nvidia’s Aerial AI-RAN stack running on merchant GPU-based accelerated computing. The company is already seeing more than 20% gains in spectral efficiency from AI-driven radio algorithms, with a roadmap to reach 50% by 2027 and more than 100% by 2028, effectively doubling capacity on existing spectrum in dense cells.

Legacy RAN infrastructure enables connectivity but not much beyond that. The AI-RAN makes the network intelligent and extends AI into the physical world, enabling telcos to get more from their infrastructure investments, including providing a path to 6G. The partnership with Nvidia brings CUDA and AI into mobile environments.

For Network World readers, the headline isn’t just that Nokia got to market first with AI‑RAN—it’s that the company is using AI and GPUs to break the historical coupling between radio performance and custom silicon refresh cycles, and to turn the RAN into an application platform.

What AI-RAN actually is

At a technical level, Nokia’s AI‑RAN is a software‑defined baseband architecture that runs Layer 1/Layer 2 RAN functions and AI models on accelerated compute, primarily GPUs, instead of being locked into fixed‑function ASICs. Udayan Mukherjee, Nokia’s CTO for RAN and core, summarized the vision in the analyst briefing: “AI‑RAN is essentially a platform that turns the radio network into a true AI‑native programmable platform… one software detached from the hardware, defining flexible hardware deployment configurations, including part of the AI grid.”

Several pillars stand out:

• AI‑native design: Algorithms move from traditional linear models to increasingly nonlinear techniques (e.g., advanced channel estimation, deep receivers/transmitters, RKHS-based methods), which demand tensor-heavy compute best delivered by GPUs.
• Software-defined RAN: The same anyRAN software stack runs across different hardware configurations—plug‑in cards, standalone AI‑RAN nodes, and COTS/cloud RAN—so innovation comes via software releases rather than baseband card swaps.
• Programmable “D‑apps” layer: Nokia is pushing a new real‑time E3 interface from Layer 1/2 into an application layer for distributed apps (D‑apps) that can tap IQ samples, channel estimation and scheduling data for use cases such as sensing and location services.
• Crucially, this isn’t meant to replace all custom silicon overnight. Mukherjee was explicit: “We are not dropping the purpose‑built product… but we want to also get to merchant silicon, because that’s the future as we want to develop bigger models and AI elements and value‑added services on top of it.” The result is a hybrid era where AI‑accelerated platforms coexist with existing basebands but begin to shoulder the most compute‑intensive workloads.

Why AI-RAN matters for operators

Nokia and its early operator partners are trying to solve three perennial problems: finite spectrum, changing traffic patterns, and the drag of hardware refresh cycles.

First, spectrum constraints. Aji Ed, Nokia’s head of AI‑RAN and cloud RAN, called spectrum “the first constraint everybody has,” noting that operators have paid “huge amount of money” for bands and now need to “get up to the 2x spectrum” in terms of usable capacity. By running more complex AI models for multi‑user MIMO pairing, channel estimation, carrier aggregation and deep receiver/transmitter functions on GPUs, Nokia believes it can unlock those gains where traditional platforms simply run out of compute headroom.

Second, traffic is shifting. Generative AI and distributed inference workloads are driving more uplink-heavy, latency‑sensitive patterns that current RANs weren’t designed for. AI‑RAN’s ability to adapt scheduling, beamforming and resource allocation dynamically via AI models deployed at the baseband is meant to keep up with this shift.

Third, innovation cadence. In Ed’s words, “hardware upgrades can’t keep up with the innovation… we can’t really have a silicon refresh cycle linked with every three‑year cycle.” Nokia’s subscription‑based software model is designed to deliver new AI algorithms, spectral‑efficiency improvements and network optimization features continuously, without requiring “forklift” hardware replacements.

For operators, the message is attractive: comparable TCO and power to existing basebands, “no hardware premium” for GPU adoption, but higher capacity and a path to new services. Nokia told analysts it has reached performance, price and energy efficiency parity between its custom GridShark silicon and GPU-based systems, while moving the baseband roadmap to merchant silicon.

Nokia’s differentiation strategy

Every major RAN vendor is talking about AI‑enhanced radio, but Nokia is drawing a line between incremental gains and what it claims is a platform shift. When asked why its 2x spectral efficiency ambition is so much higher than the ~20% numbers competitors discuss, Ed pointed to the underlying architecture: “We are able to bring much more complex algorithms into this compute infrastructure… all of these require much higher compute, which is exactly what is coming from the accelerated computing.”

Several differentiators emerge:

• Aggressive spectral roadmap: Nokia is targeting 1.5x by 2027 and 2x by 2028, across TDD massive MIMO and FDD scenarios, with a feature roadmap built jointly with Nvidia and other partners.
• Single code base, three deployment paths: The same anyRAN software stack runs on (1) a GPU‑powered AirScale capacity plug‑in card, (2) a high‑capacity standalone AI‑RAN node, and (3) GPU‑based COTS/cloud RAN servers. This lets operators modernize “at their own pace” and mix brownfield evolution with greenfield AI-native deployments.
• Open ecosystem with D‑apps: Nokia is leaning into ORAN compliance (front‑haul, O1/O2) and actively championing the E3 interface and D‑apps concept within ORAN and AI‑RAN alliances, with Bell Labs and at least two external partners already building sensing and location applications on the platform.
• Software subscription tied to value: The commercial model builds on existing software subscriptions but ties pricing more explicitly to delivered value, such as spectral efficiency improvements and new AI services, rather than pure license metrics.

Mukherjee emphasized the openness angle in the briefing: “We see a lot of third‑party applications, whether it’s improving spectral efficiency or location service or sensing, can be developed on this platform… any AI‑powered services from us in Nokia or from ecosystems can be actually developed on top of it.” For operators burned by closed optimization stacks, that’s a notable pivot.

How AI-RAN unlocks new revenue

Most operators will sign off on AI‑RAN if the capacity and TCO story holds, but the more strategic question is monetization beyond connectivity. Nokia’s spokespeople spent considerable time on this in the analyst call, pointing to several classes of services that are difficult or impossible to deliver without AI running in the RAN itself.

Examples include:

• Integrated sensing: Turning the RAN into a distributed sensor grid that can support applications such as 3D mapping, gesture recognition and environmental monitoring, using the same RF infrastructure. Mukherjee noted, “We have at least two to three partners developing sensing applications on top of it… as well as two other companies developing location services.”
• Physical AI and location services: For factories, logistics hubs and smart cities, AI‑RAN can provide high‑precision positioning and real‑time telemetry for robots, drones and autonomous systems by fusing radio data and AI models at the edge.
• Distributed AI infrastructure: Operators exploring “AI‑native cities” can use AI‑RAN nodes and COTS GPU servers as a distributed inference fabric for applications that need tight latency to endpoints—think AR/VR offload, real‑time video analytics or interactive generative AI experiences.
• Premium connectivity tiers: With fine‑grained, AI‑driven control over uplink/downlink scheduling and QoS, operators can create differentiated SLAs for enterprise slices, mission‑critical IoT and AI workloads, charging for guaranteed performance rather than best‑effort connectivity.

Ed framed the opportunity as a continuum: Superior connectivity from 2x spectral efficiency creates “space for new AI workloads and other use cases,” while the D‑apps ecosystem and subscription model provide a mechanism to package and sell those capabilities. In practice, that could look like:

• Industrial sensing-as-a-service, where Nokia and partners supply D‑apps for integrated sensing and positioning, and operators monetize them per site or per device.
• Network‑exposed APIs for inference, location and RF sensing, integrated into operators’ broader network API portfolios as they pursue “network-as-a-platform” strategies.
• Sector‑specific AI‑native services, such as stadium analytics, transportation corridor monitoring, or drone traffic management, built by ISVs on top of Nokia’s exposed E3 data.

For operators that already use Nokia’s MantaRay and SMO stacks for cross‑network optimization, AI‑RAN essentially becomes the local real‑time execution environment, while R‑apps/X‑apps continue to orchestrate macro-level behaviors. Mukherjee described this layered architecture as “DU and CU on the platform running D‑apps using E3, interfacing to X‑apps and R‑apps through E2SM and connecting to the overall management system/SMO for lifecycle management.”

Adoption path and reality check

Nokia is not promising instant transformation. AI‑RAN pilots are slated for late 2026, with commercial availability on card‑based systems in 2027 and AirScale-based systems around 2028, all driven from a single software stack that supports 4G, 5G and is upgradable to 6G. The company already has trials and collaborations underway with T‑Mobile US, SoftBank, Indosat Ooredoo Hutchison, BT, Elisa, Vodafone, Orange, NTT Docomo, Deutsche Telekom and others.

There are still open questions around 3GPP vs ORAN standardization of E3, the maturity of the D‑apps ecosystem, and how operators will digest yet another subscription layer tied to radio software. But Nokia’s move puts a stake in the ground: in the AI era, the RAN is not just a throughput engine; it’s a programmable AI computer that can be monetized.

For Network World readers evaluating vendor roadmaps, this launch suggests a clear directional change. If Nokia hits its targets, AI‑RAN could mark the point where baseband becomes less about hardware SKUs and more about an AI platform strategy—one where spectral efficiency and new services are rolled out at “software speed,” as Ed described it, rather than at the pace of the next card generation.

The cybersecurity landscape has evolved beyond human scale. Today’s adversaries have replaced predictable, manual playbooks with machine-generated attack chains that can breach traditional controls in seconds. To bridge the gap, organizations must move past legacy, reactive controls and embrace a fundamentally different, AI-driven architecture: Agentic Endpoint Security (AES). 

AES represents a paradigm shift, moving security from a passive monitor to an active participant in the defense lifecycle. It provides the visibility and automated guardrails necessary to govern autonomous AI agents and agentic tools, ensuring that as your workforce scales with AI, your security posture remains unbreakable. 

With autonomous AI agents now capable of planning and executing multi-stage attacks at machine speed, the pressure on traditional security operations (SOC) has reached a breaking point. To survive this shift, the strategy is clear: we must fight AI with AI. 

Here is how AI-driven defense, pioneered by Cortex XDR and the era of Agentic Endpoint Security, is fundamentally rewriting the cybersecurity playbook.

1. From reactive patching to proactive prevention 

For decades, the industry lived in a “wait-and-see” mode waiting for a vulnerability to surface, waiting for a signature, and then rushing to patch the hole. But reactive methods just don’t hold up against modern “frontier” AI attacks that are constantly morphing. 

AI-driven defense changes the game by shifting to a prevention-first architecture. Rather than relying on historical signatures, modern platforms deploy localized, ML-driven analysis to evaluate the intent and behavior of an active process, stopping threats pre-execution. Cortex XDR leads with a strict prevention-first approach by using AI-driven local analysis and behavioral threat protection; the XDR agent stops sophisticated threats pre-impact and pre-execution. This proactive stance reduces the overall risk profile by blocking malicious chains of events in real time across network, process, file, and registry activity. 

2. Eliminating the “agentic blind spot” 

As we all rush to adopt generative AI and automated workflows, a new gap has appeared: the “agentic blind spot.” Adversaries are now targeting AI assistants and automated scripts to bypass defenses. Since these digital agents often have deep access to enterprise data, a compromise here lets attackers move completely under the radar. 

The new playbook requires securing this entire ecosystem. By combining the distinct capabilities of Cortex XDR and Koi Security, organizations can effectively close this gap. Koi Agentic Endpoint Security tracks everything from shell commands to prompts in real time, while Cortex XDR adds a layer of defense that identifies and neutralizes behavioral anomalies unique to these automated threats. 

3. Machine-speed detection and “attack storylines” 

When an attacker can move through your network in seconds, human-led teams can’t keep up. To make matters worse, most systems just flood analysts with low-quality, isolated alerts, leading to major burnout. 

AI-driven defense fixes the investigation process by automatically stitching separate data points into a single, high-fidelity “attack storyline.” Cortex XDR uses thousands of machine learning detectors across endpoint, network, and cloud sources to group related signals into one cohesive case. This reveals the full story of an attack, letting your analysts focus on fast remediation instead of digging through piles of data, reducing alert noise by up to 98%. 

4. Surgical and autonomous response 

The final piece of the puzzle is moving from manual remediation to autonomous action. AI-driven response lets your SOC handle threats in minutes, not hours. The platform can automatically revoke compromised tokens or isolate endpoints at machine speed. 

Cortex XDR delivers built-in enterprise-grade automation at no additional cost, providing over 120 out-of-the-box playbooks and 18 quick actions to handle up to 99% of incidents without manual intervention. Crucially, this level of automation requires an unbreakable foundation of agent resilience. To ensure the defense cannot be disabled by an adversary, Cortex XDR is certified in both the AVC EDR Detection and Anti-Tampering tests, successfully blocking all attempts to disable or modify the agent. 

Summary

The threat landscape is changing faster than ever, driven by AI-powered attackers who exploit even the smallest gaps. But you don’t have to stay on the defensive. By shifting to a proactive, AI-driven architecture like the one built into Cortex XDR, you can stop threats before they happen, secure your agentic workflows, and automate away the noise that leads to analyst burnout. 

The journey to a more resilient, AI-powered SOC doesn’t have to be daunting. With the right foundation in place, you’re not just keeping pace with the new threat landscape; you’re staying one step ahead. It’s time to move beyond the old manual playbook and embrace the future of security operations. 

To learn more about Palto Alto Networks, visit https://www.paloaltonetworks.com.

Google CEO Sundar Pichai has sought to allay concerns over the delayed release of the Gemini 3.5 Pro large language model. He dodged questions about it in Google’s quarterly earnings call on Wednesday by focusing on the company’s next frontier AI model, Gemini 4, and plans to release subsequent LLMs at an almost monthly cadence.

His comments came a day after Google unveiled Gemini 3.6 Flash and 3.5 Flash Cyber but offered no update on the release of Gemini 3.5 Pro, the company’s delayed flagship reasoning model that many developers had expected to arrive weeks earlier.

Google introduced the Gemini 3.5 family at its annual I/O conference, promising to release the Pro model in June. That timeline has since slipped, with Bloomberg suggesting Gemini 3.5 Pro is months late because the model’s coding performance is falling short of internal expectations, especially when compared to better performance by similar models from OpenAI and Anthropic.

Instead of revisiting the Gemini 3.5 Pro timeline, Pichai used the earnings call to shift the discussion toward Gemini 4, when asked about how his company planned to navigate an increasingly competitive race to release frontier AI models by to Barclays Investment Bank analyst Ross Sandler.

“We are creating a baseline on top of which you will see us rapidly iterate on subsequent model releases. And so picking up pace and releasing models almost at a monthly cadence is part of our road map as we are building Gemini 4 as well,” Pichai said during the call.

Sandler’s question followed one from JPMorgan Chase & Co analyst Douglas Anmuth, who asked Pichai if Google was releasing frontier AI models frequently enough to keep pace with rivals OpenAI and Anthropic.

Pichai had responded to Anmuth’s question that Google remained confident of competing at the frontier and was investing heavily in a larger Gemini 4 base model.

Analysts, though, aren’t as confident as Pichai.

While delays to Google’s frontier model roadmap have not triggered an exodus of existing customers, either because of high switching costs or because many enterprises already running multi-model architectures, they have made CIOs evaluating AI platforms more cautious about making new commitments, said Bhupendra Chopra, chief revenue officer at IT consulting firm Kanerika.

A monthly model release cadence could prove to be a double-edged sword for enterprises and their CIOs.

While a monthly release cadence could help enterprises gain faster access to improvements in model performance, cost and capabilities, it will also require CIOs to invest more heavily in testing, governance and version management to safely adopt those updates, said Sanchit Vir Gogia, chief analyst at Greyhound Research.

Similarly, Pareekh Jain, principal analyst at Pareekh Consulting, said enterprises will embrace a faster release cadence only if each successive model delivers measurable improvements in performance, cost or safety, rather than simply changing version number.

The challenge for CIOs, Jain said, is not just keeping up with model releases; it’s deciding whether each new version is worth the cost of validating it.

Google CEO Sundar Pichai has sought to allay concerns over the delayed release of the Gemini 3.5 Pro large language model. He dodged questions about it in Google’s quarterly earnings call on Wednesday by focusing on the company’s next frontier AI model, Gemini 4, and plans to release subsequent LLMs at an almost monthly cadence.

His comments came a day after Google unveiled Gemini 3.6 Flash and 3.5 Flash Cyber but offered no update on the release of Gemini 3.5 Pro, the company’s delayed flagship reasoning model that many developers had expected to arrive weeks earlier.

Google introduced the Gemini 3.5 family at its annual I/O conference, promising to release the Pro model in June. That timeline has since slipped, with Bloomberg suggesting Gemini 3.5 Pro is months late because the model’s coding performance is falling short of internal expectations, especially when compared to better performance by similar models from OpenAI and Anthropic.

Instead of revisiting the Gemini 3.5 Pro timeline, Pichai used the earnings call to shift the discussion toward Gemini 4, when asked about how his company planned to navigate an increasingly competitive race to release frontier AI models by to Barclays Investment Bank analyst Ross Sandler.

“We are creating a baseline on top of which you will see us rapidly iterate on subsequent model releases. And so picking up pace and releasing models almost at a monthly cadence is part of our road map as we are building Gemini 4 as well,” Pichai said during the call.

Sandler’s question followed one from JPMorgan Chase & Co analyst Douglas Anmuth, who asked Pichai if Google was releasing frontier AI models frequently enough to keep pace with rivals OpenAI and Anthropic.

Pichai had responded to Anmuth’s question that Google remained confident of competing at the frontier and was investing heavily in a larger Gemini 4 base model.

Analysts, though, aren’t as confident as Pichai.

While delays to Google’s frontier model roadmap have not triggered an exodus of existing customers, either because of high switching costs or because many enterprises already running multi-model architectures, they have made CIOs evaluating AI platforms more cautious about making new commitments, said Bhupendra Chopra, chief revenue officer at IT consulting firm Kanerika.

A monthly model release cadence could prove to be a double-edged sword for enterprises and their CIOs.

While a monthly release cadence could help enterprises gain faster access to improvements in model performance, cost and capabilities, it will also require CIOs to invest more heavily in testing, governance and version management to safely adopt those updates, said Sanchit Vir Gogia, chief analyst at Greyhound Research.

Similarly, Pareekh Jain, principal analyst at Pareekh Consulting, said enterprises will embrace a faster release cadence only if each successive model delivers measurable improvements in performance, cost or safety, rather than simply changing version number.

The challenge for CIOs, Jain said, is not just keeping up with model releases; it’s deciding whether each new version is worth the cost of validating it.

This article first appeared on InfoWorld.

Google CEO Sundar Pichai has sought to allay concerns over the delayed release of the Gemini 3.5 Pro large language model. He dodged questions about it in Google’s quarterly earnings call on Wednesday by focusing on the company’s next frontier AI model, Gemini 4, and plans to release subsequent LLMs at an almost monthly cadence.

His comments came a day after Google unveiled Gemini 3.6 Flash and 3.5 Flash Cyber but offered no update on the release of Gemini 3.5 Pro, the company’s delayed flagship reasoning model that many developers had expected to arrive weeks earlier.

Google introduced the Gemini 3.5 family at its annual I/O conference, promising to release the Pro model in June. That timeline has since slipped, with Bloomberg suggesting Gemini 3.5 Pro is months late because the model’s coding performance is falling short of internal expectations, especially when compared to better performance by similar models from OpenAI and Anthropic.

Instead of revisiting the Gemini 3.5 Pro timeline, Pichai used the earnings call to shift the discussion toward Gemini 4, when asked about how his company planned to navigate an increasingly competitive race to release frontier AI models by to Barclays Investment Bank analyst Ross Sandler.

“We are creating a baseline on top of which you will see us rapidly iterate on subsequent model releases. And so picking up pace and releasing models almost at a monthly cadence is part of our road map as we are building Gemini 4 as well,” Pichai said during the call.

Sandler’s question followed one from JPMorgan Chase & Co analyst Douglas Anmuth, who asked Pichai if Google was releasing frontier AI models frequently enough to keep pace with rivals OpenAI and Anthropic.

Pichai had responded to Anmuth’s question that Google remained confident of competing at the frontier and was investing heavily in a larger Gemini 4 base model.

Analysts, though, aren’t as confident as Pichai.

While delays to Google’s frontier model roadmap have not triggered an exodus of existing customers, either because of high switching costs or because many enterprises already running multi-model architectures, they have made CIOs evaluating AI platforms more cautious about making new commitments, said Bhupendra Chopra, chief revenue officer at IT consulting firm Kanerika.

A monthly model release cadence could prove to be a double-edged sword for enterprises and their CIOs.

While a monthly release cadence could help enterprises gain faster access to improvements in model performance, cost and capabilities, it will also require CIOs to invest more heavily in testing, governance and version management to safely adopt those updates, said Sanchit Vir Gogia, chief analyst at Greyhound Research.

Similarly, Pareekh Jain, principal analyst at Pareekh Consulting, said enterprises will embrace a faster release cadence only if each successive model delivers measurable improvements in performance, cost or safety, rather than simply changing version number.

The challenge for CIOs, Jain said, is not just keeping up with model releases; it’s deciding whether each new version is worth the cost of validating it.

This article first appeared on InfoWorld.

Google’s AI offerings span its internal and cloud offerings. Its data centers are processing seven times more AI tokens compared to last year. To keep up, Google is upgrading its data-center hardware and software technologies at a faster clip. It plans to raise $80 billion to build new data centers. (See related story: Google transforms its data center architecture for agent era)

Network World spoke with Mark Lohmeyer, vice president and general manager of AI and computing at Google, about how the company’s infrastructure is keeping pace with AI demand.

Network World: What is the primary shift in infrastructure needs?

Mark Lohmeyer: We’ve seen the rise of agents and agentic use cases. Years ago, it was the chat phase: Ask a question, get an answer. Now we’re in the agentic era, where you express your intent, agents spin off multiple sub-agents, working in parallel, preserving state. This is a radical shift in what infrastructure needs to do; make them fast, cost effective, secure, reliable. We’re delivering infrastructure optimized for the age of agents.

NW: What’s the goal of the infrastructure buildout, and what should customers expect regarding costs?

ML: Ultimately, it’s about enabling customers with leading-edge capabilities and models at scale cost-effectively. With agents, inference transactions increase by 50x, 100x versus non-agentic workloads. We’re driving the cost per transaction down exponentially. In our latest platforms, we reduce the cost by almost 2x for the same work. Customers serve twice the number of users at the same cost, directly driving profitability.

NW: How are you addressing energy efficiency?

ML: Energy is a critical resource, and Google has optimized for years. We design data centers and compute [to drive] high PUE (power usage effectiveness). We introduced liquid cooling over five years ago, and these latest systems are all liquid cooled. For agentic workloads, CPUs come to the forefront… orchestrating agents, calling tools, doing evaluation loops in reinforcement learning. Our latest Axion-based CPU platform called N4A has energy efficiency and is significantly better than the prior generation and x86 comparables.

NW: How do you think about token efficiency as you build-out systems?

ML: Performance and efficiency gains are powered by co-design of the model and infrastructure. Gemini is trained on TPUs, primarily served on TPUs with high frontier model capability, in a token and cost-efficient way. This stems from co-design across the full stack.

NW: How do you project what infrastructure will be needed years in advance?

ML: Hardware cycles deliver a new next generation roughly every year, but design cycles are two years or more in advance. We work with DeepMind doing core research, to application teams taking models into production, to billions of users, to our team building infrastructure. We work upstream with DeepMind and application teams to understand what’s coming. Agents weren’t being broadly spoken of externally, but internally we had those insights around what they would need. That shows up in hardware design. We hit the timing right — these platforms are built for agents.

NW: What’s the eighth generation TPU platform?

ML: We deliver new platforms every year, and ones launched years ago are close to 100% utilized because demand for AI-optimized compute is high. The eighth-generation TPU platform is the first delivering two complete systems, from the chip all the way up to the network and storage and software, that are optimized.

TPU-8t is optimized for training, and TPU-8i is optimized for inference. For TPU-8i, we increased SRAM on the chip to 384MB — three times the prior generation — and increased the HBM by 50%.

NW: How are you approaching GPU and TPU compatibility?

ML: People in a single cluster do not commingle GPUs and TPUs. We offer both options based on specific workload needs. We’ve been investing on the TPU side in using software frameworks customers are comfortable with on GPUs and enabling those on TPUs. For example, PyTorch and vLLM. Customers could have a pool of GPUs and TPUs, running vLLM on top of that. Start with a workload on TPUs, but if the TPU pool is fully utilized, spill to GPUs or vice versa. This works because it’s all leveraging the same compatible software layer on top.

NW: How has the orchestration platform changed for agents?

ML: Kubernetes is becoming the orchestration platform of choice for AI. Google is transforming GKE [Google Kubernetes Engine] into an agent-native orchestration solution. When expressing intent to an agent and it spins up multiple sub-agents, compute needs to spin up rapidly — TPUs or GPUs — without long delays, then run and spin back down. We’re optimizing at every layer of the GKE stack: significantly improving node startup time and how rapidly we start and stop containers. Lovable demonstrates this with GKE, spinning up hundreds of sandboxes for live coding sessions on their platform in parallel, paying for infrastructure when needed.

NW: What is the role of the network and storage infrastructure?

ML: The network is critical for AI. This requires creating large-scale clusters of GPUs or TPUs and enabling them to talk to each other in a high-performance way. We created the Virgo network — a collapsed network architecture, non-blocking within a data center, where multiple pods or NVLink72 domains connect together.

In TPU8T, we can connect over a million TPUs together leveraging Virgo, creating large-scale, high-performance, reliable clusters that shrink innovation cycles. Storage is equally critical. In large-scale clusters, something is always failing. The ability to take snapshots and go back to a checkpoint is important.

We’ve introduced Managed Lustre 10T, with 10 terabytes per second of bandwidth, 18 petabytes of storage in single clusters. This is 10 times faster than last year and 20 times faster than competition. We have Rapid Bucket, low-latency storage backed by Google storage systems. Both are impactful in large-scale training environments.

NW: How does KV cache strategy differ between training and inference?

ML: For TPU-8i, we increased SRAM on the chip to 384 megabytes — three times the prior generation — and increased the HBM by 50%. Storing KV cache directly in chip memory allows responding to inference requests much more rapidly and cost-effectively than going to an external system. For inference workloads, storing as much KV cache as possible on-chip is critical.

We’re introducing a dedicated KV cache storage subsystem that works across GPUs and TPUs. As KV caches get larger, being able to fall back to this dedicated subsystem becomes critical. Loading model weights rapidly is important in dynamic inference environments where accelerators switch between models hour by hour.

Among a range of factors leading to a wave of tech sector layoffs in 2026 is the rapid rise of artificial intelligence and automation. Companies are reconfiguring their workforces to leverage AI for increased efficiency and reduced operating costs. This realignment and reduction is implemented even by companies reporting strong financial performance.

But it’s not just AI leading to workforce cuts. Complementing this technological shift are ongoing economic uncertainty, inflation, and higher interest rates, compounded by a chip shortage and rising energy costs. This mix is driving companies to cut costs and streamline operations for increased efficiency.

According to data compiled by Layoffs.fyi, an online tracker that keep tabs on job losses in the technology sector, 123,941 tech employees were laid off at 269 companies in 2025. The site also reports that 71,981 government employees were laid off by DOGE alone, with 182,528 total federal workers laid off.

Here is a list — to be updated regularly — of some of the most prominent technology layoffs the industry has experienced recently.

Notable tech layoffs in 2026

• Monday.com
• Microsoft
• Meta
• Cisco
• Cloudflare
• Oracle
• Atlassian
• Salesforce
• Amazon
• Ericsson

July 22, 2026: Monday.com cuts 20% of its workforce to restructure for the AI era

The company says the decision to cut 620 jobs isn’t about margins, but about creating a flatter organization built around AI agents, autonomous teams, and deeper customer engagement.

July 6, 2026: Microsoft cuts 4,800 jobs, primarily in sales and Xbox teams

As the company trims thousands of jobs, it’s also investing in embedded engineering teams and AI infrastructure. The layoffs come several weeks after the company offered 8,750 US employees voluntary retirement buyouts.

June 5, 2026: Tech industry cut 38,242 jobs in May, worst since 2024

AI was blamed for 40% of the job cuts in May, up from 7% in January, according to research by employment placement company Challenger, Gray & Christmas.

May 20, 2026: Meta cuts 8,000 jobs, around 10% of workforce

The cuts are expected to expected to hit Meta’s engineering and product teams the hardest, arriving as Meta pivots toward AI to boost efficiency across its organization, according to Yahoo Tech.

May 13, 2026: Cisco to cut nearly 4,000 jobs despite strong growth in AI, enterprise networking

Despite reporting positive financial news — including record third-quarter revenue of $15.8 billion, a 12% year-over-year increase — Cisco said it will eliminate almost 4,000 jobs.

May 7, 2026: Cloudflare to cut 1,100 jobs in AI-focused restructuring

About 20% of Cloudflare’s global workforce will be culled as the company pivots for the agentic AI era, Reuters reported.

April 1, 2026: Oracle to cut up to 30,000 jobs globally, putting enterprise support and roadmaps at risk

Oracle began laying off employees on March 31 in what could be the largest workforce reduction in the company’s history. Employees received termination emails at 6 a.m. local time with immediate system lockouts and no prior warning. (Note: in June, CNBC put the final layoff tally at 21,000.)

March 12, 2026: Atlassian cuts 1,600 jobs to fund AI and enterprise expansion

Atlassian will reduce its global workforce by approximately 10%, eliminating around 1,600 roles, as the collaboration software maker redirects capital toward artificial intelligence development and enterprise sales.

March 11, 2026: Tech layoffs surpass 45,000 in early 2026

A recent analysis by RationalFX found 45,363 job cuts globally so far this year—with roughly 68% or more than 30,000 occurring in the U.S. — highlighting ongoing workforce cuts even as many tech companies report strong revenue growth.

February 10, 2026: Salesforce lays off staffers as executive leadership churn continues

Salesforce has reduced close to 1,000 roles earlier this month across teams, including marketing, product management, data analytics, and its Agentforce AI unit, Business Insider reported, quoting employees familiar with the matter.

January 23, 2026: Amazon layoffs expected to disproportionately hit AWS and tech talent

As the market slows down, AWS and other Amazon units are preparing for another round of layoffs, which is expected to overwhelmingly impact tech talent. An email from HR leader Beth Galetti on Jan. 28 confirmed 16,000 job cuts.

January 15, 2026: Ericsson plans to shed 1,600 jobs in Sweden

 Ericsson lans to cut some 1,600 jobs in Sweden, the telecommunications equipment maker said doubling down on recent cost-saving measures that have helped it weather a prolonged downturn in telecoms spending, Reuters reports.

January 13, 2026: Meta plans to cut around 10% of employees in Reality Labs business

Meta plans to cut around 10% of the employees in its Reality Labs division who work on products including the metaverse, according to three people with knowledge of the discussions, according to The New York Times.

Layoffs in 2025

• Cisco
• Oracle
• Windsurf
• Intel
• Microsoft
• Crowdstrike
• HPE
• Autodesk
• HPE
• CISA
• Workday
• Salesforce
• Meta

Global tech-sector layoffs surpass 244,000 in 2025

Economic uncertainty, elevated interest rates, and AI adoption have driven workforce reductions across tech companies worldwide, according to a RationalFX report.

October 28, 2025: Amazon to cut 14,000 jobs across company

Amazon will reduce its overall workforce by 14,000, cutting layers of management across the company and hiring in some areas to support its “biggest bets”.

August 18, 2025: Cisco and Oracle to cut hundreds of Bay Area jobs

Tech companies Cisco and Oracle are cutting hundreds of jobs across the Bay Area. Cisco will eliminate 221 positions at its Milpitas and San Francisco offices, effective Oct. 13. Oracle is reducing 101 positions in Santa Clara on the same date 

August 5, 2025: 3 weeks after acquiring Windsurf, Cognition offers staff the exit door

Cognition, the AI coding startup that acquired rival company Windsurf three weeks ago, laid off 30 employees last week and is offering buyouts to the roughly 200 remaining employees on the team, reports The Information.

July 25, 2025, Intel to lay off 22% of workforce, CEO Tan signals ‘no more blank checks’

Intel will reduce its workforce to 75,000 employees by the end of 2025 as new CEO Lip-Bu Tan implements sweeping changes designed to transform the struggling chipmaker

July 8, 2025, Intel layoffs begin: Chipmaker is cutting many thousands of jobs

Intel has begun laying off employees across the company. CEO Lip-Bu Tan told workers back in April to expect major layoffs at Intel in the coming months as the chipmaker slashes costs and overhauls its organization after years of technical setbacks and falling sales.

July 2, 2025: Microsoft will cut 9,000 workers

Microsoft will lay off about 9,000 employees, a source familiar with the workforce cut told CNBC.  The cuts will reportedly affect less than 4% of Microsoft’s global workforce and will impact different teams, geographies and levels of experience. This is the latest in a string of cuts the tech giant has made this year.

June 17, 2025: Intel looks to factory layoffs to return to profitability

Intel will lay off up to 20% of its manufacturing sector employees starting in July, according to media reports, as the company looks for options as it seeks a return to profitability. The cuts reportedly will be made around the world, but some of the layoffs will be closer to home, according to a report in The Oregonian citing an internal company memo from Intel manufacturing Vice President Naga Chandrasekaran.

May 7, 2025: CrowdStrike to lay off 5% of staff

CrowdStrike announced a plan to cut about 500 roles, roughly 5% of its workforce, to streamline operations and reduce costs. The cybersecurity company will incur about $36 million to $53 million in charges related to the layoffs

March 6, 2025: HPE cuts 2,500 jobs, remains committed to Juniper buy

CEO Antonio Neri told Wall Street analysts that HPE would begin implementing a cost-cutting program involving layoffs of about 2,500 employees over the next 18 months. HPE employs about 61,000 people worldwide.

Feb. 27, 2025: Autodesk to lay off 9% of workforce

Software maker Autodesk is laying off 1,350 staff. With the rise of subscription and multi-year contracts billed annually, and self-service enablement, it finds it needs fewer sales staff, CEO Andrew Anagnost said in a message to employees. And with its cloud, platform, and AI products proving most profitable, it’s concentrating its staff and investments there.

Feb. 27, 2025: HP to lay off 2,000 more

As part of an ongoing restructuring, HP plans to lay off up to another 2,000 workers. In recent weeks, the company has tried — unsuccessfully — to do away with telephone support staff by forcing callers to wait for at least 15 minutes if they refuse to use self-service support resources online. The company swiftly backtracked, but wider job cuts are still on.

Feb. 21, 2025: CISA lays off 130

Government employees get laid off too: In this case, 130 workers at the US Cybersecurity and Infrastructure Security Agency are being shown the door as a result of a DOGE decision. Cybersecurity experts are concerned that the cuts will harm the international collaborations that CISA has fostered, quite apart from their concerns about the security of the DOGE layoff process itself.

Feb. 5, 2025: Workday lays off 1,750

As it moves to invest more in AI and international growth, Workday is laying off 8.5% of its workforce and disposing of unused office space. Some analysts fear the cutbacks will affect the company’s customer service — unless AI can pick up the slack.

Feb. 4, 2025: Salesforce lays off over 1,000

At the same time as it’s hiring sales staff for its new artificial intelligence products, Salesforce is laying off over 1,000 workers across the company, according to Bloomberg. As of June, 2024, the company had over 72,000 employees, according to its website. Salesforce did not comment on the report. In 2024 the company reportedly laid off around 1,000 staff too, in two waves: January and July.

Jan. 14, 2025: Meta will lay off 5% of workforce

Mark Zuckerberg told Meta employees he intended to “move out the low performers faster” in an internal memo reported by Bloomberg. The memo announced that the company will lay off 5% of its staff, or around 3,600 staff, beginning Feb. 10. The company had already reduced its headcount by 5% in 2024 through natural attrition, the memo said. Among those leaving the company will be staff previously responsible for fact checking of posts on its social media platforms in the US, as the company begins relying on its users to police content.

Tech layoffs in 2024

• Equinix
• AMD
• Freshworks
• Cisco
• General Motors
• Intel
• OpenText
• Microsoft
• AWS
• Dell

Nov. 26, 2024: Equinix to cut 3% of staff

Despite intense demand for its data center capacity, Equinix is planning to lay off 3% of its workforce, or around 400 employees. The announcement followed the appointment of Adaire Fox-Martin to replace Charles Meyers as CEO and the departures of two other senior executives, CIO Milind Wagle and CISO Michael Montoya.

Nov. 13, 2024: AMD to cut 4% of workforce

AMD will lay off around 1,000 employees as it pivots towards developing AI-focused chips, it said. The move came as a surprise to staff, as the company also reported strong quarterly earnings.

Nov. 7, 2024: Freshworks lays off 660

Enterprise software vendor Freshworks laid off around 660 staff, or around 13% of its headcount, despite reporting increased revenue and profits in its fourth fiscal quarter. The company described the layoffs as a realignment of its global workforce.

Sept. 17, 2024: Cisco lays off 6,000

After laying off around 4,200 staff in February, Cisco is at it again, laying off another 6,000 or around 7% of its workforce. Among the divisions affected were its threat intelligence unit, Talos Security.

Aug. 20, 2024: General Motors lays off 1,000 software staff

More than 1,000 software and services staff are on the way out at General Motors, signalling that it could be rethinking its digital transformation strategy. In an internal memo, the company said that it was moving resources to its highest-priority work and flattening hierarchies.

August 1, 2024: Intel removes 15,000 roles

Intel plans to cut its workforce by around 15% to reduce costs after a disastrous second quarter. Revenue for the three months to June 29 stagnated at around $12.8 billion, but net income fell 85% to $83 million, prompting CEO Pat Gelsinger to bring forward a company-wide meeting in order to announce that 15,000 staff would lose their jobs. “This is an incredibly hard day for Intel as we are making some of the most consequential changes in our company’s history,” Gelsinger wrote in an email to staff, continuing: “Our revenues have not grown as expected — and we’ve yet to fully benefit from powerful trends, like AI. Our costs are too high, our margins are too low. We need bolder actions to address both — particularly given our financial results and outlook for the second half of 2024, which is tougher than previously expected.”

July 4, 2024: OpenText to lay off 1,200

OpenText said it will lay off 1,200 staff, or about 1.7% of its workforce, in a bid to save around $100 million annually. It plans to hire new sales and engineering staff in other areas in 2025, it said.

June 4, 2024: Microsoft lays off staff in Azure division

Microsoft laid off staff in several teams supporting its cloud services, including Azure for Operations and Mission Engineering. The company didn’t say exactly how many staff were leaving.

April 4, 2024: Amazon downsizes AWS in a fresh cost-cutting round

Amazon announced hundreds of layoffs in the sales and marketing teams of its AWS cloud services division — and also in the technology development teams for its physical retail stores, as it stepped back from efforts to generalize the “Just Walk Out” technology built for its Amazon Fresh grocery stores.

April 1, 2024: Dell acknowledges 13,000 job cuts

Dell Technologies’ latest 10K filing with the US Securities and Exchange Commission disclosed that the company had laid off 13,000 employees over the course of the 2023 fiscal year; it characterized the layoffs and other reorganizational moves as cost-cutting measures. “These actions resulted in a reduction in our overall headcount,” the company said. A comparison to the previous year’s 10K filing, performed by The Register, found that Dell employed 133,000 people at that point, compared to 120,000 as of February 2024. Dell announced layoffs of 6,650 staffers on Feb. 6, but it is unclear whether those cuts were reflected in the numbers from this year’s 10K statement.

See news of earlier layoffs.

The traditional methods of measuring success no longer tell the full story. Here’s what should replace them — and why.

In brief:

• AI is transforming software as a service (SaaS), and the old ways of keeping score no longer apply.
• Smart companies are evolving new metrics that provide deeper insight into how AI-native software is performing in a new marketplace.
• These changes impact everything from pricing to valuations.

The transformation of the software-as-a-service (SaaS) industry toward AI-native operating companies is rapidly changing the unit of value across the industry.

The traditional metric of seats — which measured access — is rapidly giving way to credits designed to measure work performed. This evolution is upending the industry in multiple ways, impacting everything from pricing to enterprise valuations.

While many companies still cling to seat-based metrics to measure growth, efficiency and durability, the future is likely to be one in which companies utilize a credit-centric metrics framework, with seats and outcomes as the bookends of a spectrum.

Why do software companies need new metrics?

Why the rethink, and why now? There are five major forces that are driving this shift:

1. The unit of value is changing. Seats measured who could access software, and credits measure what the software actually does. But in an AI-native world, agents don’t have seats; they have workloads. Over the past 18 months, every major SaaS platform has moved to some forms of credit or consumption unit.
2. The cost of goods sold (COGS) is exploding. AI inference adds real per-unit costs that scale with usage. In an AI-native world, software companies can’t scale to infinite users at near‑zero marginal cost as before.
3. Buying is moving up the org chart. AI-native applications shift purchasing to higher-level operators — such as line-of-business leaders or chief operating officers — which expands the market from software budgets to labor budgets. And because AI agents replace services as well as software, the total market opportunity is 3x to 10x larger than traditional SaaS.
4. Time to value (TTV) is collapsing. With AI-native tools, customers start seeing meaningful results in weeks rather than quarters. Onboarding and setup are fast, workflows are pre-built, and there’s no need for extensive customer success or professional services — dramatically reducing implementation time and costs.
5. Retention is bifurcating. AI forces clarity in a way that traditional SaaS couldn’t. Products that can provide value become even “stickier” and retain customers. Those that don’t churn faster. In an AI-native marketplace, the middle disappears.

How this shift is impacting pricing

Given how AI-native software is transforming the market, the shift to more variable pricing options is inevitable.

Seats won’t go away completely. Subscription pricing based on the number of users is stable and predictable and will continue to work for some customers. Tokens — the use of pass-through pricing for underlying compute — will fit those customers where the AI feature is commoditized or the buyer wants transparency into costs.

Credits will likely become the dominant architecture because they provide a simple metric for both customers and providers. The vendor sets the conversation ratio between credits and underlying compute, shielding the customer from inference cost details. Credits are easy to understand and can be packaged into annual contracts for multiple features and products.

Finally, the industry will likely see some move toward outcome-based pricing for results such as resolved tickets, recovered revenue or qualified leads. This strategy will mostly be limited to verticals where it is easy to prove AI impacted the result.

Where a software vendor sits on this spectrum is a signal of differentiation and pricing power. Credits are where most defensible AI-native businesses are landing because they balance customer predictability with vendor margin control.

How AI upends classic SaaS metrics

When SaaS was in its infancy, companies settled on key metrics designed to answer a small set of core questions. Are we growing? Are customers using the product? Are we retaining and expanding accounts?

But as AI upends software itself, it is also requiring companies to adopt new metrics to track success. These new metrics fall into three primary buckets, rebuilt around the pricing spectrum described earlier and the trend toward credits as the primary frame:

Revenue composition

• Committed credit annual recurring revenue (ARR) vs. burndown ARR: Measuring the credits sold on annual commitment vs. those consumed and replenished. This is the single most important split for valuation. Committed credits behave like subscription and burndown behaves like usage.
• Credit utilization rate: The percentage of purchased credits consumed per period. This is a leading indicator of renewal sizing.
• Credit burn velocity: How fast is a customer consuming their credits, and is that consumption increasing or decreasing quarter over quarter? This metric predicts expansion or contraction before it shows up in ARR.
• Effective price per credit: The real revenue per credit after discounts, overage and rollover, which can detect revenue leakage and help companies set smarter guide rails.

Margin reality

• Credit margin: The gross profit the company earns per credit after subtracting inference costs. This is the core economic unit for AI-native, usage-based businesses — the replacement for gross margin per seat used in SaaS.
• Inference-adjusted gross margin: By carving out AI inference costs separately in the P&L statement, you can see true AI margins, avoid hiding deterioration inside blended SaaS margins, and clearly distinguish AI economics from legacy SaaS economics.
• Compute leverage ratio: This metric measures how efficiently the business converts compute spend into revenue. It shows whether your AI margins are improving as you scale.
• AI-adjusted “Rule of 40”: This updated metric recalibrates the traditional growth and profitability benchmark to account for AI’s lower gross margins and variable inference costs, giving a more accurate picture of business health for AI-native companies.

Behavioral and value signals

• Time-to-first outcome: Replaces traditional onboarding metrics. Tracks how fast a customer reaches their first measurable result.
• Adoption: AI-native adoption is measured by workflow penetration and active agent density, not seat count. As AI replaces human-driven usage, the unit of adoption shifts from people to automated workflows and agents.
• Net credit retention (NCR): Credit-volume retention across the customer base, tracked separately from net recurring revenue to avoid price-change impact.

Along with these new metrics, the industry’s transformation is prompting companies to retire or recalibrate old SaaS measures, including per-seat ARR as a primary key performance indicator (KPI), traditional magic number calibrated to subscription dynamics, unadjusted Rule of 40, customer success metrics tied to human touchpoints, and blended gross margin without AI COGS carve-outs.

What does this mean for enterprise value calculations?

As the internal metrics of success change, so do the ways the investment community measures growth and long-term viability.

Increasingly, a company’s valuation multiple depends on whether its revenue behaves like committed subscription ARR or volatile usage ARR, and the commit‑to‑burndown ratio is the metric investors use to decide where the company fits.

For example, a business with 80% committed credit ARR could trade closer to subscription comps and one with 80% burndown could trade closer to usage comps even though both have the same types of customers. Being able to proactively explain the commit‑to‑burndown mix can help companies avoid undervaluation.

In addition, utilization is expected to replace net promoter scores and seat usage as the primary predictor of churn or expansion. Low utilization guarantees downsizing at renewal, so companies must track utilization cohorts the same way SaaS tracks logo retention cohorts today.

We’re also seeing an inversion of the operating model, with R&D and COGS moving up the P&L and sales and marketing (S&M) and customer success (CS) moving down or sideways. The net operating leverage profile is structurally different from classical SaaS, and the cost-to-scale curve looks different too.

Finally, credit margin engineering is a hidden value-creation lever. The gap between price per credit and cost per credit is set by the software vendor and can be optimized. Most operators have barely started managing this rigorously, and the ones who do will pull away on margin.

What this means for leaders, boards and investors

The shift from classic SaaS metrics to new AI‑native measures isn’t cosmetic. It represents the seismic change the industry is experiencing as AI matures and transforms products and organizations.

While these metrics — and perhaps others yet to be determined — may evolve over time, there is no doubt they are already changing how AI companies allocate capital, price products, incent sales teams, evaluate performance and communicate with investors.

It’s important to remember that SaaS metrics were practical tools for a specific era of software. As that era draws to a close, winning companies will choose new metrics that shape behavior and drive smart decision-making.

The views reflected in this article are the views of the author and do not necessarily reflect the views of Ernst & Young LLP or other members of the global EY organization.

This article is published as part of the Foundry Expert Contributor Network.
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I haven’t slept much in the past few weeks. Not because of some theoretical cyber risk that keeps many executives awake, but because reality just delivered a real wake-up call to our industry — a call that every executive must answer, now.

Imagine this: A major global enterprise, a company most of us interact with indirectly every single day, wakes up to find its entire digital environment obliterated. Thousands of employees in dozens of offices and remote locations are suddenly offline. Customers are cut off, supply chains grind to a halt and regulators are notified with a chilling admission: “We have no idea when we’ll be back.”

This wasn’t ransomware. There was no negotiation, no decryption key to buy, no easy way out. It was destruction — deliberate, coordinated and geopolitically motivated — not monetary.

As a chief customer officer who’s worked with countless customers on cyberattack risks, my perspective hits a bit differently than a CISO or a CTO. I see the aftermath, not just the attack surface. I see the faces behind the tickets, the operations team locked out of their own systems, the support agent answering panicked calls at dawn. And I ask: How many organizations have actually stress-tested their response to this scenario — not a hypothetical, but this very real, lights-out event? Here’s what every leader needs to confront today:

Recovery is not just a technical exercise

The first assumption to break during a real crisis is the belief that recovery is purely technical.

Many organizations have done tabletop exercises and have a backup and recovery playbook, so they feel prepared. They can point to backup windows, retention schedules and immutability controls. The moment a true blackout happens, a different reality surfaces. The people who own the recovery steps either do not know each other, lack the authority to make decisions without supervisor approval or need guidance from offline systems.

The reality is that technical infrastructure almost always holds up better than human infrastructure. Organizations have built their recovery strategy around the assumption that someone competent will be awake, available and empowered when a cyber event happens.

Still, backups are only as good as their independence. Let’s be blunt: If your recovery infrastructure shares identity, authentication or network trust with your Microsoft tenant (such as Azure, Microsoft 365 or Teams), you don’t actually have a recovery plan; you have a false sense of one — and a liability. A recent survey found that while 90% of organizations express confidence in their ability to recover from a cyber incident, fewer than one in three ransomware victims fully recovered their data.

True resilience means immutable, air-gapped backups, untouchable by the same compromise. Anything less is an illusion. I talk to customers about their recovery plans constantly. The customers who have rehearsed all scenarios sleep soundly. Those who haven’t? They’re rolling the dice.

Most business continuity plans ignore ‘total blackout’

I’ve reviewed hundreds of business continuity plans. Almost all assume partial failures — a region, an application, a data center. But what if every system, in every country, goes dark simultaneously? That’s an entirely different playbook. If your team hasn’t run a drill for a global, simultaneous outage, you’re not prepared. The probability is low, but the cost of being unready is existential.

Connected devices, OT systems, field hardware, partner integrations — they all plug into your enterprise network. When the core collapses, it’s not just IT at risk. It’s operational technology, physical safety systems and in regulated sectors, potentially human lives. Understanding and testing those interdependencies is non-negotiable.

This is also where boards need to change the conversation. A study found that only 5% of companies have cybersecurity experts on their board of directors. Recovery time objectives (RTOs) should not be buried in technical appendices. It’s all jargon to boards. That makes translation essential. RTOs must be explained in terms of business impact. “We can recover in four hours” is a technical statement. “Every hour of downtime costs us $2.3M and creates regulatory exposure in three jurisdictions” is a board statement.

That is the level of clarity leaders need.

The most prepared organizations do not wait for an incident to educate the board. They bring the conversation forward proactively. They frame recovery in business terms: revenue, regulatory standing, customer trust and brand reputation.

The most effective framing is often simple. Show the most critical systems. Show what happens if each one is down for one hour, four hours, 24 hours and 72 hours. Show the current recovery capability against each and then show the gap.

If your board is not demanding real answers, your business continuity strategy is likely underfunded and your business is exposed. This is a risk conversation worth forcing because the consequences do not stay inside IT. They can show up in customer churn or missed revenue and ruin an organization’s reputation.

Threat intelligence must be actionable, not archived

Geopolitical attacks, hacktivist campaigns and nation-state targeting aren’t abstract threats. They are active risks, and that intelligence cannot languish in the security team’s inbox. Executive leadership must be looped in — and immediately — so gaps can be closed before they’re exploited. Too often, intelligence enters the security operations function and never reaches the teams responsible for recovery infrastructure or executive decision-making.

If a threat actor is targeting a specific class of backup agents, the team responsible for those agents needs to know now, not two weeks from now. If intelligence suggests destructive activity against a sector, recovery owners need to validate isolation, access paths and restoration procedures immediately. If geopolitical tension increases the likelihood of targeting, executive leadership needs to understand what exposure exists and what actions are being taken. The organizations that survive aren’t just the best at incident response. They’re the ones who anticipated, rehearsed and invested before the attack.

Part of investing in a recovery strategy requires closing the loop between signal and action. The most prepared organizations have already mapped their critical recovery dependencies to specific threat categories. When intelligence touches one of those categories, there is a named owner and a clear set of actions. No guessing or forwarding emails into the void is needed because the distance between the warning and the employees’ ability to do something is shortened.

Looking ahead, the conversation will continue to evolve beyond traditional cyber response. Because in an AI-enabled enterprise, the new question is whether the data within those systems can still be trusted. When AI systems make decisions based on enterprise data, the attack surface becomes the data’s accuracy. A threat actor who quietly corrupts a dataset over 90 days before a recovery event has done more damage than just downtime. They can poison the inputs driving decisions across the business.

Regardless of how AI will change threat intelligence and cyber response, these principles remain the same. Know your problem, whether structural or technological. Ensure your human infrastructure keeps pace with your technical infrastructure, with clear cross-functional ownership and the tools and knowledge to act autonomously. Communicate with your boards often — and correctly.

Let’s not wait for the next headline to ask, “Are we ready?” Have those conversations now. Test your assumptions. Close your gaps. Because in today’s threat landscape, resilience isn’t IT’s job — it’s everyone’s mandate.

This article is published as part of the Foundry Expert Contributor Network.
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Every CIO I speak with today is wrestling with some version of the same question: How do we move faster with AI and deliver on our commitments?

It’s an understandable concern. Boards and CEOs are asking about AI. Business leaders are experimenting with use cases. Employees are discovering tools daily, while technology vendors promise unprecedented gains in productivity, innovation, and competitive advantage.

After hundreds of conversations with technology executives over the past year, I’ve become convinced that speed isn’t the real issue. The organizations pulling away from the pack aren’t necessarily adopting AI faster than everyone else. They’re executing more effectively — a subtle distinction that represents one of the defining leadership challenges of the AI era.

Technology has never been the hardest part of transformation. People, priorities, culture, and operating models are the biggest challenges. The ability to translate bold boardroom aspirations into thousands of thoughtful decisions made every day by architects, engineers, product managers, analysts, and business leaders is where competitive advantage is created. AI may be accelerating the pace of change, but it hasn’t changed that fundamental truth.

I’ve met plenty of executives who are exceptional in the boardroom. They know how to frame a vision, influence a board, and build confidence among investors and business leaders. I’ve also met remarkable technologists who instinctively understand the architectural decisions, engineering tradeoffs, and implementation details that determine how great ideas become reality. Modern CIOs, however, must move comfortably between both worlds. Afshean Talasaz is one who stands out among this rare breed.

Long before becoming CIO of Colonial Pipeline, Talasaz built his career from the ground up as a business professional, data scientist, and technologist. He has designed enterprise platforms, built AI capabilities, led technology organizations, and partnered closely with executive leadership teams on business transformation. Today, as an executive in residence with our Practitioners for Practitioners (P4P) community, he helps CIOs and business leaders navigate one of the most significant technology shifts of our generation.

While Talasaz brings deep knowledge of data and AI to the table, his greatest strength is his ability to create strategy and connect it with execution. He can spend the morning discussing enterprise reinvention with the board and the afternoon debating architectural principles with the teams responsible for bringing that vision to life.

That versatility gives Talasaz a unique lens on how CIOs can deliver value with AI.

Software companies have a term for engineers who understand every layer of the technology stack: full-stack developers. Listen to Talasaz and it becomes evident that the AI era requires something similar from technology leaders: a full-stack CIO.

The full-stack CIO: Leading with clarity

A full-stack CIO understands how every layer of the enterprise influences the next. They recognize that every strategic priority becomes a portfolio investment, every investment shapes an operating model, every operating model influences architecture, every architecture choice informs product decisions, every product decision shapes engineering priorities.

The best CIOs understand both ends of that journey. The extraordinary ones understand everything in between.

And those who execute best lead with clarity, Talasaz says.

“Everyone, from executives to middle managers to the people writing code, should be able to explain what we’re trying to achieve,” he emphasizes. “Clarity isn’t that we’ve handed out the PowerPoint. It’s that people genuinely understand where we’re going and can articulate it in their own language.”

One of the unintended consequences of the AI boom is that organizations are beginning to confuse activity with alignment. They have AI councils, AI governance committees, AI innovation labs, AI centers of excellence, AI pilots, and AI roadmaps. Yet if you stop ten people in the hallway and ask a deceptively simple question, What business problem are we actually trying to solve? you’ll often hear ten different answers.

As a result, architects optimize for one objective while product teams optimize for another. Business units pursue opportunities that seem perfectly reasonable from their perspective. Engineers make thoughtful technical decisions based on the information available to them. Individually, none of those decisions are necessarily wrong. Collectively, however, they create organizational drift. AI doesn’t create that problem. It simply accelerates the consequences.

And while AI can be a force multiplier for the positive when every decision is guided by a shared understanding of where the organization is headed, it can also be a force multiplier for the negative, resulting in an organization simply moving faster in different directions.

“When we have the fundamentals right, the tech infrastructure, the operating models, the nuances of how our business actually runs, we get the impacts of AI in a positive way,” Talasaz says. “When we don’t have those in place, AI can amplify the gaps or mute the benefits.”

At a time when so much of the conversation surrounding AI is focused on algorithms, agents, and automation, it’s an important reminder that organizations don’t execute strategy; people do.

Reducing organizational friction

Most executives are familiar with the concept of VUCA that characterizes today’s business environment. But Talasaz stresses the importance of turning this concern inward: “If the world outside our organizations is becoming more volatile, uncertain, complex, and ambiguous, what are we, as leaders, doing to the inside of our organizations?”

Leaders spend enormous amounts of time helping their organizations respond to external disruption but comparatively little time asking whether they are inadvertently re-creating those same conditions internally in response to those external needs. Are we reducing uncertainty or introducing more of it? Are we simplifying work or adding unnecessary complexity? Are we helping people focus on what matters most, or asking them to navigate competing priorities and shifting expectations?

Talasaz refers to this phenomenon as double VUCA — something I’ve witnessed repeatedly while working with CIOs over the past decade. Organizations often assume they’re struggling because of technology limitations when the real constraint is organizational friction. Teams wait for decisions. Priorities shift faster than roadmaps. Governance grows heavier. New committees are formed to solve problems created by existing committees. Everyone is working harder, yet the organization somehow feels slower.

AI amplifies both outcomes. Organizations with clarity become dramatically more effective because AI accelerates good decisions. Organizations without clarity simply accelerate confusion.

Operating model as strategy enabler

AI governance is one way to achieve greater clarity, but as Talasaz says, governance shouldn’t primarily exist inside policy manuals that few people read.

Instead, AI governance should be embedded in the daily rhythms of the organization, shaping how teams collaborate, how decisions are made, how products move from ideas into production, and how innovation happens safely without requiring constant escalation. In other words, it’s all about your operating model.

“If you had to pick one thing that isn’t technology, your operating model is the most important element for executing data and AI at scale,” he says.

The best operating models create enough clarity that capable people can make thousands of decisions independently and confidently, without having to wait for permission. By embedding good governance into the way it works, the organization becomes faster.

This advice echoes something I’ve heard repeatedly from some of the world’s most respected CIOs: High-performing organizations aren’t built on tighter control; they’re built on greater trust, supported by clear principles, shared expectations, and operating models that enable responsible decision-making at every level of the enterprise.

Talasaz points out that technology leaders tend to speak in terms of transformation. He suggests CIOs consider a different word: reinvention.

As he explains, transformation implies replacing what exists today with something new. Reinvention starts with a more clear-eyed and practical premise: Some things absolutely must change; others represent years, sometimes decades, of accumulated expertise, customer trust, operational discipline, and competitive advantage.

Reinvention is about building on those strengths while also creating new ways to deliver value. The leaders making the greatest progress in their AI journeys seem to recognize that it’s less about abandoning the past than thoughtfully preparing the organization for the future.

Closing the gap between strategy and execution

Full-stack CIOs must be able to map out the various layers of execution and planning that need to be done at every level of the organization to be successful. To help with this, Talasaz has developed a data and AI framework that draws on his own experiences “from the keyboard to the boardroom.”

As Talasaz sees it, too many organizations have been doing good work in isolation. “They’re doing a lot of the right things,” he says. “They’re just not connected.”

Boards may be discussing growth while business leaders redesign customer experiences. Product teams may be prioritizing new capabilities while architects modernize platforms. Data teams may be improving quality while engineers focus on delivery. Every group makes meaningful progress within its own domain, yet somewhere between strategy and execution, the connective tissue begins to disappear. Talasaz’s framework brings those connecting points to the forefront.

Crucially, the framework doesn’t begin with technology or AI or even with data. It begins with the experiences the organization hopes to create for its customers, employees, or partners. Many AI initiatives start with the question, “What can this technology do?” And indeed, we need to be inspired by the possibilities and challenged to think differently by what the technology can do. But, Talasaz emphasizes, we also need to ask what experiences we need to deliver for our business and how the technology can make that a reality.

The framework challenges CIOs to answer that question first. Only after the experiences are clearly defined does the conversation move to the capabilities required to deliver it, the business activities that support those capabilities, the AI and data products that enable them, and finally the data foundation that makes everything possible.

This shift in perspective ensures that, rather than allowing technology investments to search for business value, the business experience defines the technology required to deliver it. For CIOs, that’s more than a planning exercise. It’s a fundamentally different way of leading.

Over the coming months, the P4P community will be convening a series of small CxO roundtables to explore these issues and work more deeply with Afshean Talasaz’s 6×6 Data and AI Framework. CIOs and other enterprise leaders interested in participating are welcome to reach out to me directly.

hasan as’ari – shutterstock.com

SAP-Anwenderunternehmen stehen unter Druck, auf SAP S/4HANA zu wechseln, weil die Mainstream-Wartung für SAP ERP (SAP ECC 6.0) Ende 2027 ausläuft und die bis Ende 2030 geltende erweiterte Wartung kostenpflichtig ist.

Zwar stellt SAP mit der „SAP ERP, Private Edition, Transition Option“ eine weitere Wartungsverlängerung bis 2033 in Aussicht. Da diese einer Neuimplementierung gleichkommt, bleibt SAP-Kunden mehr Zeit für die Planung, die Analyse und das Changemanagement. Der Nachteil: Wer diese Option nutzt, läuft Gefahr, technologisch ins Hintertreffen zu geraten, da Innovationen nahezu ausschließlich für SAP S/4HANA bereitgestellt werden.

Zögerliche SAP-S/4HANA-Transformation trotz Wartungsdruck

Obwohl der Druck hoch ist, hat eine große Zahl der SAP-Bestandskunden die Transformation auf die seit 2015 verfügbare ERP-Suite offenbar noch nicht vollzogen. Eine COMPUTERWOCHE-Expertenrunde zeigte, wo die größten Hürden liegen und was erfolgreiche Projekte auszeichnet.

Warum etliche Unternehmen die Transformation vor dem regulären Wartungsende scheuen und stattdessen zwei Prozent Mehrkosten für die erweiterte Wartung einkalkulieren, brachte ein Teilnehmender auf den Punkt: Firmen haben über Jahrzehnte in ihre SAP-ERP-Lösung investiert und sie an individuelle Prozessanforderungen angepasst, damit die Abläufe entlang der Supply Chain reibungslos laufen. Er habe daher in den vergangenen zehn Jahren keinen Kunden erlebt, der freiwillig umsteigen wollte. Alle hätten gesagt, dass sie müssen.

Nach Erfahrungswerten eines weiteren Experten nutzen erst rund 20 Prozent der SAP-Kunden SAP S/4HANA als Kernapplikation produktiv, unter anderem, weil entsprechende Transformationsprojekte auf sieben bis neun Jahre angelegt sind.

Altlasten bremsen die SAP-S/4HANA-Transformation

Unternehmen, die sich für den Wechsel entscheiden, verzichten häufig auf jede Modernisierung. Sie vollziehen einen Eins-zu-eins-Umstieg ohne Code-Modifikation, sei es in Form einer System Conversion (Brownfield-Ansatz) oder per Lift and Shift in SAP Cloud ERP Private (früher: SAP S/4HANA Cloud Private Edition). Dabei ist eine große Zahl von SAP-ERP-Installationen gar nicht zukunftsfähig, weil sie auf Prozessen aus den 1990er Jahren basieren und im Lauf der Jahre durch zahlreiche Eigenentwicklungen erweitert wurden.

Nicht selten gibt es bis zu mehrere tausend kundeneigene Programme im Z/Y-Namensraum, die zum Teil nicht mehr genutzt werden und das System unnötig belasten. Die Experten waren sich einig, dass eine solche rein technische Migration, bei der Altlasten wie ABAP-Eigenentwicklungen mitgeschleppt werden, keinen Mehrwert für das Unternehmen bringt.

Es muss geprüft werden, welche Eigenentwicklungen beibehalten werden, weil sie wettbewerbsdifferenzierend und damit geschäftskritisch sind, und welche gelöscht werden müssen, weil sie nicht genutzt werden oder weil es dafür inzwischen SAP-Standardfunktionen gibt. Handlungsbedarf besteht auch bei einer dreistelligen Anzahl von Buchungskreisen, von denen niemand weiß, welche noch benötigt werden, oder bei zahlreichen Dubletten in den Kreditoren- und Debitorenstammdaten.

Migrations-Tools und KI-Agenten beschleunigen den Umstieg

Um diesen Prüf- und Bereinigungsaufwand zu bewältigen, bietet SAP mehrere Tools, um die Transformation auf SAP S/4HANA zu vereinfachen: darunter SAP Activate, SAP Cloud ALM, Migration Cockpit, Readiness Check, Custom-Code-Check oder Modifikationsabgleich. Ergänzt werden sie durch Lösungen wie Signavio für die Prozessanalyse. Die Experten schätzen den Effizienzgewinn durch solche Migrationswerkzeuge auf 30 bis 50 Prozent.

Zusätzliche Produktivität versprechen KI-Agenten, die Altsysteme automatisiert analysieren, Code bereinigen und Datenflüsse transformieren. Das reduziert den Migrationsaufwand und beschleunigt den Umstieg.

Scope-Management als Schlüssel für den Projekterfolg

Einig waren sich die Teilnehmenden, dass SAP-S/4HANA-Transformationsprojekte in der Regel nicht an der Technologie scheitern, sondern an einer mangelhaften Scope-Definition und am unzureichenden Changemanagement.

Ein Scope-Management vor dem Projektstart, das berücksichtigt, wie viel Veränderung der IT-Organisation und den Fachbereichen zugemutet werden kann, sei essenziell für den Erfolg, sagte einer der Teilnehmenden. Es erfordert die Fähigkeit zu priorisieren und ein iteratives Vorgehen, bei dem zunächst geschäftskritische Must-haves und Quick Wins umgesetzt werden. Weniger wichtige Nice-to-haves folgen später. Wer dagegen in der Konzeptionsphase bereits den großen Wurf anstrebt, wird voraussichtlich scheitern. Als Beispiel wurde der direkte Umstieg auf ein SAP-S/4HANA-Kernsystem genannt, das nach dem Clean-Core-Ansatz von nicht mehr lauffähigen Programmen und obsoleten Erweiterungen bereinigt ist.

Genauso wichtig ist ein Change-Management, das Mitarbeitende von Beginn an einbezieht, die nötige Akzeptanz schafft und vom Top-Management aktiv unterstützt wird, sowie eine verbindliche Governance mit klaren Zielvorgaben. Unverzichtbar ist auch die Einbindung der Fachbereiche. Sie stellt die größte Herausforderung dar, da Unternehmen befürchten, dass durch die SAP-S/4HANA-Transformation zu viele personelle Ressourcen gebunden werden, die dann für Kernaufgaben fehlen. Kommt es vor, dass IT und Fachbereiche als Antipoden agieren, sollte ein Change-Coach als Vermittler eingesetzt werden.

Hybride Betriebsmodelle setzen sich langfristig durch

Bereits vor dem Projektstart muss abschließend geklärt sein, welches Betriebsmodell für SAP S/4HANA am besten zu einem Unternehmen und seinen Zielen passt, auch mit Blick auf regulatorische Anforderungen. Das ist häufig nicht der Fall, sodass das Projektteam unnötig Zeit damit verbringt, das passende Betriebsmodell zu ermitteln. Das bremst Transformationsvorhaben aus.

Nach Ansicht eines Teilnehmenden wird sich langfristig ein hybrides Betriebsmodell durchsetzen, bei dem der SAP-Kunde entscheidet, welche Elemente der SAP-S/4HANA-Landschaft in einer Hyperscaler-Cloud, einer souveränen Cloud und/oder On-Premises laufen. Eine weitere, weitgehend unbekannte Möglichkeit ist der Betrieb im Rahmen der Customer-Data-Center-Option (CDC) von SAP Cloud ERP Private (früher: SAP S/4HANA Cloud Private Edition), die aus Gründen wie Datenschutz, Leistung und Souveränität eine interessante Alternative sein kann.

Mehrere Experten stellen darüber hinaus fest, dass die vollwertige SaaS-Lösung SAP Cloud ERP Public (früher: SAP S/4HANA Cloud Public Edition) inzwischen verstärkt eingesetzt wird. Sie stellt vorkonfigurierte Kern-ERP-Funktionen (Best Practices) bereit und lässt sich relativ schnell einführen, ermöglicht aber kaum individuelle Anpassungen. Diese Abstriche nehmen Unternehmen in Kauf, um von regelmäßigen, automatischen Upgrades und technologischen Innovationen zu profitieren.

Kritisiert wurde allerdings, dass die Cloud-Diskussion häufig unter begrifflichen Unschärfen leidet. So macht der Betrieb von SAP S/4HANA in einer Hyperscaler- oder SAP-Cloud die Lösung noch lange nicht zum Software-as-a-Service-Angebot. Solche Ungenauigkeiten irritierten SAP-Kunden und bremsten die Entscheidungsfindung. Letztlich sind beim Cloud-Betrieb auch die Kosten entscheidend. Zwar wollen viele Unternehmen anfangs maximale Sicherheit mit Private Network und Confidential Computing, wählen dann aber günstigere Commercial-Cloud-Angebote. Ausnahmen bilden regulierte Branchen und der öffentliche Sektor.

Ob hybrides Betriebsmodell oder Kostenfrage, am Ende entscheidet über den Projekterfolg nicht allein die Technologie, sondern auch, wie diszipliniert Scope und Wandel im Unternehmen gesteuert werden.

Teilnehmer der Round-Table “SAP S4HANA 2027”

Harald Becker / Hewlett-Packard GmbH

Sonja Brüggemann / Lufthansa Industry Solutions GmbH & Co. KG

Microsoft Deutschland GmbH

VOGUS – Wolfgang Voglhuber / Natuvion GmbH

smartShift Technologies GmbH

A global law enforcement crackdown has seized infrastructure serving the massive phishing-as-a-service (PhaaS) group Kratos, as well resulting in the arrest of an unnamed Kratos “developer and technical administrator” in Indonesia. 

The effort was managed by German law enforcement and involved agencies from the US, Indonesia and other countries.

Although a German statement claimed that the Kratos infrastructure “has been completely disabled” and that “Kratos-supported phishing campaigns can no longer be carried out,” cybersecurity analysts and consultants question how much of a dent in enterprise phishing activity will result, and how long it will last.

“A server seizure and a single arrest overseas remove infrastructure, not the intellectual property,” said Frank Dickson, group VP for security at IDC. “PhaaS kits get cloned, forked and resold routinely, and the 1,800 Kratos customers didn’t vanish. They just lost a vendor in a market where vendors get replaced fast.”

He added, “seizing 200-plus servers and arresting the developer pulls a major supplier out of that specific niche. It doesn’t touch the broader phishing economy. For every roach that you squish, there are a hundred that you do not see.”

Noah Kenney, principal consultant at Digital 520, takes an even more pessimistic view, arguing that there might not even be that much of a short-term phishing slowdown. 

“What makes this different from a botnet or ransomware takedown is that the people running the attacks were never part of the organization. Kratos was just a vendor,” Kenney said. “The 1,800 customers who bought it still have their target lists, their sending infrastructure and whatever access they had already established. The tooling went dark, but the people phishing your employees last week are still working, shopping for a replacement that already exists. Enterprises should not read this as a drop in (likely) threat volume.”

One thing that the security community seems to agree on is that Kratos was a major player in the lucrative PhaaS space. But precisely determining the percentage of PhaaS activity controlled by Kratos is impossible, given that Kratos sold their kits to others. Security researchers even disagree on what they should call Kratos kits.

“Microsoft tracks this kit as SneakyLog, others tie it to Sneaky 2FA, and KnowBe4 disputes the lineage entirely. When the security industry cannot agree on what a kit is to be called, that is because renaming and reselling is continuous rather than something that happens after a raid,” Kenney said. “What actually changed this time is the arrest and the [shutdown of the] servers. Standing up new hosting is only a weekend of work, but replacing a developer who understood how to keep an adversary in the middle proxy stable and evasive at scale is harder.”

IDC’s Dickson added that the biggest value from the takedown is in the information gleaned from the seized servers. 

“Kratos operated in the adversary-in-the-middle category, generating convincing fake Microsoft 365 login pages that harvest session tokens and step past MFA, the exact technique behind a lot of the business email compromise activity of the past two years,” he said. “I would love to see what law enforcement does with the customer list. That, my friend, is gold.”

Regardless, Assaf Morag, a cybersecurity researcher at Flare, dubbed the German crackdown “symbolic,” given Kratos’ reach within phishing circles. 

He argued that the very nature of software makes it all but impossible to shut down in a meaningful way.

“Although this is malicious infrastructure, it is still software, and modern development and deployment practices make it relatively quick to rebuild or replicate,” he said. “Demand is likely to shift to competing providers, allowing the ecosystem to recover even if this particular operation has been disrupted.”

Pieter Arntz, malware intelligence researcher at Malwarebytes, agreed that the crackdown is disruptive but not definitive. 

“This appears to be more than a routine website seizure. The reporting points to a PhaaS platform with centralized infrastructure, subscription-style customers, and Microsoft 365 session theft / MFA-bypass tooling, so taking down the backend likely hurts many downstream affiliates at once. In that sense, it is a meaningful disruption to the phishing ecosystem, not just one campaign,” Arntz said.

But, he added, “a rebrand or partial re-emergence is plausible, which is the historical pattern for PhaaS operations. Even if the core infrastructure is gone, the code, customer lists, and operator tradecraft can survive.”

This means that customers and affiliates can shift to other phishing kits, he said, so it’s likely that the takedown will create a temporary decline in Kratos-specific activity, but probably not a lasting reduction in phishing overall.

Flavio Villanustre, CISO for the LexisNexis Risk Solutions Group, also concluded that the impact of this crackdown will be short-lived. 

“For each criminal organization that is dismantled, ten new ones pop out of nowhere. Unless there is a coordinated international effort by more than a few countries, this is a whack-a-mole exercise,” he said. “These are all loosely connected individuals and akin to a lernaean hydra, with two heads growing whenever you chop off one. Their leadership emerges from their lines organically without a real center of control. This makes it almost impossible to completely eliminate these criminal organizations.”

Oracle’s July 2026 Critical Patch Update, its largest ever, contains 1,449 new security patches spanning 32 product families, from Oracle Database and E-Business Suite to PeopleSoft, GoldenGate, Java SE, and Fusion Middleware.

Fusion Middleware was particularly hard hit, with new security patches for 355 security vulnerabilities, 219 of them remotely exploitable without authentication, meaning they can be exploited over a network without requiring user credentials. Ten of them scored a “perfect” 10.0 on the Common Vulnerability Scoring System (CVSS).

These included easily exploitable vulnerabilities allowing unauthenticated attackers with network access via HTTP to compromise Oracle Data Integrator, Oracle Access Manager, Oracle HTTP Server, Oracle Platform Security for Java, Oracle WebCenter Content, Service Delivery Platform, or Oracle Weblogic Server Proxy Plug-in,

No other products were found to have quite such extreme vulnerabilities, but there were plenty of others scoring almost as badly.

Two critical flaws in Oracle Database Server

The most severe flaw Oracle patched in its flagship database product is CVE-2026-61211, a vulnerability in the RDBMS component’s DBMS_CLOUD package with a CVSS score of 9.9.

This easily exploitable vulnerability allows a low-privileged attacker having Execute DBMS_CLOUD privilege with network access via Oracle Net to compromise the RDBMS, Oracle said in the patch update statement. “While the vulnerability is in RDBMS, attacks may significantly impact additional products (scope change). Successful attacks of this vulnerability can result in takeover of RDBMS,” it warned.

The flaw affects Database Server versions 19.3 through 19.31 and 23.4.0 through 23.26.2.

Sanchit Vir Gogia, chief analyst at Greyhound Research, said the 9.9 score should be read as serious but conditional. Exposure depends on configuration, he said: On customer-managed databases, DBMS_CLOUD is absent until installed, and grants and network access lists determine the radius from there. “Where DBMS_CLOUD is broadly granted and reachable, the emergency is real and the window is seventy-two hours; where it is absent, the accelerated database wave will do.”

Vibhum Dubey, a cybersecurity researcher and red teamer, said the flaw stood out to him because it checks several boxes that concern defenders.

“Database servers often hold an organization’s most valuable data, so even if exploitation is not publicly observed yet, I don’t think this is the kind of issue you leave until the next routine maintenance window if your environment is exposed,” Dubey said.

A second Database Server flaw, CVE-2026-47040, affects Connection Manager in Oracle Net Services, is remotely exploitable without credentials. Oracle’s risk matrix lists six Database Product vulnerabilities in this cycle as reachable over a network with no authentication required, the statement added.

CVE-2026-7383, an OpenSSL-related TLS vulnerability, affects two products, Database Server and Autonomous Health Framework, since both bundle the same third-party component. Oracle’s advisory notes the Database Server patch for that CVE also resolves 19 related OpenSSL CVEs bundled into the same fix.

Oracle GoldenGate received 27 new patches, nine of which do not require authentication to exploit, including CVE-2026-2332, a flaw in the Big Data and Application Adapters component tied to Eclipse Jetty, the statement added.

There were also two critical flaws in Oracle’s TimesTen in-memory database.

The remainder of the release spans E-Business Suite, WebLogic Server, PeopleSoft, Siebel, JD Edwards, Communications, Retail Applications, Utilities Applications, MySQL, Solaris and VM VirtualBox.

Volume repair

Gogia said the volume itself marks a shift.

“At 1,449 patches, against 481 in April 2026 and 309 a year earlier, patch load has outgrown the queue built to hold it,” he said. He recommended a tiered response: “The reachable and the reported inside seventy-two hours, the trusted core inside ten days, the rest by risk before the October release.”

He also flagged a specific risk in how organizations might triage E-Business Suite. “Oracle’s advisory concedes that E-Business Suite exposure sits partly in underlying Database and Fusion Middleware versions outside the E-Business Suite matrix. The fastest way to mis-prioritise this release is to patch by product logo instead of trust boundary.”

Third Tuesday, quarterly cycle

The July release is the third quarterly Critical Patch Update of 2026, and the first since the introduction in May of the monthly Critical Security Patch Update program.

Gogia said Oracle has effectively layered a second cadence on top of the existing one rather than replacing it.

“Quarterly Critical Patch Updates remain and stay cumulative; monthly Critical Security Patch Updates now sit on top,” he said, adding that enterprise adoption of the new rhythm remains low because of “certification obligations, regression exposure and scarce specialist hours.”

Dubey made a similar point about organizational readiness: “In large enterprises, patching is rarely a technical problem. It is an operational one. Database administrators, application owners, infrastructure teams, business stakeholders, and change advisory boards all have to align.”

Niyati Daftary, principal analyst at Gartner, said the release underscores a broader shift in how patching is approached.

“Patching is no longer a race to remediate every vulnerability. It is a discipline of identifying the exposures that matter most and reducing business risk as efficiently as possible,” she said, adding that organizations should prioritize based on exposure, business impact and exploitability, starting with internet-facing assets and mission-critical systems.

Daftary pointed to continuous threat exposure management and adversarial exposure validation as increasingly relevant frameworks, since CVSS scores “measure theoretical severity rather than actual enterprise risk.” Patching alone will not be sufficient, Daftary said, and organizations should continue investing in defense in depth, including behavioral threat detection and incident response.

Oracle’s next cumulative Critical Patch Update will come on Oct. 20, 2026, with smaller Critical Security Patch Updates on Aug. 18 and Sept. 15.

This article first appeared on CSO.

Oracle’s July 2026 Critical Patch Update, its largest ever, contains 1,449 new security patches spanning 32 product families, from Oracle Database and E-Business Suite to PeopleSoft, GoldenGate, Java SE, and Fusion Middleware.

Fusion Middleware was particularly hard hit, with new security patches for 355 security vulnerabilities, 219 of them remotely exploitable without authentication, meaning they can be exploited over a network without requiring user credentials. Ten of them scored a “perfect” 10.0 on the Common Vulnerability Scoring System (CVSS).

These included easily exploitable vulnerabilities allowing unauthenticated attackers with network access via HTTP to compromise Oracle Data Integrator, Oracle Access Manager, Oracle HTTP Server, Oracle Platform Security for Java, Oracle WebCenter Content, Service Delivery Platform, or Oracle Weblogic Server Proxy Plug-in,

No other products were found to have quite such extreme vulnerabilities, but there were plenty of others scoring almost as badly.

Two critical flaws in Oracle Database Server

The most severe flaw Oracle patched in its flagship database product is CVE-2026-61211, a vulnerability in the RDBMS component’s DBMS_CLOUD package with a CVSS score of 9.9.

This easily exploitable vulnerability allows a low-privileged attacker having Execute DBMS_CLOUD privilege with network access via Oracle Net to compromise the RDBMS, Oracle said in the patch update statement. “While the vulnerability is in RDBMS, attacks may significantly impact additional products (scope change). Successful attacks of this vulnerability can result in takeover of RDBMS,” it warned.

The flaw affects Database Server versions 19.3 through 19.31 and 23.4.0 through 23.26.2.

Sanchit Vir Gogia, chief analyst at Greyhound Research, said the 9.9 score should be read as serious but conditional. Exposure depends on configuration, he said: On customer-managed databases, DBMS_CLOUD is absent until installed, and grants and network access lists determine the radius from there. “Where DBMS_CLOUD is broadly granted and reachable, the emergency is real and the window is seventy-two hours; where it is absent, the accelerated database wave will do.”

Vibhum Dubey, a cybersecurity researcher and red teamer, said the flaw stood out to him because it checks several boxes that concern defenders.

“Database servers often hold an organization’s most valuable data, so even if exploitation is not publicly observed yet, I don’t think this is the kind of issue you leave until the next routine maintenance window if your environment is exposed,” Dubey said.

A second Database Server flaw, CVE-2026-47040, affects Connection Manager in Oracle Net Services, is remotely exploitable without credentials. Oracle’s risk matrix lists six Database Product vulnerabilities in this cycle as reachable over a network with no authentication required, the statement added.

CVE-2026-7383, an OpenSSL-related TLS vulnerability, affects two products, Database Server and Autonomous Health Framework, since both bundle the same third-party component. Oracle’s advisory notes the Database Server patch for that CVE also resolves 19 related OpenSSL CVEs bundled into the same fix.

Oracle GoldenGate received 27 new patches, nine of which do not require authentication to exploit, including CVE-2026-2332, a flaw in the Big Data and Application Adapters component tied to Eclipse Jetty, the statement added.

There were also two critical flaws in Oracle’s TimesTen in-memory database.

The remainder of the release spans E-Business Suite, WebLogic Server, PeopleSoft, Siebel, JD Edwards, Communications, Retail Applications, Utilities Applications, MySQL, Solaris and VM VirtualBox.

Volume repair

Gogia said the volume itself marks a shift.

“At 1,449 patches, against 481 in April 2026 and 309 a year earlier, patch load has outgrown the queue built to hold it,” he said. He recommended a tiered response: “The reachable and the reported inside seventy-two hours, the trusted core inside ten days, the rest by risk before the October release.”

He also flagged a specific risk in how organizations might triage E-Business Suite. “Oracle’s advisory concedes that E-Business Suite exposure sits partly in underlying Database and Fusion Middleware versions outside the E-Business Suite matrix. The fastest way to mis-prioritise this release is to patch by product logo instead of trust boundary.”

Third Tuesday, quarterly cycle

The July release is the third quarterly Critical Patch Update of 2026, and the first since the introduction in May of the monthly Critical Security Patch Update program.

Gogia said Oracle has effectively layered a second cadence on top of the existing one rather than replacing it.

“Quarterly Critical Patch Updates remain and stay cumulative; monthly Critical Security Patch Updates now sit on top,” he said, adding that enterprise adoption of the new rhythm remains low because of “certification obligations, regression exposure and scarce specialist hours.”

Dubey made a similar point about organizational readiness: “In large enterprises, patching is rarely a technical problem. It is an operational one. Database administrators, application owners, infrastructure teams, business stakeholders, and change advisory boards all have to align.”

Niyati Daftary, principal analyst at Gartner, said the release underscores a broader shift in how patching is approached.

“Patching is no longer a race to remediate every vulnerability. It is a discipline of identifying the exposures that matter most and reducing business risk as efficiently as possible,” she said, adding that organizations should prioritize based on exposure, business impact and exploitability, starting with internet-facing assets and mission-critical systems.

Daftary pointed to continuous threat exposure management and adversarial exposure validation as increasingly relevant frameworks, since CVSS scores “measure theoretical severity rather than actual enterprise risk.” Patching alone will not be sufficient, Daftary said, and organizations should continue investing in defense in depth, including behavioral threat detection and incident response.

Oracle’s next cumulative Critical Patch Update will come on Oct. 20, 2026, with smaller Critical Security Patch Updates on Aug. 18 and Sept. 15.

This article first appeared on CSO.

Oracle’s July 2026 Critical Patch Update, its largest ever, contains 1,449 new security patches spanning 32 product families, from Oracle Database and E-Business Suite to PeopleSoft, GoldenGate, Java SE, and Fusion Middleware.

Fusion Middleware was particularly hard hit, with new security patches for 355 security vulnerabilities, 219 of them remotely exploitable without authentication, meaning they can be exploited over a network without requiring user credentials. Ten of them scored a “perfect” 10.0 on the Common Vulnerability Scoring System (CVSS).

These included easily exploitable vulnerabilities allowing unauthenticated attackers with network access via HTTP to compromise Oracle Data Integrator, Oracle Access Manager, Oracle HTTP Server, Oracle Platform Security for Java, Oracle WebCenter Content, Service Delivery Platform, or Oracle Weblogic Server Proxy Plug-in,

No other products were found to have quite such extreme vulnerabilities, but there were plenty of others scoring almost as badly.

Two critical flaws in Oracle Database Server

The most severe flaw Oracle patched in its flagship database product is CVE-2026-61211, a vulnerability in the RDBMS component’s DBMS_CLOUD package with a CVSS score of 9.9.

This easily exploitable vulnerability allows a low-privileged attacker having Execute DBMS_CLOUD privilege with network access via Oracle Net to compromise the RDBMS, Oracle said in the patch update statement. “While the vulnerability is in RDBMS, attacks may significantly impact additional products (scope change). Successful attacks of this vulnerability can result in takeover of RDBMS,” it warned.

The flaw affects Database Server versions 19.3 through 19.31 and 23.4.0 through 23.26.2.

Sanchit Vir Gogia, chief analyst at Greyhound Research, said the 9.9 score should be read as serious but conditional. Exposure depends on configuration, he said: On customer-managed databases, DBMS_CLOUD is absent until installed, and grants and network access lists determine the radius from there. “Where DBMS_CLOUD is broadly granted and reachable, the emergency is real and the window is seventy-two hours; where it is absent, the accelerated database wave will do.”

Vibhum Dubey, a cybersecurity researcher and red teamer, said the flaw stood out to him because it checks several boxes that concern defenders.

“Database servers often hold an organization’s most valuable data, so even if exploitation is not publicly observed yet, I don’t think this is the kind of issue you leave until the next routine maintenance window if your environment is exposed,” Dubey said.

A second Database Server flaw, CVE-2026-47040, affects Connection Manager in Oracle Net Services, is remotely exploitable without credentials. Oracle’s risk matrix lists six Database Product vulnerabilities in this cycle as reachable over a network with no authentication required, the statement added.

CVE-2026-7383, an OpenSSL-related TLS vulnerability, affects two products, Database Server and Autonomous Health Framework, since both bundle the same third-party component. Oracle’s advisory notes the Database Server patch for that CVE also resolves 19 related OpenSSL CVEs bundled into the same fix.

Oracle GoldenGate received 27 new patches, nine of which do not require authentication to exploit, including CVE-2026-2332, a flaw in the Big Data and Application Adapters component tied to Eclipse Jetty, the statement added.

There were also two critical flaws in Oracle’s TimesTen in-memory database.

The remainder of the release spans E-Business Suite, WebLogic Server, PeopleSoft, Siebel, JD Edwards, Communications, Retail Applications, Utilities Applications, MySQL, Solaris and VM VirtualBox.

Volume repair

Gogia said the volume itself marks a shift.

“At 1,449 patches, against 481 in April 2026 and 309 a year earlier, patch load has outgrown the queue built to hold it,” he said. He recommended a tiered response: “The reachable and the reported inside seventy-two hours, the trusted core inside ten days, the rest by risk before the October release.”

He also flagged a specific risk in how organizations might triage E-Business Suite. “Oracle’s advisory concedes that E-Business Suite exposure sits partly in underlying Database and Fusion Middleware versions outside the E-Business Suite matrix. The fastest way to mis-prioritise this release is to patch by product logo instead of trust boundary.”

Third Tuesday, quarterly cycle

The July release is the third quarterly Critical Patch Update of 2026, and the first since the introduction in May of the monthly Critical Security Patch Update program.

Gogia said Oracle has effectively layered a second cadence on top of the existing one rather than replacing it.

“Quarterly Critical Patch Updates remain and stay cumulative; monthly Critical Security Patch Updates now sit on top,” he said, adding that enterprise adoption of the new rhythm remains low because of “certification obligations, regression exposure and scarce specialist hours.”

Dubey made a similar point about organizational readiness: “In large enterprises, patching is rarely a technical problem. It is an operational one. Database administrators, application owners, infrastructure teams, business stakeholders, and change advisory boards all have to align.”

Niyati Daftary, principal analyst at Gartner, said the release underscores a broader shift in how patching is approached.

“Patching is no longer a race to remediate every vulnerability. It is a discipline of identifying the exposures that matter most and reducing business risk as efficiently as possible,” she said, adding that organizations should prioritize based on exposure, business impact and exploitability, starting with internet-facing assets and mission-critical systems.

Daftary pointed to continuous threat exposure management and adversarial exposure validation as increasingly relevant frameworks, since CVSS scores “measure theoretical severity rather than actual enterprise risk.” Patching alone will not be sufficient, Daftary said, and organizations should continue investing in defense in depth, including behavioral threat detection and incident response.

Oracle’s next cumulative Critical Patch Update will come on Oct. 20, 2026, with smaller Critical Security Patch Updates on Aug. 18 and Sept. 15.

AI agents can turn a clear description into working software, the engineer’s judgement is what makes the difference: deciding what to build, catching the tradeoff the agent didn’t know to weigh, and owning the call on whether the result is right.

That judgement has always been the hard part of engineering. It just used to be bundled into the act of writing code, where a skilled engineer did it while typing. As agents take on more of the typing, that judgement separates out and becomes the clear center of the role. Leaders who adapt early will get their metrics, their talent pipelines, and their delivery models working with this shift rather than against it.

Judgement is defining, constraining, and deciding

Judgement is all about defining the problem precisely enough that an agent builds the right thing. It’s setting the constraints the agent won’t infer on its own. It’s spotting the tradeoff buried three layers down that only shows up if you understand the system. And it’s looking at a finished implementation and knowing whether it’s genuinely good enough to ship.

This is the harder part of the job and the real driver of quality. It was easy to underrate when it lived inside day-to-day coding. Now it’s what separates a strong team from an average one.

The shift changes where time, growth, and metrics go

If the high-value activity is intent, review, and judgement rather than raw output, a few assumptions are worth revisiting.

Where engineers spend their time. Less of the day goes to producing boilerplate and mechanical implementation, and more goes to the reasoning that used to get squeezed to the edges: framing the problem and owning the judgement calls that determine quality.

How teams grow their people. Defining problems well, spotting risk, and critically evaluating work you didn’t write yourself have always been senior skills. When agents handle more of the mechanical work, those skills become learnable earlier. That puts the emphasis on leaders to teach the reasoning: why a choice gets made and how to weigh the tradeoffs that come with it.

What you measure. Lines shipped, tickets closed, and velocity charts all measured throughput of the old scarce resource. They say very little about the new one. The teams that adapt will start measuring the quality of intent going in and the reliability of judgement coming out, because that’s where the results now live.

Reinvest the time you get back

The tempting response is to treat the freed-up capacity as pure speed: same work, same tooling, just faster. That captures the easy win and misses the real one. If engineers spend their reclaimed time reviewing a rising volume of agent output with no better context than before, review quietly becomes the new constraint, and you’ve moved the problem rather than solved it.

The organizations that get ahead will invest the reclaimed capacity into the judgement layer: creating stronger specs and acceptance criteria before work starts, building review practices that test agent output against intent, and capturing the reasoning behind decisions where the next person can find it, so it doesn’t have to be reconstructed every time. That’s how the shift becomes an advantage for your team.

The through-line for leaders

The engineering job is moving up a level, from executing the work to directing and validating it. That’s a more strategic role, and it rewards clarity of thought over speed of output. Leaders who see the shift early can help their engineers grow into the work that’s now most valuable.

See how leading engineering organizations are operationalizing this shift at jira.dev.

Nvidia has introduced its next-generation Spectrum-X Ethernet networking platform, positioning it as a key building block for the next wave of “gigascale” AI factories designed to connect millions of GPUs while reducing power consumption and operational costs.

The networking platform is part of Nvidia’s broader Rubin architecture, which integrates six major components—including the Vera CPU, Rubin GPU, NVLink 6 switches, ConnectX-9 SuperNICs, BlueField-4 DPUs and the new Spectrum-6 Ethernet switches—into a tightly coupled AI infrastructure stack.

The company says this level of integration underscores the growing importance of networking in AI. In its most recent quarter, networking sales were $11 billion, up 263% year-over-year, prompting the ever-subtle CEO Jensen Huang to declare “We’re … now the largest networking company in the world” during Nvidia’s earnings call.

While GPUs have dominated headlines during the AI boom, networking has increasingly become a performance bottleneck as models grow larger and require faster communication between compute nodes.

Spectrum-X is a comprehensive platform consisting of Spectrum Ethernet switches, Spectrum-X SuperNICs, ConnectX NICs, BlueField DPUs, LinkX cabling and transceivers and Spectrum-XGS for networking between multiple AI data centers.

At the heart of the platform is the Spectrum-6 switch, a 102.4-terabit-per-second Ethernet switch system delivering 2x the capacity of previous-generation systems and built as part of the Vera Rubin platform. 

Spectrum-6 is designed to operate an AI factory as one end-to-end computing system. It combines new Ethernet switches, network interface cards, silicon photonics and software designed to improve bandwidth while lowering latency and power usage.

The new Spectrum-X technology intelligently balances traffic across available paths, rapidly bypasses failures and precisely recovers when data traveling across a network fails to reach its destination. Plus, support for open network operating systems and a choice of RDMA transport models gives AI builders flexibility without compromising performance.

Nvidia says its latest silicon photonics technology integrates optical communications directly into networking hardware, reducing power consumption while increasing bandwidth density compared with conventional optical networking approaches.

The announcement reflects a broader shift in AI infrastructure strategy. Early AI clusters were primarily limited by GPU availability, but hyperscale operators are increasingly finding that networking, storage and power delivery determine how efficiently massive GPU deployments perform. By integrating networking more tightly with compute, Nvidia aims to eliminate communication bottlenecks that emerge as AI systems scale beyond a single data center or even multiple campuses.

New to the platform is Nvidia’s previously announced Spectrum-XGS technology, which links geographically distributed data centers into a single AI supercomputer. Together, the technologies are designed to enable organizations to construct AI factories that span multiple facilities while operating as a unified computing environment.

CyCognito, a leading exposure management platform, today introduced Continuous AI Pentesting. The new capability bakes AI-driven offensive pentesting directly into the platform, leveraging the rich context it already maintains for every exposed asset. This enables CyCognito to deliver AI pentesting as a continuous service, circumventing the cost and coverage constraints that confine comparable solutions to periodic, narrowly scoped engagements.

With this new solution, CyCognito addresses a major shift in the security ecosystem, driven by the latest advances in AI. Today’s models, with more advanced ones on the way, have lowered the bar for attackers. An attack campaign that once required a group of skilled threat actors can now be carried out by a low-skilled individual, in a fraction of the time and at relatively low cost. This signals a tectonic shift that compels defenders to adopt the same technology to keep pace and close the security gaps in their own environment.

Continuous AI Pentesting: Solution architecture, at a glance.

“AI pentesting is rapidly becoming part of every security team’s toolkit, and a lot of it is already being done in-house,” said Rob Gurzeev, CEO and co-founder of CyCognito. “But running offensive AI isn’t the hard part. The challenge is scale. AI pentesting today is typically limited to the top 1% of priority assets. Meanwhile, the other 99% is where a lot of attacks actually start, where adversaries find the low-hanging fruit and use it as a foothold for lateral movement.”

To provide AI pentesting coverage across that overlooked 99%, CyCognito built a distinct architecture that centers on the Target Graph, a contextual graph that bridges the AI pentesting solution and CyCognito’s three core modules:

• Exposure Assessment maps the external footprint, attributes every asset to the right part of the organization, and enriches it with business and stack context.
• Exposure Validation runs more than 100,000 deterministic tests continuously, freeing the AI pentesters to focus on high-judgment work.
• Threat Intelligence draws on the history of existing and emerging vulnerabilities, along with attacker playbooks and statistical models trained on past engagements, to anticipate attacker activity.

Together, these layers increase the effectiveness of the pentesting agents, equipping them with the rich context and exploitability evidence, dramatically improving the efficiency of every run.

The architecture is also built to be constantly self-evolving. Every new risk scenario AI pentesters uncover can be hardcoded into the Exposure Validation module, joining the deterministic tests it already runs. This frees the AI agents to pursue new threats, and also consolidates learnings from agentic tests in a way that will benefit every CyCognito customer.

In the announcement for this new feature, the company also shared some of the vulnerabilities:

• Unauthenticated access to a production CRM: an exposed MCP server allowed anonymous, natural-language queries against three million rows of account, opportunity, and financial data, with no credentials required.
• A publicly readable RAG index: an AI agent stack enforced authentication only on its API, leaving the knowledge base behind it, which held customer data, contracts, and internal communications, open to anyone on the internet.
• A building’s access controls exposed to the internet: a system running door locks, card readers, and CCTV sat unsegmented on the public internet alongside the organization’s AI document tools and chatbot, leaving physical entry reachable by a remote attacker.

These examples are just some of the risk scenarios identified through the work on this new capability, now running with select design partners, including major enterprises and Fortune 500 companies. Internally, CyCognito refers to the project as Project Kineto, after the Kinetograph, the first motion picture camera.

“The name echoes our vision for what AI pentesting should be,” said Gurzeev. “Security testing has always been a snapshot. AI lets us turn it into continuous motion: an always-on stream of change-aware tests that runs across your entire attack surface at machine speed, with the skill of a seasoned security expert.”

To go deeper on Continuous AI Pentesting, read the full announcement post: https://www.cycognito.com/blog/new-continuous-ai-pentesting/

About CyCognito

CyCognito is an external exposure management platform that reduces risk by discovering, testing and prioritizing security issues. 

The platform scans billions of websites, cloud applications and APIs and uses advanced AI to identify the most critical risks and guide remediation. Emerging companies, government agencies and Fortune 500 organizations rely on CyCognito to secure and protect from growing threats. For more information, visit https://www.cycognito.com.

Contact

VP Marketing

Igal Zeifman

CyCognito

igal.zeifman@cycognito.com

You are one of the six billion people (75% of the world population) online today, and every click you make is routed through the data center. Data centers, whether knowingly or unknowingly, play a very critical role in your daily online activities. With an increasing population, increasing usage of online presence, and now omniscient AI, the demand for data centers has increased manyfold, and the trend seems similar to the year 2000, when telephone towers were built to accommodate increased digital presence.

To win the AI race, Hyperscalers (Google, Meta, Amazon, Microsoft, Alibaba, Oracle, IBM, Tencent) are spending huge amounts of money on data center development. In the USA, the hyperscalers are planning to spend $650 billion in 2026, which is around 70% higher than 2025 spending, according to Yahoo Finance.

As per McKinsey research, by 2030, companies will invest around $7 trillion in Capex on data center infrastructure globally. More than $4 trillion will go towards computing hardware investment. More than 40% of this spending will be invested in the United States.

Demand growth in data centers

McKinsey analysis shows that global demand for data center capacity can more than triple by 2030, with a compound annual growth rate (CAGR) of around 22 per cent. In the USA, data center demand could grow by 20-25 per cent at the same time.  

The data center industry is currently undergoing a violent transition. We are moving away from the era of “bespoke projects” — where every facility was a unique architectural feat — into an era of industrialized infrastructure. With global capital expenditure in the sector projected to hit $3 trillion by 2028, the “bottleneck” has shifted. It is no longer about securing the capital; it is about the physics of the supply chain.

During my tenure at Vantage, managing the intersection of data center construction management (DCCM) and infrastructure management (DCIM), I saw firsthand that the most successful players aren’t those with the deepest pockets, but those with the most integrated data threads. If your construction data in Procore doesn’t talk to your financial reality in Yardi, or your operational capacity in DCIM, you aren’t building a data center — you’re managing a $500 million blind spot.

The death of “sticks and bricks”

Traditionally, data center construction was treated as civil engineering. But for the modern CIO, a data center is a complex product assembly.

The challenges are systemic. We are facing 50-to-80-week lead times for critical “long-pole” items: extra-high-voltage transformers, switchgear, and the liquid cooling manifolds required for the next generation of AI chips. In this environment, the traditional reactive supply chain model is a liability.

To survive the $3 trillion inflow, we must adopt a hybrid-agile SCOR (supply chain operations reference) model. This means applying continuous flow logic to standardized components (like modular power skids) while maintaining agile responsiveness for the volatile IT layer.

The digital bridge: Construction management software  to ERP

The most significant opportunity for CIOs lies in financial-operational integration. In many organizations, there is a data chasm between the construction site and the corporate office. Construction teams live in the construction management software tracking tasks, trades, RFIs and payment submittals. Finance teams operate corporate offices with project management tools (worth remembering that email is a key tool besides spreadsheets and phone calls) tracking capex schedule, commissioning timeline, capital drawdowns and asset lifecycle management.

These systems are siloed; the CIO loses visibility into the total cost to serve. By integrating construction management into the financial system, we create real-time financial visibility of the build. We can see exactly how a three-week delay in a chiller delivery impacts the internal rate of return (IRR) of the entire asset. This isn’t just accounting; it’s strategic telemetry.

From BIM to DCIM: The lifecycle thread

The second bridge is the handoff from construction (BIM) to operations (DCIM). Historically, this handoff was a nightmare of PDFs and Excel sheets. By the time the operations team took the keys, the “as-built” design information was already out of date.

The opportunity today is to maintain a continuous data thread. The sensor data and asset tags established during the “make” phase in our SCOR model should flow directly into the DCIM. This allows us to perform virtual commissioning. Before a single server is racked, we should already have a digital replica of the airflow, power distribution, and cooling capacity.

The scientific inference: AI in the supply chain

As someone who has led data and AI initiatives, I’ve seen the hype. But in the supply chain, the application of AI must be pragmatic, not generative. We don’t need AI to write poems; we need it for predictive procurement. Most organizations manage their procurement in ERP or a mix of a few tools to manage the source-to-settle business flow. Adopting a system workflow improves data collection and the state of the procurement cycle, which in turn provides AI with the context to draw inferences for possible delays and anomalies in original specifications and change orders.

By applying machine learning to global logistics data, we can move from just-in-time to just-in-case modeling. AI can analyze geopolitical risks, shipping lane congestion, and raw material pricing to tell a CIO: “Order your switchgear 14 months early, or your Q3 2027 ‘Power On’ date is at risk.”

Bringing it all together: AI in the supply chain and finance

Why it matters: Approximately 70% of the capex is on this workflow and making timely decisions that directly impact the ready-for-service dates. The current challenge of reactionary adjustment in design to procurement to local fit-out is a significant drain on capex efficiency and cost of capital. Because single-project delivery delays have become so volatile, a massive structural shift is occurring in how digital infrastructure is funded. Single-project debt (special purpose vehicles or SPVs) is facing severe friction. To insulate themselves from RFS shocks, the largest institutional players are moving toward permanent platform capital — aggregating exposure across dozens of global assets simultaneously.

Navigating these complex multi-billion-dollar engineering projects distributed over a large geography is simply unmanageable without rethinking and re-engineering existing tools and processes.

The roadmap for the modern CIO

To lead this transformation, CIOs must move beyond the IT shop mentality and become master orchestrators of the supply chain. Here is the 1500-word reality condensed into three mandates:

1. Standardize the product: Stop designing bespoke facilities. Move toward DFMA (design for manufacturing and assembly). If 70% of your data center can be built in a factory and shipped as modules, you bypass the unpredictability of on-site labor.
2. Integrate the financial stack: If your construction management software and your ERP aren’t sharing a heartbeat, your data is lying to you. Force the integration between Procore and Yardi.
3. Own the long poles: Don’t leave the procurement of transformers and cooling units to general contractors. Use your balance sheet to secure these items years in advance. In 2026, inventory is the new currency.

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Across industries, a version of the same conversation is playing out in technology leadership meetings. Enterprises have deployed AI broadly, and foundation models keep getting more capable. Yet the outputs still feel generic, shaped by industry patterns rather than by the organization producing them.

McKinsey’s AI Trust Maturity Survey found that while overall AI maturity scores have improved, only about a third of organizations have reached a mature level of strategy and governance. Technical capability is advancing faster than organizational alignment. In my view, the gap is not a model problem. It is a context problem. Enterprises are feeding generic inputs into powerful models because sharing organizational context seamlessly with AI is neither easy nor intuitive today.

Building the analytical and creative capabilities to scale AI, something I explored in a recent piece on the left-brain and right-brain approach to enterprise AI, is necessary but not sufficient. Before either can function effectively, the enterprise needs something more fundamental. AI that actually understands the contextual fabric of the organization it is operating in. A frontier model has processed everything written about your sector, your competitors and your regulatory landscape. It cannot access the reasoning embedded in years of delivery decisions, the patterns encoded in how your teams scope and deliver work over time. That knowledge is organizational memory, and frontier models can’t get that easily. It exists inside every enterprise but has never been structured, connected or made available to any AI system. Without it, even the most capable model answers a generic version of your question.

The next competitive advantage in enterprise AI will not come from a better model. It will come from a better organizational context.

One global technology enterprise set out to solve this across its own operations, building a modular ecosystem of domain-specific agents grounded in its own data across contracting, talent and vendor management workflows. What emerged was not just operational efficiency but a shared intelligence layer connecting decisions across functions for the first time.

Competitive differentiation was never about the tools

Consider what actually separates high-performing enterprises from the rest. In a regulated industry like financial services or healthcare, organizations cannot meaningfully differentiate on product. A bank cannot offer substantially different products or services. A health system uses the same clinical protocols and the same electronic health record (EHR) platforms as its peers. What varies is everything underneath: the rigor of processes, the coherence of cross-functional decisions and the people who carry years of accumulated organizational judgment in how they make those decisions.

An organization with a proper context layer in place can say with precision that for this type of engagement, in this sector, with this risk profile, our institutional history tells us exactly where we stand. That level of specificity is what most enterprises have never made available to AI.

The enterprise AI brain that every organization has but has never assembled

Every enterprise already possesses what I think of as an enterprise AI brain. The problem is that it has never been assembled in one place. The data exists across contracts, project documentation, talent records, delivery metrics and the operational communications of daily execution — the informal reasoning that rarely makes it into formal systems.

None of the standard enterprise platforms were designed to connect this. A customer relationship management (CRM) system captures customer interactions. An enterprise resource planning (ERP) system captures transactions. A project management tool captures tasks and timelines. None of them captures the reasoning behind decisions and none of them surfaces a coherent picture of how the organization actually thinks and operates.

BCG’s study across hundreds of companies found that only 10% of AI value comes from the algorithms and another 20% from the technology that implements them, meaning the remaining 70% depends on people, processes and organizational change. The organizations extracting real value are those that have made their institutional knowledge available to AI in a structured, governed way.

Building a contextual AI fabric

A Contextual AI Fabric is the technical and organizational layer that makes the Enterprise AI Brain usable. It brings together unstructured data ingestion, semantic structuring, retrieval pipelines and governed model access to give AI systems the organizational context they need to produce outputs that are genuinely specific to your enterprise rather than generically accurate about your industry. It rests on three pillars. Core is the secure, governed and interoperable foundation that AI operations run on. Context is reliable, traceable access to the organization’s data, processes, knowledge and history. Coordination connects people, agents, applications and systems into process-driven workflows with clear controls and accountability, so the organization acts as one rather than a set of disconnected functions.

The data layer is where most organizations underestimate the work. Contracts, project reports, talent assessments and operational communications require extraction, chunking, embedding and indexing before a model can retrieve and reason over them meaningfully.

The semantic layer is what makes retrieval meaningful. Even well-ingested data fails if functions use different terminology for the same concepts. What legal calls a contract, delivery calls a scope. Without a shared ontology, AI systems remain precise about the wrong thing. And retrieval alone, however well-structured, only takes an organization so far. Retrieval surfaces the right information at the moment of a query, but it does not give a model genuine memory of the organization. The real source of unique, organization-level relevance comes from training domain-specific small language models on this context directly, models that carry organizational memory forward rather than fetching it fresh every time. That is what ultimately separates a Contextual AI Fabric from a well-organized database.

The governance layer is not an add-on. Access controls, data lineage, approval thresholds and human checkpoints need to be designed in before any agent goes into production. Security is not a layer you add afterward. It is the condition under which organizational AI is worth building. If the institutional intelligence that makes your enterprise distinct gets absorbed into a frontier model’s training data, it becomes everyone’s baseline. That is an architectural decision made, or avoided, at the point of deployment.

Proprietary by design

The institutional knowledge that makes up a contextual AI fabric — delivery history, commercial patterns, talent intelligence and operating culture — is proprietary in ways no external model can replicate. This is as much a security imperative as it is a competitive one. Organizational context, once exposed, cannot be unexposed.

Most enterprises are using AI to automate existing processes rather than questioning whether those processes should be redesigned entirely. The organizations extracting the most value are those willing to ask whether their current operating model, built before GenAI existed, is the one they would build today. That question is harder than any technology decision, and it is also the most consequential one.

From context to coordinated action

Context alone is not enough. When a delivery risk surfaces in project data, the talent function needs to respond. When a commercial signal changes in contract data, operations need to recalibrate. This kind of cross-functional coordination, driven by shared organizational intelligence rather than siloed data, is where the real value of enterprise AI shows up and where the absence of a shared context layer becomes most visible.

A global leader in digital payments and business services found its AI deployments across payroll, HR and risk compliance, each running in isolation, with no shared governance or common data foundation. Once the organization established a unified governance backbone connecting its operational data through a shared retrieval layer, business users could query across domains in plain language and new use cases across fraud analytics, forecasting and policy extraction became extensible without rebuilding infrastructure for each one. The shift was not in the models. It was in the shared foundation underneath them.

The leadership question behind the technology question

The enterprises pulling ahead in AI are not winning on model quality but on organizational memory. The ones that have done the hard work of structuring their institutional knowledge into a governed, secure Contextual AI Fabric are giving their AI something no competitor can replicate: the accumulated intelligence of how the business actually operates.

For CIOs, the question is no longer which model to deploy. It is whether the organization has built the foundation that would make any model worth deploying.

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At Cisco, VP of engineering Jason Andrews deals with all the same technical issues as every other company deploying AI, including ensuring it’s governed, secure, and integrating multiple data sources, legacy systems, and AI models.

But these issues are relatively straightforward compared to the bigger challenges relating to the fast pace of change, specifically how AI can touch and transform nearly every aspect of business.

“We’re thinking about it every day,” he says. “My belief is we’ll be seeing a massive acceleration of everything.”

In coding, for example, he’s witnessing productivity increases up to 110% with AI assistants. “I can build apps or custom integrations a lot faster,” he adds.

And the real benefit of AI isn’t just in speeding up individual steps in a process, but in making AI the core of a new business process. But building it from scratch puts even more pressure on organizations trying to get employees up to speed on new ways of doing things.

“We want to move fast, train people, and get them onboarded,” he says. “But what I thought AI was going to do for my organization nine months ago is different from three months ago.” So by the time something is rolled out, it’s changed three times.

“I struggle with the change management aspect,” he says. “The legacy model of change management isn’t fast enough. How do you create that constant learning?”

One of the ways Cisco approaches it is to create communities where people can talk about these issues and share best practices and governance, and you have to keep people’s minds open that every day is going to be different than the last, Andrews adds.

Testing the AI waters

Cisco isn’t the only organization struggling with change management in the face of the AI tsunami. In a survey of 2,000 global CEOs IBM released in May, 83% of them said AI success depends more on adoption than on the technology itself, and 77% said talent and technology roles are converging.

“Thanks to Claude Code, our entire development cadence is exponentially greater than a year ago,” says Andrew Johnson, CIO at Brownstein Hyatt Farber Schreck, a Denver-based law firm with about 700 employees and clients around the US. But, as with Cisco, the biggest challenge isn’t technical.

“In our industry, with our circumstances, we’re probably less constrained by technical capability than organizational constraints, culture, aptitude, the need to bind people to technology, and what helps me and the client,” he says. “There’s a tremendous amount of cultural shift that has to happen in our organization, which is far more demanding of my attention and complexity of thought than the technical stuff.”

Companies that bill by the hour, such as law firms, may face additional challenges as attorney productivity increases because billable hours might go down. Alternatively, the total number of cases could go up as litigation becomes less expensive. Either way, firms that adapt will see competitive advantage, and the rest will fall behind, putting more pressure on the need for change management.

“If people can’t embrace technology, we won’t be able to get a lot of value out of it,” says Johnson. “I’m talking to people about adapting their way of work. There are certainly a lot of people intrigued and anxious to dive in. They recognize the connection between the potential of the technology and what we do.”

But helping everyone see that connection and then working with them to change their habits is difficult, and requires solid relationships and good communications. “That’s been far more of a bottleneck for us,” he says.

To address the issue, the firm has developed a network of technology champions who also understand the legal side of the business. “Now we need lawyers who know how to use the technology and can articulate these things to the people we’re trying to reach,” Johnson says.

But change management is only one leadership bottleneck slowing AI adoption. Companies also struggle with figuring out their vision for AI, with slow decision-making, and a tendency to focus on the past instead of the future.

Vision and strategy

In another survey, this time of 950 business leaders released by Grant Thornton in April, 51% said strategy is the biggest driver of ROI when it comes to AI adoption, but 79% of operations leaders said they don’t have a fully developed and implemented AI strategy.

“Having leadership understanding why AI is needed and what objective they’re trying to achieve is very important,” says Shivi Verma, senior manager of engineering at Docusign. “Sometimes leadership doesn’t have a strategy for their organization on how AI should be adopted. Many times it’s bottom-up, which creates a chaotic experience.”

When Docusign started adopting gen AI, different teams and organizational units wanted to go in different directions. “All were coming up with their own strategy and tooling,” he says. So Docusign brought business leaders together to understand the pain points, and decide on the technology.

“Getting requirements and placing a bet on a specific technology was important,” he says, “as well as pivoting to a different technology if needed.”

In order to adapt to changes, the company wanted to have a nimble approach, starting with smaller use cases, with power users, and problem areas.

“We try to plan for four to six months,” he adds. “We set expectations for our leadership that we place a bet with a specific technology, but want to be able to pivot.”

Today, the leadership challenge front lines have moved yet again, to agentic AI. “Folks are creating their own agents and deciding their own permissions,” Verma adds. “We’re still coming up with a governance strategy.”

Slow decision-making

When it comes to AI deployments, Dan Diasio, global AI consulting leader at EY and CTO for its US consulting business, admits he’s a bottleneck.

There’s a great deal of interest in what AI can do, and using a variety of new AI tools. But since the firm deals with sensitive client data, safety is paramount. It’s a slow process, but important to build secure infrastructure, and to have trust in the technology. “That’s a reasonable bottleneck that makes sense,” he says.

Trust in the tools they work with is essential because clients expect it. “Every tool we use has to go through a detailed security and information privacy impact assessment, as well as a whole other set of controls so they can be used appropriately and safely,” he says.

These reviews can take a lot of time, though, and in the age of AI, speed is a highly valued currency. So how do you balance the two, when safety reviews can require input from a lot of different stakeholders and be extremely time intensive?

“We’ve stood up a team to be able to quickly certify and address a variety of platforms,” Diasio says. “Instead of working with different departments in the way we used to, we’ve started identifying representatives from different departments into a cohort. Decisions we used to make in months now take weeks.”

According to a West Monroe survey of more than 1,200 leaders released earlier this year, slow decision-making is already showing up on the bottom line. Nearly three out of four leaders said their organizations lose up to 5% of annual revenue to slow decision-making and delayed execution.

And the top reasons for the delays? According to 40% of the managers surveyed, the problem was the skills gaps of overwhelmed teams, and 35% pointed to layers of management or approvals. Nearly half said they’re spending 10 to 25% of their time on rework, excessive approvals, and unnecessary meetings, and more than half say up to 50% of their projects fail or lose momentum to delays.

Focus on the future, not the past

When it comes to the decision about where to apply AI in an organization, the tendency, Diasio says, is to turn to the experts with the most expertise in the business. But these are the same people most likely to focus on improving on what they’re already doing.

“And that often blinds people to what’s possible in the future,” he says. “That becomes a significant bottleneck.” So the solution is to revamp the decision-making process around the new reality.

“What we see some advanced companies do is give people who don’t understand the process but understand the technology equal footing with people who don’t understand the technology but understand the process,” he says. “A lot of companies are disproportionately focused on just addressing their operating model right now.”

Instead of focusing on what they’re currently doing, AI-native companies will start with a focus on the customer, he says. This shift in focus isn’t likely to show up immediately on the bottom line, or result in the highest possible number of pilots going into production.

“If leaders are in a position where they’re justifying the use of a technology to the board or their CFO, they become a bottleneck when they start demonstrating their value in terms of the number of things they’re doing,” Diasio says.

But 150 or 200 use cases deployed into production may feel like progress, like things are happening in the organization. But all these use cases are a waste of time and money if they’re applied to existing processes that don’t move the needle. “We see that happen in organizations today,” he says. “Maybe we need to reinvent the processes.”

It’s no secret that companies will need to change in order to adapt to AI. Deloitte recently surveyed 660 global technology leaders and 81% said their current operating model can deploy and govern AI enterprise-wide, but 75% also said their organization must change its operating model within the next 12 to 18 months to drive greater value.

AI ROI is real, says China Widener, Deloitte vice chair and US tech, media, and telecom industry leader. But it’s currently weighted toward efficiency gains, with broader business transformation and revenue upside still developing.

Another Deloitte survey showed that the clearest results from AI were in productivity, with 66% of organizations reporting gains, and cost efficiency, with 40% saying AI reduces costs. “However, revenue impact is still emerging,” says Widener. “Only one in five companies says AI is driving top-line growth today.” But optimism prevails, with 74% expecting it to do so in the future.

Outsourcing worked – until it didn’t.

After Akirolabs achieved early market validation and onboarded its first enterprise customers, outsourcing began to create strategic limitations around scalability, intellectual property (IP) ownership, security and delivery execution.

The challenges started after the first enterprise customers confirmed product-market fit. At that point, delivery speed became directly tied to business growth. Product quality expectations increased. Infrastructure and security requirements became stricter. Investors started asking difficult but fair questions about IP ownership, operational dependencies and long-term scalability.

Most importantly, engineering execution was no longer just an operational function – it became part of the company’s strategic advantage. That was the moment when the founders decided the company needed dedicated technology leadership to address these challenges. This is how I joined the company at the beginning of 2023. As VP of Engineering and a bit later as CTO, I led the transformation (usually known as insourcing, repatriating or backsourcing) from an outsourced model to an internal engineering organization while maintaining product delivery continuity and preparing the company for the next growth stage. The process took roughly a year and involved not only technical migration, but also organizational design, hiring, process development, infrastructure modernization and cultural transformation – everything from the ground up.

Building an internal engineering organization while still delivering

One of the biggest misconceptions about insourcing is that it is primarily a technical project. It is a leadership and execution challenge.

When I joined the company, there was effectively no internal engineering structure, limited visibility into the existing system and no clear long-term technical strategy. My first months were dedicated to understanding reality and I began with a comprehensive assessment of the codebase, operational risks, documentation quality and knowledge dependencies to determine the most viable transition strategy.

Very early in the process, I faced a critical strategic decision: whether to gradually assume ownership of the existing platform or rebuild it internally. To make that decision, I evaluated four distinct transition models ranging from limited management insourcing to a complete internal rebuild.

After assessing the technical, operational and long-term business implications of each approach, I selected the most demanding option: rebuilding the product internally while maintaining uninterrupted delivery for existing customers. Although riskier in the short term, a full rebuild offered the clearest route to complete IP ownership, architectural flexibility and long-term scalability.

At the time, this decision ran counter to the approach typically taken by startups in similar situations. Most organizations gradually assume ownership of an existing codebase to minimize short-term risk and preserve delivery capacity. My assessment was that the accumulated architectural debt, fragmented knowledge distribution and long-term maintenance risks would ultimately make a phased takeover more expensive and less scalable than a controlled rebuild. The strategy required significantly higher execution discipline, but it allowed us to establish complete ownership of the platform, eliminate inherited constraints and create an architecture capable of supporting enterprise-scale growth.

The next challenge was hiring.

In Germany, hiring can easily take four to six months – mostly due to a typical 3-month notice period, which is incompatible with startup timelines. We solved this by building a hybrid organization structure early: a lean internal core team combined with carefully selected contractors. Instead of hiring only narrow specialists, we prioritized experienced generalists capable of operating across architecture, infrastructure, security and compliance discussions. Later, we evolved toward a product engineering model, where engineers owned broader product outcomes rather than narrowly defined technical functions.

During the first three months, we established a core engineering team of four senior engineers. Over the following nine months, the organization expanded to roughly fifteen engineers while I strategically designed and executed the transformation of the platform’s architecture to meet the rigorous deployment and compliance standards of our first enterprise clients, including Raiffeisen Bank International and Bertelsmann. This structural overhaul allowed the company to meet the deployment, security and compliance requirements of enterprise customers that had previously been inaccessible under the outsourced model. At that point, we had already achieved complete coverage across backend, frontend, DevOps, QA and security.

I also intentionally kept processes lightweight during the transition. Instead of introducing heavyweight frameworks, we focused on clarity of priorities, fast decision-making and execution discipline. We used Kanban over Scrum, eliminated unnecessary meetings, shortened the remaining ones and emphasized engineering culture over process overhead.

Another major challenge was project estimation. Because dual-track development was unavoidable until the in-house platform reached production readiness, estimation accuracy had a direct impact on budget efficiency. Despite all challenges, my initial estimate ultimately proved remarkably close to the final delivery date, differing by only about a week. Accurate forecasting under conditions of parallel development streams, ongoing customer commitments and active team formation became a critical leadership challenge. Maintaining this level of predictability throughout the transition helped align engineering execution with business planning, hiring decisions and investor expectations.

The engineering transformation enabled capabilities that contributed to Akirolabs being recognized as an IDC Innovator in Procurement in 2023, named amongst the Top 27 AI Startups in Germany in 2024, Sifted’s 100 Fastest-Growing Startups in DACH & CEE 2025 and inclusion in 2024-2026 in ProcureTech100 annual recognition of procurement technology providers shaping the future of digital procurement.

Managing risk without slowing down the business

The hardest part of insourcing is not writing code, selecting the technology stack, designing architecture or configuring infrastructure. It is avoiding disruption while the company is changing underneath the product. I successfully orchestrated the concurrent overhaul of product architecture, cross-functional engineering recruitment, infrastructure modernization and live customer operations under exceptionally tight margins.

To reduce delivery risk, we approached the transition in layers.

First, we focused on infrastructure reliability and operational readiness before feature expansion. Cloud architecture, recovery testing, permission segregation and incident management processes were implemented early, not after launch. We also introduced multiple testing stages and dedicated QA functions after learning the hard way that a “developers-only” quality control approach does not scale for complex web platforms and business domains.

Second, we established a structured knowledge-transfer process to rapidly onboard engineers and reduce external dependencies.

Third, we became extremely disciplined about scope management. One of the most common reasons insourcing initiatives fail is uncontrolled change during the rebuild phase. Every new feature request increases uncertainty non-linearly. We learned to separate strategic improvements from distractions and protect the core delivery roadmap aggressively. Throughout the transition, we successfully maintained uninterrupted customer operations by utilizing planned maintenance windows, achieved a near-zero-downtime migration and permanently doubled product velocity immediately following the migration.

Beyond the technical migration itself, the transition established a repeatable operating model for scaling technology organizations beyond the product-market-fit stage. The framework combined organizational redesign, controlled knowledge repatriation, architecture modernization and enterprise-grade operational practices while maintaining uninterrupted customer delivery throughout the transformation. While the implementation was specific to Akirolabs, the underlying principles are broadly applicable to organizations seeking to transition from outsourced development to internal product ownership without disrupting business operations.

By the time the new platform reached production readiness, I had established not only a functioning engineering organization, but also a stable operational model: internal ownership, production-grade infrastructure, security processes, scalable hiring practices and clear technology and product roadmaps.

A positive side effect of the transition was the creation of internal UI/UX and Data Science capabilities, which later became strategically important for AI product initiatives and created a foundation for the third version of the product, which we released in mid-2025.

My technical restructuring and migration to a secure proprietary platform reduced architectural risk, established full in-house ownership and helped strengthen investor confidence during the company’s successful €5M fundraising round in 2024.

The transition created a stronger foundation for scale and supported the company’s continued expansion among enterprise organizations operating at Fortune 500 scale, including Ahold Delhaize, Workday, IFF, Deutsche Bahn and others.

Lessons learned for CTOs considering insourcing

Looking back, several decisions made the transition successful, and several mistakes made it harder than necessary.

The first lesson is simple: decisiveness in strategic transition is paramount to maintaining business momentum. Rapidly evaluating insourcing frameworks and defining clear boundaries with the external partner allowed us to mitigate operational downtime and execute a highly efficient migration ahead of critical market deadlines.

Second, hire more senior people and do it as early as possible. Strong technical leaders multiply execution capacity far beyond their individual contribution. In our case, the quality of the first hires influenced architecture quality, hiring standards, delivery discipline and engineering culture for the entire organization.

Finally, culture matters more than frameworks. Processes can be added later. Ownership mentality cannot.

The biggest long-term advantage of bringing development in-house was not simply faster execution, not better code quality or operational cost optimization by over 30% after the transition which we also achieved. It was an alignment. Product strategy, engineering decisions, customer priorities and business goals became part of the same conversation instead of being separated by organizational boundaries. For technology companies operating in highly competitive markets, that alignment becomes a compounding advantage over time.

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When Anthropic unveiled Project Glasswing and the Mythos model, much of the discussion focused on the capabilities themselves.

Security leaders debated what these systems could mean for vulnerability discovery, exploit development and the pace of offensive innovation. Researchers examined technical benchmarks. Industry observers questioned how quickly these capabilities might fall into attackers’ hands.

Those conversations are important. They also point to a larger question that predominates my discussions with CISOs: How much time do we have?

Over the past year, conversations about AI in cybersecurity have changed noticeably. Twelve months ago, security leaders wanted to understand whether AI could meaningfully improve security operations. They wanted to know whether it could accurately investigate alerts, reduce analyst workload and operate reliably in production environments.

Today, security leaders are asking about timelines, implementation, how quickly AI is changing the threat landscape and what that means for how security teams operate.

Anthropic’s Mythos and Glasswing, OpenAI’s Daybreak and advances in DeepSeek accelerate those conversations. Each development provides another glimpse into the pace at which AI capabilities are advancing.

AI now reasons through security problems that historically required highly specialized expertise. The implications span vulnerability discovery, attack-path analysis, reconnaissance, social engineering and security operations.

The shift reflects a broader reality: cybersecurity is entering a period where the pace of adaptation may matter as much as the quality of defenses themselves. AI is accelerating both offense and defense simultaneously. Organizations are quickly redesigning security operations around that reality.

One consequence is becoming increasingly visible. For years, cybersecurity teams invested enormous effort in discovering threats, identifying vulnerabilities, gathering telemetry and collecting intelligence. AI is accelerating many of those activities simultaneously. Visibility is improving. Discovery is accelerating. Investigations are becoming faster and more comprehensive.

The bottleneck is beginning to move. The challenge increasingly centers on how quickly organizations can act on what they know. The organizations that gain an advantage may not be the ones with the most information. They will be the ones who can operationalize that information the fastest.

The timeline is compressing

Cybersecurity has experienced many major technology transitions. Cloud computing changed infrastructure. Mobile devices expanded the attack surface. Digital transformation connected systems that were previously isolated.

AI introduces a different dynamic.

Most technology transitions unfolded over years. Organizations had time to evaluate, pilot, deploy and gradually adapt operating models.

The current AI cycle moves at a different pace.

Capabilities improve continuously. New models arrive every few months. New research emerges every few weeks. Security teams absorb developments at the same time attackers do.

Vulnerability discovery provides a useful example. Security teams have long operated around a familiar cycle of discovery, validation, remediation and protection. AI systems accelerate every stage of that process. Similar patterns exist in phishing, reconnaissance, social engineering and attack planning.

A vulnerability that once moved through that cycle over weeks increasingly now moves through those stages in days or, in some cases, hours.

Attackers are already operating at the speed of AI. Defenders are now focused on reaching the same level of operational speed.

This shift is changing the questions CISOs ask.

Early discussions focused on capability. Could AI investigate alerts accurately? Could it operate reliably in production environments? Could it be trusted with meaningful security work?

As organizations gained experience with AI, the discussion shifted toward implementation. Security teams began evaluating where AI could create operational leverage and how quickly they could deploy it into existing workflows.

Today, many CISOs are focused on timing.

The pace of advancement is influencing planning horizons, budget decisions and operating-model discussions. Security leaders are evaluating how quickly they can introduce AI into investigations, threat hunting, detection engineering and response workflows. Boards are asking questions. Executive teams are paying attention.

Security programs that once viewed AI as a future initiative increasingly view it as a current operational priority.

The industry is moving from evaluating AI as a technology to incorporating AI as a security capability.

The timeline compression creates pressure on the traditional security operations model. Investigation speed, response speed and defensive coverage increasingly determine whether organizations can keep pace with adversaries operating with AI assistance.

Security operations are entering a new phase

The impact of AI is becoming particularly visible inside the SOC.

Many security operations centers were built around a straightforward assumption: alerts flow to human analysts who conduct investigations. Operational capacity scales primarily through hiring.

The volume of security data, the number of alerts and the complexity of modern environments have steadily increased. Security teams have responded by building processes, adding tools and creating specialized analyst roles.

AI introduces a new source of operational capacity.

Investigations that require analysts to examine dozens or hundreds of artifacts across endpoint, identity, cloud, network and email systems can now be performed in minutes. Analysts gain access to investigative depth and consistency that would be difficult to achieve manually at scale.

Many security leaders now view this capability through the lens of operating model design. They are examining how investigations are performed, how work is distributed and where human expertise creates the greatest value.

The evolution of the analyst role

One of the most important developments emerging from early production deployments is the evolution of analyst responsibilities.

Security analysts remain central to security operations. Their expertise becomes even more valuable as AI systems take on larger portions of investigative work.

Threat hunting, detection engineering, response strategy, governance and oversight are receiving increased attention. Analysts spend more time shaping how investigations are conducted, evaluating outcomes and improving overall security operations.

Many organizations are already beginning this shift.

Teams are investing more heavily in proactive security activities. Detection engineering programs are expanding. Threat hunting is becoming more accessible. Analysts are spending more time improving systems and less time repeating investigative tasks.

These changes create what I think of as an analyst-amplified SOC: an environment where AI expands the reach of security professionals and enables deeper security work across the organization.

Trust is critical and it doesn’t have to compromise speed

Faced with a compressing timeline, the instinct is to treat speed and trust as a trade-off, i.e., move faster, verify less. That trade-off feels inevitable. It isn’t.

You don’t trust AI in the abstract. You trust that a system understands your tools, your telemetry and the edge cases that only exist in your network. The problem was never speed. It’s speed without context. The faster a context-blind system runs, the more decisions you’re left unable to verify.

The tension eases when the system is quick to deploy and tunes to your environment once it’s there, rather than treating every network the same. Speed stops being the thing you trade against trust. The more it learns about your environment, the sharper and more trustworthy it becomes, so the two compound rather than compete. Trust still develops through operational evidence such as measurable outcomes, visibility into decisions and consistent performance. But where that evidence accrues matters.

The organizations making the fastest real progress understand this. They don’t compromise quality and trust for speed. They invest in AI that earns trust inside their own environment, so they don’t have to choose.

Leadership during a period of rapid change

The conversations surrounding Mythos and Glasswing reflect a broader reality facing security leaders.

AI is becoming part of both offense and defense. Security teams are incorporating it into investigations, detection engineering, response workflows and threat hunting. Attackers are incorporating it into their own operations.

Security leaders have an opportunity to modernize operating models, expand defensive capacity and build organizational experience while these capabilities continue to evolve.

The organizations making progress today are investing in readiness. They are building experience, adapting workflows and preparing teams for a new model of security operations.

The next phase of cybersecurity will be defined by how effectively organizations combine human judgment with machine-scale execution.

The question facing security leaders is increasingly clear: How quickly can their organizations adapt to a continuously changing threat environment?

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Was ist Claude Mythos?

Claude Mythos ist ein KI-Modell, das von Anthropic entwickelt wurde und für Anwendungen in den Bereichen Cybersicherheit und Gesundheitswesen optimiert ist. Ursprünglich wurde Mythos 5 im April einer kleinen Gruppe geprüfter Technologiepartner zugänglich gemacht – im Vorfeld eines geplanten, breiter angelegten Rollouts.

Zu diesem Zweck rief das KI-Unternehmen das Projekt „Glasswing“ ins Leben, ein Konsortium, das Infrastrukturanbietern, Open-Source-Entwicklern und großen Technologieunternehmen einen begrenzten, kontrollierten Zugriff zu Mythos gewährt. Ziel der Initiative ist es, Verteidigern zu ermöglichen, Schwachstellen schneller aufzuspüren und zu beheben, als Angreifer sie identifizieren können. Das erscheint auch dringend notwendig, setzen diese doch zunehmend selbst auf KI-gestützte Werkzeuge.

Über welche Fähigkeiten verfügt Claude Mythos?

Die ersten 50 Partner von Project Glasswing konnten mithilfe von Mythos mehr als 10.000 Schwachstellen mit hohem oder kritischem Schweregrad in allen gängigen Betriebssystemen und Webbrowsern aufspüren.

So identifizierte das Modell Sicherheitslücken, die selbst den fähigsten Sicherheitsforschern jahrelang entgangen waren – etwa einen 27 Jahre alten Fehler in OpenBSD. Zudem hat Mythos bewiesen, dass es mehrere Schwachstellen miteinander verknüpfen kann.

Wie schränkt Anthropic den Zugang zu Claude Mythos ein?

Anthropic teilte bei der Vorstellung von Claude Mythos mit, es schränke die Verfügbarkeit des Spitzen-KI-Modells bewusst ein, da dessen Fähigkeiten von Angreifern leicht missbraucht werden könnten.

Im Juni wurde die Technologie dann für weitere 150 Organisationen freigegeben. Alle Mythos-Partner müssen hierbei aber zustimmen, dass ihre Daten 30 Tage lang zu Sicherheitsüberwachungszwecken gespeichert werden.

Am 15. Juni verhängte die Trump-Regierung allerdings Exportbeschränkungen für Claude Fable 5 und Claude Mythos 5. Diese sollten ausländischen Staatsangehörigen sowohl innerhalb als auch außerhalb der USA den Zugang verwehren. Am 30. Juni wurden die Beschränkungen jedoch bereits wieder aufgehoben.

Was ist Claude Fable?

Für einen breiteren Einsatzbereich bietet Anthropic Claude Fable 5 an. Das Modell basiert auf derselben technischen Grundlage wie Mythos. Es verfügt jedoch über strenge Sicherheitsmechanismen, die den Betrieb in als „riskant“ eingestuften Bereichen der Cybersicherheit einschränken. Alle als problematisch deklarierten Anfragen werden stattdessen automatisch an das ältere und weniger leistungsfähige Large Language Model (LLM) Opus 4.8 weitergeleitet.

Wie nutzen Security-Partner von Anthropic den Zugriff auf Mythos?

Cisco, einer der Projekt-Glasswing-Partner, hat seine „Foundry Security Spec“ als Open-Source-Lösung veröffentlicht. Hierbei handelt es sich um ein modellunabhängiges Framework für Sicherheitstests, das es anderen Anbietern und Sicherheitsexperten in Unternehmen ermöglichen soll, ähnliche Arbeitsabläufe zu entwickeln, ohne bei Null anfangen zu müssen.

Vor kurzem betonten Vertreter von Cisco auf einer Online-Veranstaltung, dass Verteidiger KI nutzen können, um Sicherheitsprobleme wesentlich schneller und in größerem Umfang zu identifizieren, zu bestätigen und zu beheben. Ältere Modelle, die nach dem Prinzip „eine Schwachstelle finden und patchen“ funktionieren, seien nicht mehr zeitgemäß. Dies liege daran, dass Angreifer KI einsetzen, um den Weg von der Entdeckung einer Schwachstelle bis zu deren Ausnutzung zu beschleunigen. Cisco wiederum setzt KI intern bereits in der Defensive ein, um 1,8 Milliarden Zeilen Code im gesamten Produktportfolio zu scannen.

Gleichzeitig betonen die Experten, dass kleinere Unternehmen keinen Zugriff auf eingeschränkte KI-Modelle benötigen, um ihre Sicherheit zu verbessern. In solchen Betrieben lasse sich stattdessen mehr erreichen, indem grundlegende Sicherheitsmaßnahmen optimiert werden. Hierzu zählen laut Cisco unter anderem Authentifizierung, Netzwerk-Segmentierung, Zero Trust und die Behebung aktiv ausgenutzter Schwachstellen.

Bieten andere KI-Anbieter etwas Vergleichbares zu Claude Mythos an?

Mythos ist das prominenteste Beispiel für Frontier-KI-Modelle. Mit ihnen kann die Suche nach Zero-Day-Lücken in einem Tempo und Ausmaß automatisiert werden, die weit über die Fähigkeiten menschlicher Teams hinausgeht.

Allerdings arbeiten auch etliche andere Anbieter an hochleistungsfähigen, auf Sicherheit ausgerichteten „Frontier“-KI-Modellen. Zudem gibt es andere leistungsstarke Open-Source-Modelle, die sich problemlos für die Cybersicherheitsforschung nutzen lassen. Claude Mythos ist also bei weitem nicht die einzige verfügbare Option.

So werden beispielsweise die Modelle GPT-5.4-Cyber sowie GPT-5.5 von OpenAI genutzt, um Schwachstellen zu erkennen und zu analysieren. Auch in der Malware-Analyse und der Bedrohungsmodellierung kommen sie zum Einsatz. Zugang zu diesen Technologien können Sicherheitsanbieter, Unternehmen und Forscher über das Programm „Trusted Access for Cyber“ (TAC) von OpenAI erhalten.

Zusätzlich hat das chinesische Cybersicherheitsunternehmen 360 Security Technology mit Tulongfeng ein System entwickelt, das als Gegenstück zu Anthropics „Mythos“ beschrieben wird.

Privat lassen sich leistungsstarke offene Modelle – darunter DeepSeek V3.2 von DeepSeek und Llama 4 von Meta – auf GPU-Infrastrukturen betreiben und in der Cybersicherheitsforschung einsetzen. Fugu des japanischen Anbieters Sakana AI ist eine weitere Option in dieser Kategorie.

Was kritisieren Cybersicherheitsexperten an Claude Mythos?

Kritiker aus dem Cybersecurity-Bereich räumen ein, dass Claude Mythos zweifellos hochentwickelt sei. Die Marketing-Behauptung, wonach es zuverlässig produktive IT-Systeme lahmlegen könne, übersteige jedoch die tatsächlichen Fähigkeiten.

Darüber hinaus beklagen sich Sicherheitsexperten – etwa in Podcasts – über die übertrieben restriktiven Sicherheitsmechanismen von Claude Fable: Bereits Anfragen, einen sicherheitsrelevanten Blogbeitrag zusammenzufassen oder sogar das Wort „Exploit“ zu buchstabieren, würden auf das deutlich schwächere Modell Opus 4.8 zurückgestuft. Dadurch würden selbst alltägliche Aufgaben in der Informationssicherheit unnötig erschwert.

Andere Experten warnen davor, dass Frontier-KI-Modelle anfällig für False Positives seien. Eher grundsätzlich ist die Kritik, dass das schnellere Aufspüren von mehr Schwachstellen das eigentliche Problem nicht löst, nämlich zuverlässig Sicherheitslücken zu beheben oder nicht-technische Angriffsvektoren wie Social Engineering zu verhindern.

Wie sollten CISOs auf Mythos reagieren?

Die Nachrichtendienste der „Five Eyes“ (USA, Großbritannien, Kanada, Australien und Neuseeland)  warnen davor, dass hochmoderne KI-Modelle wie Claude Mythos „sowohl offensive als auch defensive Cyber-Fähigkeiten grundlegend verändern werden“ – und zwar in einem Zeitraum von Monaten statt Jahren.

„Während KI uns dabei helfen wird, die Cyberabwehr im Laufe der Zeit zu verbessern, erhöht sie zugleich Geschwindigkeit, Ausmaß und Raffinesse von Cyberbedrohungen“, heißt es in der Erklärung der Gruppe. Unternehmen sollen daher KI nutzen, um ihre Abwehrmechanismen im Rahmen umfassenderer Strategien zur Stärkung der Cybersicherheits-Resilienz zu verbessern.

Die meisten Unternehmen seien jedoch bei weitem noch nicht darauf vorbereitet, was dies für ihre Bedrohungsmodelle bedeutet, warnt ein Experte. „Wir verfügen heute über KI-Systeme, die realistische Angriffswege über Software, Anbieter und kritische Infrastrukturen hinweg schneller abbilden können, als menschliche Angreifer sie erfassen können“, erläutert Joe Hubback, Partner und CISO beim Beratungsunternehmen Elixirr sowie ehemaliger McKinsey-Partner. Dadurch, dass „Fähigkeiten der ‚Mythos-Klasse‘ vor der breiten kommerziellen Einführung stünden, handle es sich nicht mehr um „ein Nischenproblem der Forschung“, ergänzt er. Vielmehr sei es jetzt ein Faktor, den jedes Unternehmen in sein Bedrohungsmodell einbeziehen müsse, so der Experte.

Auch ein Bericht der Cloud Security Alliance warnt davor, dass KI die Zeitspanne zwischen der Entdeckung einer Schwachstelle und deren Ausnutzung drastisch verkürzt habe. Damit seien herkömmliche Sicherheitsmodelle, die auf „Patchen und Reagieren“ basieren, überholt. Unternehmen sollten sich vielmehr auf anhaltende Wellen von Schwachstellen einstellen, die durch „Project Glasswing“ und andere Quellen mittels KI aufgedeckt werden.

„Die bei Mythos beobachteten Fähigkeiten werden schon bald breiter verfügbar sein. Dadurch wird sich die Anzahl sowie Häufigkeit komplexer, neuartiger Angriffe, denen sich Unternehmen gegenübersehen, drastisch erhöhen“, heißt es in der Warnung. Sicherheitsverantwortliche müssten daher ihre Verteidigungsstrategien auf einen „Mythos-ready“-Ansatz umstellen, der auf kontinuierlichem Schwachstellenmanagement, schnellerer Priorisierung und verbesserter Reaktion auf Sicherheitsvorfälle basiert. (tf)

Dieser Artikel basiert auf einem Beitrag von CSO.

Arista Networks is looking to simplify data protection at the edge of enterprise networks with a new security package that combines branch office security with SD-WAN connectivity in a single platform.

The company announced AI-driven Edge Threat Management (ETM) for VeloCloud SD-WAN, a platform that links typically separate products and capabilities including Arista’s next-generation firewall, IP reputation, external blocklists, intrusion prevention, URL filtering, application classification, geo-IP filtering, network address translation, deep packet inspection, and zone-based segmentation.

ETM provides perimeter protection at the WAN edge and is a software upgrade option to VeloCloud SD-WAN, according to Arista. It can help simplify branch operations with a common operating system, a uniform enforcement engine, and common end-to-end security policies, the vendor stated. The new ETM solution also leverages Arista’s AVA (Autonomous Virtual Assist) for AI-driven policy intelligence.

“Multi-vendor branch complexity creates the ultimate blind spot, and your adversaries are actively hiding in it,” wrote Brendan Gibbs, Arista’s vice president, AI, routing, and switching platforms, in a blog post about the new platform.

Sprawling multi-vendor infrastructure creates operational headaches and increases security risks, according to Gibbs. “When you have four or five different point solutions from different vendors stacked on top of each other, configuring them becomes a manual, disjointed process. In fact, industry data shows that up to 95% of network changes are still performed manually, which inevitably leads to configuration mistakes, the single biggest driver of network downtime and security policy gaps,” he wrote. 

“When security policies are decoupled from local network routing, critical blind spots emerge. An attacker doesn’t need to break your cloud-delivered SASE firewall; they just need to target the unmonitored local traffic gaps between your Wi-Fi AP, your LAN switch, and your SD-WAN edge router,” Gibbs wrote.

ETM is integrated into VeloCloud Orchestrator as a dedicated enterprise application. “This enables security operators to configure policies that build on the same source of shared network configuration while maintaining a dedicated management console for security policy configuration, provisioning, and reporting,” Arista stated.

ETM security policies are managed in VeloCloud Orchestrator. “Admins can build and assign reusable policies consisting of predefined objects and templates. This design makes updating security policies possible by a few simple clicks, while the associated changes are propagated throughout the network within minutes,” Arista stated.

VeloCloud Orchestrator is the central management, configuration, and monitoring hub for VeloCloud SD-WAN and SASE networks.

In addition, VeloCloud edge routers collect threat intelligence data from a variety of sources to determine in real-time the trustworthiness and identity of hosts inside and outside the network. Through integration with Arista Network Detection and Response and other web-based dynamic lists, administrators can identify suspicious hosts and build policies to block potentially harmful activities, the vendor stated.

Integration with Arista’s AVA policy assistant is aimed at simplifying management of branch security policies. AVA continuously analyzes configuration states and translates complex, multi-site security rules into plain English, Gibbs explained. For example, NetOps administrators can use AI with Ask AVA to predict “how specific traffic will be handled before committing to a deployment, preventing manual configuration errors that leave branches exposed,” Gibbs wrote.

Arista also touted support for network-wide segmentation policies. “The flexible security policy configuration within the Edge Threat Management policy management extends the security coverage from the data center to the branch,” the vendor stated. “Security operations administrators can build access policies that are enforced across a distributed network. The centralized design enables admins to configure and deploy consistent zone based policies across the entire distributed network.”

ETM is a significant addition to the Arista VeloCloud portfolio. Arista bought the VeloCloud SD-WAN platform from Broadcom a year ago and has been promising new technologies that expand the platform. ETM also could further the vendor’s stated plans to expand beyond its data center networking roots and compete more broadly with enterprise networking vendors such as Cisco, Palo Alto Networks, and Fortinet.

In the SASE and SD-WAN world, vendors such as Cisco, Palo Alto, Fortinet, Cato Networks, and Versa Networks are among the most balanced suppliers, with both SD-WAN and SSE contributing meaningful revenue streams, according to a recently published report from Dell’Oro Group.

“We forecast that SASE will remain on a double-digit growth path in 2026, with SSE-first rollouts remaining the most common entry point, and SD-WAN supported by branch modernization, software attach, and branch security refresh,” Dell Oro stated.

“AI is changing the SASE discussion from access and inspection to governance, data protection, and control over agents and machine traffic,” Mauricio Sanchez, senior director, enterprise security and networking at Dell’Oro Group, stated in the report. “A 21 percent Y/Y quarter shows that SASE is not waiting for a future AI refresh cycle; it is already absorbing the early security and networking requirements created by AI adoption,” Sanchez added.

ETM for VeloCloud SD-WAN will be available in Q4 of 2026 and will be available for all current VeloCloud hardware and virtual edge platforms.

Ever since Chinese AI startup DeepSeek launched three years ago, enterprise executives have been nervous about relying on Chinese AI models. 

But now that the latest Chinese AI offerings, Alibaba’s 2.4-trillion-parameter model Qwen3.8 Max and Moonshot’s 2.8-trillion-parameter model Kimi K3, are promising even more powerful performance, those IT executives are being forced to again ask if these models are worth using, even in a limited fashion.

Former Walmart head of risk Steven Eric Fisher, now an independent cybersecurity and risk advisor, thinks they should at least take another look.

“Enterprises should take these models seriously, but neither adopt nor reject them solely because they are Chinese,” he said. “They should be assessed like any other critical technology dependency: jurisdiction, ownership, training and software provenance, licensing, data handling, hosting, security, reliability, and the ability to independently test their behavior. Geopolitical exposure is a legitimate risk factor, but it should be incorporated into technical and supply-chain diligence rather than used as a substitute for it.”

Choose applications with care

He added, “Chinese models may be especially valuable for coding, multilingual processing, high-volume document analysis, research, synthetic-data generation, and privately operated security or forensic workflows, but they should be subject to task-specific testing rather than broad benchmark claims.”

Shashi Bellamkonda, principal research director at Info-Tech Research Group, agreed that the Chinese models can work well if they are only used in carefully chosen applications. 

“Although Moonshot’s K3 still trails Claude’s Fable 5 and GPT 5.6 Sol on performance and user experience, good companies that have governance and prompt guardrails will not face the instability and improvisation of [the Chinese] models,” he said. “These models will win in usage. US frontier models are leading as the best models, but Chinese models will be sufficient for high-volume, low-drama tasks that cost less for non-critical transactions.”

On the flipside, Bellamkonda suggested a variety of areas where enterprises should avoid Chinese AI models, including “customer-facing work without a human in the loop, regulated or sensitive data, and anything where a hallucinated answer creates legal or safety exposure. That is where the reliability gap and the political-radioactivity concern both bite, and where the closed American models still earn their premium.”

Bellamkonda said he didn’t see the differences in data reliability, mostly involving hallucination rates, as meaningful for enterprise AI strategy decisions.

“Every open-weight model in this class can get facts wrong or make things up. That is fixable with the right setup, so it is not a reason to avoid these models,” he said. “For high-volume tasks with clear limits, you feed the model your own trusted documents to answer from, and you keep a person checking the output. That combination is safe for production. The model on its own is not.”

Too early for enterprises to consider

However, not everyone agrees that the latest Chinese models have earned their place as enterprise AI decision options. 

Cybersecurity consultant Brian Levine, executive director of FormerGov, focused on Chinese technology concerns when he worked for the US Justice Department as its representative in the US law enforcement Joint Liaison Group (JLG) with China. 

“It is way too early for US enterprises to seriously consider these models,” he said. “Until proven otherwise, enterprises should assume that if they use these models, they may be granting China complete access to everything they do through the models, and potentially access to their networks and employees more broadly. At this point, any pros of using such models are strongly outweighed by the potential security, confidentiality, and reliability concerns.”

Tom Findling, CEO of Conifers.ai, was equally emphatic that enterprise CIOs need to steer clear of these newer Chinese models. 

“Using them inhouse? Absolutely not. You simply don’t know what is planted inside of it and you don’t know what training data is put into them,” Findling said. 

Mike Wilkes, enterprise CISO at Aikido Security, added that the very attractive pricing for these Chinese models may be appealing, but suggested that, despite the low cost, they’re ultimately too risky.

“Enterprises should take these models seriously, but not romantically. Parameter count is horsepower measured in a showroom, not braking distance in the rain,” he said. “The real tests are reliability on your data, the cost of a wrong answer, and whether the model behaves predictably under pressure.”

He noted that the benchmarks on the latest open-weights models are impressive, and very close to those of the frontier lab models, which makes the cost ”incredibly seductive, especially when a team does not want to risk their data being used to train those frontier models.”

But the Chinese models can still work in specific circumstances. “The strongest value will be in bounded, reversible and inspectable work: coding inside a sandbox, multilingual translation, document triage, data extraction and other high-volume tasks where outputs can be verified,” he said. “Cheap intelligence is valuable, but only when it is not mistaken for trustworthy judgment.”

Wilkes added that the regulatory issues surrounding Chinese models can be especially problematic. Texas, for example, has banned their usage.  

A rational choice for some workloads

However, Yuri Goryunov, CIO of consulting firm Acceligence, argued that CIOs should seriously consider these models. 

“Counterintuitively, the biggest benefit of Kimi and models like it is the lack of guardrails,” Goryunov said. “Think of it as stick shift cars in the era of automatics. If you want ease and comfort, stay with the frontiers because they have cruise control, shift the gears for you and they decide when. If you want performance and control, expand your horizons. But a stick shift assumes you know how to drive one: you bring your own governance, your own evals, your own safety layer. That’s a cost and specialized talent, which is super rare, and for the right organization it’s also the whole point.”

Goryunov’s bottom line: “For internal, high-volume, well-harnessed workloads, [the Chinese models] have moved from ‘watch list’ to ‘rational choice.’”

This article originally appeared on CIO.com.

Ever since Chinese AI startup DeepSeek launched three years ago, enterprise executives have been nervous about relying on Chinese AI models. 

But now that the latest Chinese AI offerings, Alibaba’s 2.4-trillion-parameter model Qwen3.8 Max and Moonshot’s 2.8-trillion-parameter model Kimi K3, are promising even more powerful performance, those IT executives are being forced to again ask if these models are worth using, even in a limited fashion.

Former Walmart head of risk Steven Eric Fisher, now an independent cybersecurity and risk advisor, thinks they should at least take another look.

“Enterprises should take these models seriously, but neither adopt nor reject them solely because they are Chinese,” he said. “They should be assessed like any other critical technology dependency: jurisdiction, ownership, training and software provenance, licensing, data handling, hosting, security, reliability, and the ability to independently test their behavior. Geopolitical exposure is a legitimate risk factor, but it should be incorporated into technical and supply-chain diligence rather than used as a substitute for it.”

Choose applications with care

He added, “Chinese models may be especially valuable for coding, multilingual processing, high-volume document analysis, research, synthetic-data generation, and privately operated security or forensic workflows, but they should be subject to task-specific testing rather than broad benchmark claims.”

Shashi Bellamkonda, principal research director at Info-Tech Research Group, agreed that the Chinese models can work well if they are only used in carefully chosen applications. 

“Although Moonshot’s K3 still trails Claude’s Fable 5 and GPT 5.6 Sol on performance and user experience, good companies that have governance and prompt guardrails will not face the instability and improvisation of [the Chinese] models,” he said. “These models will win in usage. US frontier models are leading as the best models, but Chinese models will be sufficient for high-volume, low-drama tasks that cost less for non-critical transactions.”

On the flipside, Bellamkonda suggested a variety of areas where enterprises should avoid Chinese AI models, including “customer-facing work without a human in the loop, regulated or sensitive data, and anything where a hallucinated answer creates legal or safety exposure. That is where the reliability gap and the political-radioactivity concern both bite, and where the closed American models still earn their premium.”

Bellamkonda said he didn’t see the differences in data reliability, mostly involving hallucination rates, as meaningful for enterprise AI strategy decisions.

“Every open-weight model in this class can get facts wrong or make things up. That is fixable with the right setup, so it is not a reason to avoid these models,” he said. “For high-volume tasks with clear limits, you feed the model your own trusted documents to answer from, and you keep a person checking the output. That combination is safe for production. The model on its own is not.”

Too early for enterprises to consider

However, not everyone agrees that the latest Chinese models have earned their place as enterprise AI decision options. 

Cybersecurity consultant Brian Levine, executive director of FormerGov, focused on Chinese technology concerns when he worked for the US Justice Department as its representative in the US law enforcement Joint Liaison Group (JLG) with China. 

“It is way too early for US enterprises to seriously consider these models,” he said. “Until proven otherwise, enterprises should assume that if they use these models, they may be granting China complete access to everything they do through the models, and potentially access to their networks and employees more broadly. At this point, any pros of using such models are strongly outweighed by the potential security, confidentiality, and reliability concerns.”

Tom Findling, CEO of Conifers.ai, was equally emphatic that enterprise CIOs need to steer clear of these newer Chinese models. 

“Using them inhouse? Absolutely not. You simply don’t know what is planted inside of it and you don’t know what training data is put into them,” Findling said. 

Mike Wilkes, enterprise CISO at Aikido Security, added that the very attractive pricing for these Chinese models may be appealing, but suggested that, despite the low cost, they’re ultimately too risky.

“Enterprises should take these models seriously, but not romantically. Parameter count is horsepower measured in a showroom, not braking distance in the rain,” he said. “The real tests are reliability on your data, the cost of a wrong answer, and whether the model behaves predictably under pressure.”

He noted that the benchmarks on the latest open-weights models are impressive, and very close to those of the frontier lab models, which makes the cost ”incredibly seductive, especially when a team does not want to risk their data being used to train those frontier models.”

But the Chinese models can still work in specific circumstances. “The strongest value will be in bounded, reversible and inspectable work: coding inside a sandbox, multilingual translation, document triage, data extraction and other high-volume tasks where outputs can be verified,” he said. “Cheap intelligence is valuable, but only when it is not mistaken for trustworthy judgment.”

Wilkes added that the regulatory issues surrounding Chinese models can be especially problematic. Texas, for example, has banned their usage.  

A rational choice for some workloads

However, Yuri Goryunov, CIO of consulting firm Acceligence, argued that CIOs should seriously consider these models. 

“Counterintuitively, the biggest benefit of Kimi and models like it is the lack of guardrails,” Goryunov said. “Think of it as stick shift cars in the era of automatics. If you want ease and comfort, stay with the frontiers because they have cruise control, shift the gears for you and they decide when. If you want performance and control, expand your horizons. But a stick shift assumes you know how to drive one: you bring your own governance, your own evals, your own safety layer. That’s a cost and specialized talent, which is super rare, and for the right organization it’s also the whole point.”

Goryunov’s bottom line: “For internal, high-volume, well-harnessed workloads, [the Chinese models] have moved from ‘watch list’ to ‘rational choice.’”

AI-powered professional services automation provider Certinia has acquired Moonnox, an AI-native automation platform created for the sector. It extends Certinia’s system of action, Veda, offering a new suite of AI agents that automate administration, project management and project deliverables, the company said.

The acquisition will add real-time native context capture across applications such as Salesforce, G-Suite, Microsoft 365, Jira, Confluence, Zoom and others, and, unlike point agents, it “spans the full arc from proposal to delivery to renewal, so nothing has to be rebuilt, re-mapped, or re-trusted as work moves from sales to delivery to customer success,” Certinia said.

New capabilities in Veda include automatic creation of proposal responses and statements of work, conversion of high-level business requirements into actionable blueprints, providing an on-demand virtual assistant to manage day-to-day tasks, performing scope scans and otherwise monitoring projects to proactively manage risk, and organizing delivery data and lessons learned into a searchable knowledge base for later use.

“What excites me most is the combination,” Robert Ong, co-founder and CEO of Moonnox, now part of Certinia, said in a statement. “Moonnox’s ability to capture what happens in the room, paired with Certinia’s system of record and agentic capabilities for services operations, closes a gap neither of us could close alone. Together, we give services firms the foundation to capture that value, deliver with confidence, and navigate shifting their operating models into the future.”

Thomas Randall, research director at Info-Tech Research Group, said it’s a smart move for Certinia to acquire Moonnox. “The current solution is quite complex to use. What Moonnox offers for Certinia is a way for non-technical staff to navigate their system of record across unstructured data silos. I expect to see an increase in satisfaction for the user experience.”

However, Jason Andersen, VP and principal analyst at Moor Insights & Strategy, still has questions.

“While this acquisition might increase service planning and delivery efficiencies in the short term, the real question will be how this combination will help firms with the fundamental shift AI and agents have thrust upon the services industry,” he pointed out. ”Unfortunately for services firms, agentic technologies have already reset client perceptions on internal work capacity, velocity, and cost. So, the proof point I’d like to see is beyond margin improvement and towards business transformation.”

Military strategists know that asymmetric wars are lost not at the point of attack but at the seams between defensive units, where no single commander owns the territory and information moves slower than the threat. In January 2024, a finance employee at Arup’s Hong Kong office learned this lesson for $25 million, joining a video call with what appeared to be the engineering firm’s chief financial officer and several colleagues, receiving instructions to wire funds to a designated account, and complying. Every face on the screen was a deepfake, cloned from publicly available footage of the actual executives. The attackers conducted the entire meeting in real time and vanished before anyone in the organization realized the CFO had never logged on.

The incident would be remarkable enough as a one-off, but it represents a pattern accelerating well beyond isolated cases. Global payment fraud reached $33.4 billion in 2024 according to the Nilson Report, and the US absorbed a disproportionate 42% of those losses despite processing only 25% of global card transactions. The latest FBI Internet Crime report identifies more than one million complaints and nearly $21 billion in cyber-enabled crime losses in 2025 (up from $16 million in 2023), while Deloitte projects AI-enabled fraud in the US will hit $40 billion by 2027. This increasingly includes crypto-related fraud, not just credit card or traditional banking fraud.

For anyone who oversees financial operations, risk or payment technology infrastructure, these numbers are not forecasts of a future “regional conflict.” Instead, they are the current cost of a war most institutions have not yet recognized they are fighting.

Reconnaissance at scale: How AI redraws the attacker’s map

The conventional narrative around AI-powered fraud emphasizes speed: Faster phishing, faster credential stuffing, faster social engineering. Jason Kikta, CTO of Automox, sees the shift differently. “The main threat from AI misuse isn’t faster execution, as automation has been leveraged for years,” Kikta says. “The true dangers are lower barriers to entry and faster adaptation, giving attackers the ability to pivot techniques in near real-time.”

The distinction means that execution is a quantitative improvement, the kind existing defenses can absorb by scaling up. Lower barriers to entry and real-time adaptation are qualitative: A force multiplier that turns every amateur into an equipped operator with a coach that learns from each failed attempt. Deepfake-as-a-service platforms now produce voice clones from three seconds of audio. AI-driven vulnerability scanning maps an institution’s unpatched endpoints while the security team is still scheduling the review meeting. In 2024, 269 million stolen credit card records appeared on dark web platforms, giving AI-equipped attackers what military intelligence analysts would call an order of battle: A detailed map of the defender’s exposed positions, ready to be mined for patterns, tested against live systems and exploited at machine speed.

The result is a combined arms threat, one that operates across domains simultaneously the way a competent military force coordinates air, ground and intelligence rather than running them as independent campaigns. The same AI that crafts a convincing business email compromise can probe unpatched point-of-sale systems to install digital skimmers. The same synthetic identity that opens a fraudulent credit card account can exploit a payment authorization vulnerability discovered through automated scanning. Card-not-present fraud now accounts for 71% of all US card fraud losses, and the attack surface keeps expanding as digital wallets and e-commerce push more transactions into channels where physical card verification is impossible.

Attackers treat endpoint management gaps and transaction monitoring gaps as a single attack surface, while most defenders continue to patrol them as separate territories.

Fragmented command: The structural vulnerability AI exploits

Consider how most financial institutions, crypto platforms and digital asset intermediaries actually organize their defenses: A cybersecurity team focused on identity compromise, endpoint protection and infrastructure threats; a fraud team focused on account takeover, mule networks and scam typologies; an AML or financial crimes team focused on wallet screening, sanctions exposure and suspicious activity reporting; and an AI risk or digital trust team, if one exists at all, focused on synthetic media, model abuse and impersonation. Each function has its own tooling, budget, reporting line and intelligence feeds. In crypto markets, where value can move irreversibly across wallets, chains, mixers, exchanges and OTC brokers in minutes, those silos create exploitable gaps between detection, attribution, interdiction and recovery.

A pig-butchering scam that begins on a dating app, migrates to WhatsApp, directs a victim to a fake crypto investment platform, and then launders proceeds through nested services and cross-chain bridges is not just a fraud event. It is also a cybersecurity event, a financial crimes event, an identity event, a platform abuse event and, increasingly, an AI-enabled social engineering event. Chainalysis reported that high-yield investment scams and pig-butchering schemes were among the most successful crypto scam types in 2024, while also noting growing use of AI in fraud and scams.

Research published by the University of California, Davis found that these schemes follow a staged lifecycle: Trust-building, fabricated investment returns, escalating deposits, withdrawal obstruction and re-targeting of victims after the initial loss. When each part of that lifecycle is monitored by a different team, the institution sees fragments of the attack rather than the economic system of the crime.

“Fraud no longer happens in isolated channels,” observes Jeff Li, Global Product & Designer Lead at Binance. “AI-powered scams move seamlessly across platforms, and payment systems, making fragmented defenses increasingly ineffective.” He believes that the future of security depends on unified intelligence — combining AI, real-time monitoring, secure infrastructure and cross-functional response mechanisms into a single coordinated defense system.

“We’ve invested heavily in AI-driven risk detection, real-time scam warnings and infrastructure to stay ahead of evolving threats, continues Li, claiming that from Q1 2025 to Q1 2026, these efforts helped Binance prevent over $10 billion in potential user losses and protected more than 5 million users globally. As AI continues to reshape both fraud and fraud prevention, the focus remains on building systems that can protect users, not just at scale, but in real time.

Unified command: From org chart to battle plan

Kikta’s assessment contains a contrarian detail worth teasing apart: “The good news is that a strong compliance program prioritizing depth of coverage and speed of enforcement will hold up against AI-enabled fraud,” he says. In a landscape saturated with predictions that existing defenses are obsolete, Kikta argues that the fundamentals of patch management, endpoint hygiene and compliance rigor still hold, provided the clock speed at which those fundamentals execute keeps pace with the adversary.

That clock speed is the operational link between cybersecurity and card fraud prevention. An unpatched point-of-sale terminal or payment gateway exposed for 30 days represents 30 days of reconnaissance opportunity for an AI scanner probing for places to install a digital skimmer or intercept card data in transit. A compliance gap in identity verification is an open invitation for synthetic identities to open accounts and run fraudulent transactions. Endpoint management data and transaction monitoring data describe the same attack surface from different angles, and fusing those streams into a single operational picture, the financial equivalent of a military intelligence fusion center, gives defenders something the current siloed structure cannot: Visibility into an attack developing across domains before it reaches the payment layer.

The value of that convergence extends beyond defense. A unified data layer across cyber, fraud and payments creates consolidated threat intelligence that can inform underwriting decisions, merchant risk scoring and product design. Organizations that treat converged security data as a business intelligence asset (not merely an operational feed) will find they have built something with commercial utility well beyond the security operations center.

Mascaro frames the prescription in terms that belong in a boardroom, not a SOC. “The real competitive advantage in fraud isn’t your AI stack,” he says. “It’s leadership’s clarity to unify risk disciplines that everyone else keeps in separate departments.”

Field manual: What winning institutions do differently

The institutions gaining ground in this new form of asymmetric conflict share a common operational posture: They treat endpoint management as card fraud prevention rather than IT maintenance, and they feed cyber, fraud and payments intelligence into a single picture rather than three separate briefings. The defensive AI advantage, such as it is, comes from that integration, not from any single model’s sophistication.

Adversaries have already unified their operations. Yet, payment processors and financial institutions that keep running separate campaigns on separate fronts, with separate intelligence, will keep conducting after-action reviews of battles they have already lost.

This article is published as part of the Foundry Expert Contributor Network.
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For the past three years, the AI conversation has been dominated by scale. Bigger models, bigger compute clusters, bigger headlines. But the next wave of competitive advantage won’t come from who can rent the biggest model; it will come from who can build the smallest one that knows their business.

That model is the small language model (SLM): Compact, purpose-built, trained on an organization’s own data and run under that organization’s own governance. And it is about to become one of the most consequential strategic assets available to both the private and public sector.

The problem with renting intelligence

Right now, most organizations consume AI the way they once consumed electricity from a single utility by plugging into a handful of frontier models built by a small number of global vendors. These models are extraordinary generalists. They are also, by design, generic. They are tuned to be safe, broad and useful to everyone, which means they are optimised for no one in particular.

That’s a problem for any organization trying to build genuine differentiation. If every competitor in your sector is calling the same foundation model with the same prompts, the model itself is not your edge. Your edge is what only you know, your proprietary data, your institutional judgement, your operating history. A generic model can’t see any of that unless you keep feeding it to them, turn after turn, at cost, with no lasting memory and no guarantee of where that data ends up.

An SLM flips that equation. Trained on an organization’s own document libraries, case histories, policy archives, transaction data and operational know-how, it becomes a model that thinks the way your organization thinks, because it was built from your organization’s accumulated judgement. It doesn’t need to be the smartest model in the world. It needs to be the most useful one for you.

I’ve seen this play out directly. At one of Australia’s largest integrated tourism and cruise businesses, simultaneously a B2C retailer, a B2B distributor to thousands of agency and wholesale clients globally, an aggregator marketplace for more than 1,800 independent tourism operators, and a cruise operator with offshore shared services spanning finance, customer contact and content management. The constraint wasn’t a lack of access to large general-purpose models. It was that none of them understood the business: 1,800 different operator catalogues, each with its own pricing logic, inventory quirks and content conventions; years of customer contact history with its own vocabulary and escalation patterns; a marketplace search experience that needed to reason over the business’s own product taxonomy, not the open web’s.

Models trained and tuned on that proprietary data, operator listings, historical tickets, booking and pricing data delivered results a generic model never could. Domain-tuned content drafting cut operator listing time by 70% and eliminated a 23-day onboarding backlog outright, taking new-operator time-to-live from 23 days to three. A semantic search model trained on the marketplace’s own product catalogue lifted booking conversion by 24%. AI-driven triage trained on the business’s own contact history cut Tier 1 escalations by 34%. None of this came from a smarter foundation model. It came from a smaller, more specific one that knew the business.

Why “small” is the strategic choice, not the compromise

There’s a temptation to treat SLMs as the budget option, what you build when you can’t afford a frontier model. That’s the wrong frame. The evidence is already compelling: Microsoft’s Phi-4 family of small models, released in early 2025, demonstrated that a 14-billion-parameter model can match or exceed the performance of models many times its size on complex reasoning and domain-specific tasks while running at a fraction of the compute cost and on-premise, entirely within an organization’s own infrastructure. Smaller, domain-trained models are increasingly outperforming general-purpose giants on narrow, high-value tasks, with far tighter control over data residency, security and explainability.

For a CIO or CTO, that combination of lower cost, tighter governance, higher task-specific accuracy is rare enough to demand attention on its own. But the deeper value sits one layer up, at the operating model. An SLM trained on your service history can sit inside claims processing, citizen services, clinical triage, asset maintenance scheduling or M&A due diligence quietly compounding institutional knowledge into a reusable asset rather than letting it walk out the door every time someone retires or resigns.

That is the real shift: AI capability stops being a subscription and starts being a balance-sheet asset. It can be valued, protected, audited and improved because it belongs to you.

The public sector’s hidden advantage

Nowhere is this more obvious than in government. The public sector sits on some of the richest, least-exploited data and institutional knowledge in the country: Decades of policy outcomes, service delivery history, regulatory precedent, infrastructure records and frontline expertise. Most of it has never been put to systematic use because no commercially available model was ever trusted to touch it, and rightly so.

A small, sovereign, purpose-built model changes that calculus. Trained, hosted and governed entirely within government infrastructure, an SLM doesn’t require sensitive citizen or policy data to leave a secure perimeter. The Australian Government has already recognised this direction: The APS AI Plan, released in November 2025, commits to expanding the GovAI platform to provide all public servants with secure, sovereign AI tools operating entirely within Australian Government infrastructure. SLMs tuned to individual agency mandates are the logical next step and a more powerful one than any generic government-wide tool can deliver.

Rather than each agency independently negotiating with the same handful of overseas vendors, a coordinated approach of common standards for model governance, shared security architecture, common evaluation frameworks and pooled infrastructure investment would let agencies build and reuse SLM capability horizontally, the way shared services and common ICT platforms have been built before. Each agency gets a model genuinely tuned to its mandate, but the security model, audit trail and assurance framework are consistent, government-backed and independently verifiable.

Done well, this isn’t just an efficiency play. It’s a sovereignty play. As GovTech Review has noted, large language models hosted offshore create data flows that extend beyond Australia’s borders in ways that are rarely transparent, a risk that is simply untenable for government. Sovereign, purpose-built models keep Australian public data, public knowledge and the resulting capability uplift inside Australian hands, rather than exporting both the data and the long-term value to offshore platforms.

Why this belongs in the innovation budget, not the IT budget

The instinct in many organizations is to treat AI spend as an IT line item, something to be minimised, benchmarked and squeezed for cost efficiency. SLMs deserve a different treatment. They are closer to R&D than infrastructure: An investment in converting accumulated institutional knowledge into a durable, defensible capability.

That argument holds in the private sector too. A PE-backed portfolio company, a regulated financial services firm, a healthcare provider — each has years of proprietary operating data sitting idle in case files, transaction logs and service records. An SLM built on that data is a way of turning a sunk cost, decades of operational history, into a forward-looking asset that compounds with every additional case it processes.

Boards and executive committees that are still asking “what is our AI strategy?” as a single, undifferentiated question are asking the wrong thing. The better question is: Which parts of our operation are rich enough in proprietary data and judgement to justify owning the model outright, rather than renting someone else’s?

The opportunity in front of us

The first wave of enterprise AI adoption was about access: Getting a capable model into people’s hands quickly. The next wave will be about ownership: Who controls the model, who controls the data it was built on, and who captures the long-term value of the institutional knowledge it encodes.

Australia, with a public sector rich in data and a private sector with deep vertical expertise in financial services, resources, healthcare and logistics, is well placed to lead on this if it treats small, sovereign models as a genuine national capability question, not a procurement footnote. The organizations, and the country, that move early will not just save money. They will own something their competitors can’t easily replicate: An AI that knows them.

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Site reliability engineers (SREs) have the tough assignment of resolving thorny performance and reliability issues. But their primary mission is to provide devops teams with operational insights and to suggest implementation improvements on business system performance, security, and overall robustness.

Google introduced its SRE playbook in 2003, but it took some time for the role’s definition, tools, and techniques to become mainstream. Startups were the first to adopt observability for cloud-native applications and create dedicated SRE positions. As tools matured and SRE responsibilities became more clearly defined, larger enterprises assigned SREs to work as a bridge between devops and IT ops teams to improve resilience across a wider range of applications, APIs, and data pipelines.

SRE is a career path for multidisciplinary engineers with strong investigative instincts, sharp data analytics skills, and the temperament to perform under pressure. It has become a critical responsibility as tech became mission-critical for enterprises, and it is a growing role in the genAI era as more businesses deploy AI agents.

But the critical need for resiliency and greater technological complexity brings new challenges for SREs. According to the 2026 State of Production Reliability and AI Adoption report, 44% of respondents experienced an outage linked to ignored or suppressed alerts in the past year, and 35% report their engineers occasionally ignore or dismiss alerts due to alert fatigue. More than 70% of alerts received are not actionable, according to 57% of organizations.

So, is AI making the SRE’s role easier and helping businesses run more reliable technology operations? On the other hand, AI is also driving complexity, as companies deploy genAI tools and AI agents across more business functions and seek to automate more decision-making across operations.

AIops and agentic ops aid SREs

Over the past decade, SRE responsibilities have become somewhat easier through improvements in monitoring platforms, observability practices, tools for centralizing operational data, and AI applied in IT operations (AIops). But during the heat of resolving an outage or performance issue, it’s not easy to correctly identify what system triggered the issue versus other downstream systems impacted by it.

According to the Komodore 2025 Enterprise Kubernetes Report, 79% of production incidents originate from recent system changes, including deployments and changes to compute environments. But the other 21% of incidents stem from issues outside of the business’s control, including network failures, third-party changes, and cloud provider failures.

“SREs using AI capabilities succeed or fail in the moment an incident unfolds, when engineers are deciding what to investigate next,” says Itiel Shwartz, CTO at Komodor. “If the system streamlines root cause detection, connects signals to recent changes, and explains its reasoning in a way engineers recognize, it earns trust. If it adds uncertainty or demands extra validation, it gets sidelined, regardless of how bespoke the model behind it may be. What’s less obvious is what it takes to make AI for SREs work in production, and how different that reality is from prototypes, demos, or early internal builds.”

AIops is not a new capability, especially in using machine learning to correlate logs, metrics, and traces across monitoring and alerting systems. IT service management and SREs have been using AIops to reduce the mean time to resolve incidents and to perform accurate root cause analysis (RCA) efficiently. Agentic ops is the next wave of genAI operational capabilities, including tools for monitoring AI agents, managing their access rights, and detecting AI model accuracy drift.

 “AI is useful during major incidents because it can pull together a lot of context into a few clear sentences, which is exactly what an SRE needs in the moment,” suggests Shani Shoham, chief revenue officer at OpenObserve. “The complexity of architecture and the different tooling make it easier for AI than for a human, but autonomous resolution is still a way off.”

AI’s impact on people and burnout

The business pressure to keep systems up, secure, and performing well is a 24/7 stressful responsibility. According to The SRE Report 2025 from Catchpoint, 36% of SREs often or always experience elevated stress during an incident, and 28% said the stress persists even after the incident is resolved. AI capabilities may prove to be a game-changer in helping SREs avoid burnout and reduce stress.

“AI can improve RCA by taking in a much larger incident context than any engineer can hold at 3am, reasoning across traces, logs, metrics, deploys, config changes, alerts, ownership, and recent production behavior,” says Noam Levy, founding engineer and field CTO at Groundcover. “Beyond attempting a full RCA, its immediate value is distilling the signals that actually matter, reconstructing a clear timeline of cause and effect, and helping engineers separate correlation from likely causality. Once a fix is deployed, agents can also verify remediation by comparing pre- and post-fix behavior, but this depends on broad access to rich, correlated production signals and a cost model that does not discourage adoption or experimentation.”

Not only are incidents resolved faster and with less stress, but AI can also free up SRE time to focus on proactive work and create a career path for junior developers into SRE roles. Quais Taraki, CTO at EDB Postgres AI, adds, “AI reduces toil by automating repetitive tasks while accelerating incident resolution through copilots that correlate signals across distributed systems, allowing SREs to focus more on resilience strategies like chaos engineering and failure analysis.”

AI can have long-lasting operational impacts, especially for organizations looking to deploy more mission-critical technology and AI capabilities. Two longer-term benefits of AI for SREs are reducing the number of bridge calls needed for incident response and the number of engineers required in “war rooms” to coordinate root cause analyses.

“When something goes wrong, AI that guides SREs can do the full analysis, get to the root cause, and perform the remediation,” says Spiros Xanthos, founder and CEO of Resolve AI. “AI also helps avoid many escalations, and when escalations are needed, it targets the right people from the network, infrastructure, and the application teams. AI for SREs centralizes operational intelligence, exposes tribal knowledge, and can guide more junior developers.” 

AI agent reliability

While AI capabilities have been a net positive in helping SREs improve system reliability, the growth of AI code generators, vibe coding, and spec-driven development is adding to their workloads. According to one study, 41% of all global code is now AI-generated, and Gartner predicts that 40% of new enterprise production software will be created using vibe coding techniques by 2028.

But coding velocity is creating new issues for SREs as AI pull requests have 1.4 times more critical issues and 1.7 times more major issues, according to CodeRabbit. “AI-assisted development has created an unprecedented velocity of code reaching production, expanding surface area, edge cases, and failure rates faster than traditional SRE practices can absorb,” says Vinod Jayaraman, cofounder and CTO at NeuBird AI. “The speed of shipping has far outpaced the speed of understanding what breaks in production. To close this loop, SREs need enterprise agents that can capture precise diagnostic context, including correlated traces, service dependencies, and anomaly timelines, and structure it as actionable input for the engineers and AI coding tools responsible for the fix.”

The growing number of AI agents deployed to production creates new challenges. AI agents are not just code; they have multiple failure points. They are built using language models, connect to proprietary sources for context, and integrate with Model Context Protocol servers to support more complex workflows. Changes are ongoing and not deployment events, so the SRE’s job of identifying the source of performance and accuracy drifts isn’t trivial. 

“Traditional SRE was built for systems that fail in reproducible ways, but agents fail differently and drift when a model provider pushes an update, and behavior shifts silently with no baseline for comparison,” says Mohammed Aboul-Magd, vice president of product at SandboxAQ. “Most organizations can’t even answer the basics: how many agents are running, what they have access to, and whether they’re still doing what they were built to do.”

“Every time a senior engineer leaves, they take years of learned failure patterns with them, and the next outage starts from square one,” adds Ronak Desai, cofounder and CEO at Ciroos. “Using AI for compounding operational memory changes that, and every incident your system resolves, the AI learns it.”

SREs should take a leadership role in emerging best practices, including defining their standards for AI agent non-functional acceptance criteria, observability practices, and release-readiness criteria. SREs should update their service-level objectives (SLOs) and define error budgets for AI agents in production.

Ryan Downing, vice president and CIO of enterprise business solutions at Principal Financial Group, says, “Standard SLOs and error budgets give teams the guardrails, and AI helps interpret the telemetry against those targets, reducing noise so engineers can get to the real issue faster and automate parts of remediation before customers are impacted.”

AI raises the SRE’s business impact

The more dramatic shift in site reliability engineering is an evolution of its business scope. IT leaders focus on uptime, performance, and issue resolution, as well as understanding their impacts. Business leaders will look to IT and SREs to identify, determine root cause, and remediate a broader class of issues, including rogue AI agents and the impacts of rapidly deploying new agentic capabilities. 

“AI agents are handing SREs categories of problems they’ve never had to solve before, specifically failures defined in business terms, not technical ones,” says Blake Sherwood, distinguished technologist for AI and platform strategy at Smarsh. “Traditional reliability engineering is built around latency, errors, and crashes, but agents now fail due to skipped compliance steps or outcomes that looked fine technically but were wrong contextually. Most SRE teams aren’t wired for that yet.”

The question is whether SREs with AI-augmented tools can keep up with the velocity, complexity, and business urgency of deploying new AI business capabilities.

Every enterprise AI conversation seems to begin with the same question: Which model should we use?

I understand why. Models are visible. They have names, benchmarks, release notes, pricing pages and impressive demos. They are easy to compare in a leadership meeting. One model promises better reasoning. Another offers a larger context window. Another appears faster, cheaper or more specialized.

But after years of working around enterprise platforms, integration layers, cloud migration, middleware, production operations and mission-critical systems, I see the AI conversation differently.

The model matters. But it is not where most enterprises will struggle next.

The next AI bottleneck is the infrastructure behind the model.

I do not mean only GPUs, cloud capacity or data storage. I mean the full enterprise operating layer that allows AI to work safely in the real world: data pipelines, identity, APIs, messaging, observability, security controls, deployment automation, cost governance, auditability, support ownership and recovery design.

That layer is what determines whether AI remains an exciting experiment or becomes a trusted business capability.

Pilots hide the hard part

Most organizations can build an impressive AI pilot. A small team can connect a model to a dataset, create a workflow and show a use case that works well in a controlled setting.

The harder part starts when that pilot moves into a real production process.

That is when practical questions show up. Who owns the data quality? What systems can the AI access? How do we trace which prompt, policy or retrieval flow produced a specific answer? What happens when an API slows down, a queue backs up or a downstream system is unavailable?

To me, these are not model problems. They are infrastructure problems.

This is where many enterprises are now headed. The first phase of AI was experimentation. The next phase is operationalization, and that is where the real gap becomes clear.

McKinsey has made a similar point in its work on agentic AI, noting that the next phase of value depends less on isolated tools and more on redesigning workflows, operating models and enterprise execution around agents.

AI pilots can survive on enthusiasm. Production AI requires architecture.

AI is becoming an integration problem

The more I look at enterprise AI, the more it feels like an integration challenge.

In large organizations, I have seen how messaging platforms, integration gateways, deployment pipelines, monitoring tools and cloud infrastructure can decide whether a digital capability succeeds or fails. AI will be no different. Even the strongest model will struggle if the data, middleware, identity layer and operational controls around it are weak.

AI does not work in isolation. It needs context from systems of record, clean data from different business areas, secure access to APIs, event streams, workflows, knowledge repositories, monitoring tools and legacy systems.

That is why the CIO question is changing.

It is no longer just, “Which AI tool should we buy?”

It is becoming, “Can we safely operationalize intelligence across the business?”

This is where agentic AI matters. Autonomous AI only creates real value when the architecture around it can make its actions safe, traceable and useful.

A model can generate an answer. Infrastructure determines whether that answer is secure, timely, explainable, governed and connected to the right workflow.

For example, an AI assistant that summarizes customer or order information may look like a model use case. But underneath, it depends on access control, fresh data, reliable APIs, logging, encryption, monitoring and policy enforcement.

If the answer is wrong, people may blame the model. But the real failure may have started with stale data, weak integration, poor access design, missing observability or an unreliable downstream system.

That is why CIOs should not judge AI only by model capability. The enterprise system around the model matters just as much.

Latency will become a trust issue

In traditional technology operations, latency is often treated as a performance metric. In AI-enabled workflows, latency becomes a trust issue.

When an employee asks an AI assistant for help and the response takes too long, the employee stops using it. When a customer-facing workflow becomes slow, the customer abandons it. When an AI agent waits on multiple backend calls, the entire business process feels unreliable.

This becomes even more important as organizations move from simple chat interfaces to agentic workflows. A single AI-driven action may include identity checks, context retrieval, policy validation, model reasoning, API calls, business-rule execution, logging and human approval.

Each step adds latency. Each dependency adds a possible failure point.

A model may be fast in a benchmark but slow inside an enterprise process. That difference matters.

This is where platform engineering becomes essential. Enterprises need reusable patterns for AI workloads: approved connectors, secure retrieval methods, queue-based decoupling, caching strategies, deployment pipelines, monitoring dashboards and standard rollback procedures.

Without those patterns, every AI initiative becomes a custom build. Custom builds may work for pilots, but they do not scale across a large enterprise.

Observability has to expand

Traditional monitoring tells us whether infrastructure is healthy. Is the server up? Is CPU high? Is memory exhausted? Is the application returning errors?

AI needs that, but it also needs more.

We need to know what data was retrieved, which model was used, which prompt version was active, which user initiated the request, which policy was applied, how long each step took and whether the output passed validation.

We also need to detect new forms of risk: unusual usage patterns, repeated failed tool calls, unexpected cost spikes, sensitive data exposure, weak retrieval results or an AI workflow attempting actions outside its intended boundary.

In production AI, observability is not only about uptime. It is about confidence.

If a business leader, auditor, regulator or security team asks why an AI system made a recommendation, the answer cannot be, “The model said so.” The enterprise needs traceability. It needs evidence. It needs operational context that engineers, risk teams and business owners can understand.

This is one of the biggest gaps I see in AI strategy. Many organizations are investing in models and use cases, but not enough in the control plane required to manage them.

Data readiness is still underestimated

AI has exposed an uncomfortable truth: many enterprises are not as data ready as they think.

Data is often duplicated across platforms, described differently by each team, governed inconsistently and refreshed on different schedules. Access rules may be clear in one system but unclear in another. Even basic business definitions can change from department to department.

AI does not fix that automatically. In many cases, it makes the problem more visible.

A bad report may be questioned. A bad AI answer may sound confident enough to be trusted.

That is a real risk.

Being data-ready for AI is not just about connecting a vector database or indexing documents. It requires clear ownership, lineage, classification, quality checks, retention rules, access boundaries and a shared understanding of which data should be used for which purpose.

The same principle applies to resilient cloud-native design. In my IEEE TechRxiv paper, “Enabling Fault-Tolerant Multicast in Cloud-Native Architectures” I explored how reliability, observability and fault tolerance become foundational requirements when critical workloads stretch across hybrid and multi-cloud environments.

CIOs already understand this because they have lived through enterprise resource planning programs, cloud migration, integration modernization, cybersecurity transformation and analytics initiatives. The lesson is familiar: technology cannot outrun data discipline forever.

Security cannot be added later

As AI moves from answering questions to acting, security becomes much more important.

An assistant that summarizes information carries one level of risk. An agent that can open a ticket, update a record, trigger a workflow, approve a request or contact a customer carries a very different one.

The more AI can do, the more identity, authorization, least privilege, separation of duties and human approval matter.

Enterprises should be careful not to grant AI broad access just to speed up a pilot. That may seem harmless in development, but it can become dangerous at scale.

AI access should be treated like any other privileged enterprise capability: limited, logged, reviewed and easy to revoke.

The NIST AI Risk Management Framework is a useful reference point here because it frames AI risk as something organizations must govern, map, measure and manage continuously rather than something handled only at the end of deployment.

Security teams should be involved early, not at the end. The goal is not to slow innovation. The goal is to build a platform where safe innovation becomes repeatable.

The CIO has to define the operating model

AI is creating pressure from every direction. Boards want productivity. Business teams want automation. Employees want better tools. Vendors are pushing new features. Security teams are watching risk. Finance teams are watching cost. Customers expect faster, smarter experiences.

The CIO sits in the middle of all of it.

That is why the CIO’s role cannot stop at choosing tools or approving pilots. The CIO has to define how AI will actually operate across the enterprise.

That means answering practical questions. Which architecture is approved? Which data sources can be trusted? How are AI workflows deployed, monitored, supported and governed? How are costs controlled? How do teams reuse common patterns instead of rebuilding the same foundation each time?

This work may not be as exciting as a model demo, but it is what separates sustainable AI from short-term experimentation.

The winning organizations will not be the ones with the most pilots. They will be the ones with the strongest AI operating layer.

They will build reusable platform patterns, strengthen data governance, design access properly, monitor AI behavior end to end and measure success by business improvement, not only model performance.

The model still matters. But the enterprise behind the model matters more.

A powerful model on weak infrastructure will eventually disappoint the business. A capable model on strong infrastructure can deliver real value because it can be trusted, secured, scaled and improved.

That is the shift CIOs need to lead.

The next AI bottleneck is not the model. It is whether the enterprise behind the model is ready.

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Technology executives from across the New York metropolitan area gathered July 16 at Convene, One Liberty Plaza, for CIO 100 Leadership Live New York, a full day of roundtables and panel discussions on enterprise AI investment, governance, and organizational change.

Several key areas of consensus emerged throughout this highly interactive event. Infrastructure fragmentation continues to block the path to securing returns on AI investments prompting leaders to understand rising cloud spend attributed to large language model utilization. This has caused a growing number of organizations to refocus on on-premises and hybrid options in C-suite and board-level capital planning conversations. Speakers, along with comments from the audience, described a shift from project thinking to product thinking, with smaller multidisciplinary teams moving faster than legacy structures.

Several participants repeatedly warned that automating broken processes just amplifies dysfunction. Governance and measurement remain unresolved, with usage metrics still getting mistaken for business value. One of the panels explored how CIOs may benefit from applying venture capital-style scrutiny to enterprise bets, weighing team execution as heavily as the technology itself. The throughline was a redefinition of the CIO role, from technology executor to business strategist fluent in revenue, board engagement, and transformation ownership.

Morning roundtable tackles AI infrastructure

The day opened with an invitation-only executive breakfast roundtable, “Beyond the Pilot, Building the Infrastructure for Real AI Returns,” co-hosted by Unisys and Dell Technologies. Over a dozen executives representing major public and private sector organizations across the New York metropolitan area joined Steve Hollander, senior director of Americas global alliances at Dell Technologies, and Matt Marshall, CIO at Unisys for a workshop-style discussion.

The session explored the strategic, operational, financial, and technological issues that must be mastered to optimize infrastructure decisions and separate organizations that are experimenting with AI from those competing on it. Discussion questions probed how CIOs measure whether AI investment is translating into business results, how they can break the cycle of fragmented and siloed AI deployments, how boards are beginning to scrutinize seven-figure token spend and whether on-premises or hybrid infrastructure can rein in costs.

The take-home point: the organizations pulling ahead are the ones that stopped treating AI as four separate problems, strategic, operational, financial, technological, owned by four separate functions, and started running it as one coordinated decision. Fragmentation is the actual cost center here, not the token spend itself. A CIO who solves the infrastructure question in isolation from the governance question, or the cost question in isolation from the talent question, ends up optimizing one silo while the other three keep bleeding value. Competing on AI, instead of just experimenting with it, means the finance, operations, technology and business sides are reasoning from the same picture of what’s being built and why, so the tradeoffs get made once, together, instead of getting re-litigated at every handoff.

Forum sessions open with a mandate for growth

Following breakfast, the main forum program began with “The New CIO Mandate, Delivering Growth, Not Just Technology.” In a moderated conversation, Laksh Nathan, chief information officer at Paramount Skydance, drew on his experience with mergers, enterprise transformation and AI-enabled development to describe a shift from project and application management toward a product-centric operating model. Nathan addressed how smaller, multidisciplinary teams are changing expectations on both the business and technology sides of the enterprise, and what mindset changes CIOs must lead to turn AI into an engine of growth rather than a cost center.

PwC followed with a session on “Designing the Intelligent Enterprise, From AI Investment to Evolving Operations.” Darren O’Meara, principal and chief technology officer for managed services, and Meghna Shah, principal for engineering and AI, examined why fragmented outcomes persist even after heavy investment in technology and transformation.

The intelligent enterprise, they posited, is less about working toward achieving specific technology outcomes and more about creating operating models that integrate strategy, technology, operations, and governance into one system. This, they explained, requires linking AI, data, and decisions across the business and will leave an indelible mark on how decision rights are redesigned, funding models are developed, and accountability is enforced to accommodate the speed of the agentic economy.

Talent, tradeoffs, and the cost of getting it wrong

The session “Return on Transformation: Time, Talent, and Tradeoffs” — with Prashant Hinge, chief information and transformation officer at MSIG USA; Joseph Gimigliano, chief technology officer at Northwell Health; and Eduard de Vries Sands, AI executive advisor at PatientPoint — examined why transformation initiatives so often lose their way.

The main culprit, even today in 2026, continues to revolve around a persistent instinct for technology implementations to become the objective rather than the means to a measurable business outcome. The panelists made the case for doing the incredibly difficult work of re-engineering (if not entirely re-imagining) existing processes before automating them and then placing smaller bets inside that bigger vision.

Ricky Thakrar, head of sales and account management at Zoho, took the stage to present “Smaller, Smarter, Safer, The Enterprise AI Architecture Most Leaders Get Backwards,” arguing that constrained, context-rich architectures consistently outperform expensive models bolted onto fragmented systems.

A round of Hot Topic Discussion Groups and a networking lunch followed, including the Next CIO Luncheon featuring Robert Half Regional Director Jason Deneu.

Afternoon sessions turn to security, scale, and investment signals

CSO and CIO Contributor Joan Goodchild moderated “Securing Trust in the Agentic Economy,” a discussion with Marlowe Cochran, CISO at the New York State Education Department, and Gee Rittenhouse, vice president of security services at AWS, on how organizations are balancing speed, innovation and security as AI agents move from experimentation into productization at scale.

Rittenhouse framed agentic risk as closer to human risk than traditional software risk, describing how an independent agent acting in a non-deterministic way really does look like a potential insider threat, pushing CISOs toward behavioral monitoring over static workload protection. He tied this to a structural shift in defense, noting it’s hard to do agentic security if you’re not observing it, putting observability at the center of agentic risk management.

Cochran concurred, adding that many of the key tools that are needed to move into the agentic economy already exist, but must be implemented more aggressively, comprehensively and even more creatively. CISOs don’t need to invent an entirely new security discipline for the agentic era so much as extend identity management, access control and monitoring frameworks they already run to cover a new class of non-human actor — agents.

A session on “AI, From Experimentation to Enterprise Impact” brought together Meagan Gentry, national AI practice manager and distinguished technologist at Insight and Yuri Gubin, chief technology officer at DataArt, for a candid look at why pilots stall before reaching scaled production and what operating capabilities, governance, cost visibility, continuous education, must be in place to sustain AI once a proof of concept works.

During the session’s Q&A segment, a discussion emerged around how proof-of-concept success can result in a false signal, raising questions about whether pilots should be considered successful before the intended outcomes have had time to materialize, and drawing a distinction between measuring usage and adoption versus measuring business value.

The panelists explored how CIOs can identify the small number of transformational AI opportunities worth pursuing rather than managing hundreds of incremental use cases, and even challenged whether prioritization is the CIO’s job at all. The discussion closed on a sequencing question with real strategic weight, whether AI-first strategies are putting the technology ahead of the business problem CIOs are trying to solve, and what role CIOs should play with boards in defining the outcomes AI is expected to support.

A shift in perspectives

The “Think Like a VC, Investment Shifts Towards Focused AI Applications” session featured three venture investors, Aaron Darr, partner at Lead Edge; Isabelle Phelps, partner at Lerer Hippeau; and Marshall Porter, general partner at AlleyCorp. The panel explored how investors evaluate risk and talent in a market where products and competitive positions can shift within months, and what separates a focused AI application with durable enterprise value from an AI wrapper built to chase a trend.

The panel challenged the enterprise instinct to seek certainty in a market moving this fast, questioning whether CIOs should stop looking for technologies that will future-proof the enterprise and instead grow more comfortable continuously reassessing their bets. Investors framed this as a deliberate departure from the traditional low-tolerance-for-failure posture that has long governed enterprise technology purchasing, arguing that the search for certainty has itself become a risk in a market where products and business models can shift within months. The discussion pressed CIOs to weigh how they can adopt a more dynamic investment mindset without compromising the enterprise security, governance and accountability their organizations still depend on.

A Lightning Insights followed, featuring five-minute briefings from Insight, Platform9 and Console, followed by Keystone Senior Principal Ellora Sarkar’s talk on why most enterprise AI investment fails to produce measurable value and what separates the small share of firms capturing real return on investment from the majority still stuck in pilots.

Closing the day

The forum closed with “What’s Next for the CIO, Preparing for the Next 12 to 24 Months,” a fireside conversation with Leif Maiorini, CIO for corporate services at Omnicom. Maiorini discussed why business processes need to be redesigned for agentic speed rather than automated around existing human workflows, how organizational structures may shift as autonomous agents reshape visibility and decision support, and where sustainable differentiation will come from once AI capability itself becomes widely accessible.

Maiorini encouraged the industry to clearly distinguish between nondifferentiated services that should be made as efficient as possible and the differentiated capabilities that actually influence why customers choose to do business with an organization, once the major efficiency gains from optimization and AI have been captured.

He was candid about the governance gap agentic systems open up, noting that agents lack the professional reputation, personal accountability and inherent constraints that shape human behavior, which creates new risk when autonomous decisions occur at machine speed. That combination, reinvesting efficiency gains into genuine differentiation while building governance models suited to non-human decision-makers, framed his closing case for why human creativity and judgment remain the enterprise’s most durable asset even as the underlying technology becomes commoditized.

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A sandbox security hole that could lead to remote code execution (RCE), patched last week by ServiceNow, is being actively exploited in the wild, according to a report from threat intel firm Defused. 

The report, posted on X, said the firm is “observing in-the-wild exploitation of the ServiceNow pre-auth sandbox-escape RCE (CVE-2026-6875).”

Defused CEO Simo Kohonen, in an interview with CSO Online, noted that it appeared that the attacker has changed its tactics from those documented in an earlier proof of concept (PoC) from researchers at Searchlight Cyber, in response to ServiceNow patches and defenses. The company had implemented five different mitigations in its code base, which “neutered” the initial attack methodology, he said, adding that, overall, his team is seeing more attack method tweaks than it used to see. 

“We are seeing a lot of [attack] variations, much more so than a year ago, for the same vulnerability,” Kohonen said. Attackers “now have more tools to build their own stuff.”

However, he admitted that his team has thus far only observed this exploit an in the wild exploitation “once, by one actor.” 

In response to the report, ServiceNow issued a statement saying that it has not yet directly seen any such exploitations. 

“ServiceNow is aware of a cybersecurity company’s recent publication regarding exploitation activity associated with a previously disclosed security vulnerability, identified as CVE-2026-6875. Based on our investigation to date, we have not observed evidence that this activity is related to instances that ServiceNow hosts,” the emailed statement said. “We have provided updates and patches designed to address this issue, and we encourage our self-hosted and ServiceNow-hosted customers to apply the relevant patches if they have not already done so.”

A ‘repeatable failure point’

Analysts and consultants said the bigger concern with this hole is that it focuses on the lack of protections in the sandbox, which many security and IT teams have relied on for years. 

“The vulnerability lets an attacker bypass ServiceNow’s scripting sandbox entirely, and researchers are now seeing exploitation using a different technique than the one originally published, which means signature-based defenses built on the first proof of concept are unlikely to catch every variant,” said Frank Dickson, group VP for security at IDC.

“A compromise that starts in the cloud tenant can end up inside the corporate network, turning a SaaS incident into an on-premises one,” he pointed out. “And because ServiceNow frequently houses HR records, CMDB asset data, and the ticketing system itself, an attacker sitting inside it may have visibility into how the incident response team is tracking the incident.”

Dickson added that this incident is further proof that both IT and security teams need to reevaluate their patching methodologies. 

“Enterprises outsource patching for platforms like ServiceNow to the vendor, but keep the risk that comes from what those platforms touch: HR records, CMDB inventories, and now on-premises systems through MID Server integration. Control sits with the vendor, liability sits with the enterprise, and that mismatch argues for treating core SaaS platforms as part of the internal attack surface, not externalized vendor risk,” he said, noting that as vendors embed more AI-driven scripting into their platforms, the sandbox boundary becomes “a repeatable failure point.”

Because of this, he advised, “CISOs should start asking every AI-enabled SaaS vendor how that boundary is architected and tested, before the next version of this story breaks elsewhere.”

Noah Kenney, principal consultant at Digital 520, said the sandbox escape is the more disturbing element of the issue. 

“The significance is not that ServiceNow had a critical bug, so much as the fact that the bug is a sandbox escape in the AI Platform, which means the containment layer specifically built to run untrusted AI-driven code safely is the thing that failed,” he said. “CISOs have been told repeatedly that the sandbox is what makes enterprise AI safe to deploy, but we’re now seeing the sandbox breaking and that should reframe how CISOs think about every feature sitting behind a similar wall.”

Addition of AI increases blast radius

This is yet another example where AI is fundamentally changing just about every IT and security rule, he pointed out.

“Enterprises are bolting AI onto their most privileged systems of record faster than anyone is updating the threat models for those systems, and the AI layer is becoming the softest part of the hardest targets,” Kenney said. “The real question for a CISO is how many of your critical platforms shipped an AI feature in the past year, and whether a single person in your organization can tell you what that did to the pre-auth attack surface. Most cannot, and that is the actual exposure.”

Aman Mahapatra, chief strategy officer for Tribeca Softtech, a New York City-based technology consulting firm, agreed.

“A vulnerability that gives an attacker a foothold in the ServiceNow instance is now also a vulnerability that gives them access to whatever AI agents are running inside that instance, along with any capability tokens, service accounts, or delegated permissions those agents hold,” Mahapatra said. “The blast radius of a ServiceNow compromise in 2026 is meaningfully larger than the same compromise would have been in 2023, and most enterprise security programs have not caught up to that shift.”

Defused’s Kohonen said that he did not disagree with the sandbox concerns, but he stressed that enterprise CISOs have long ago abandoned the belief that sandboxes are secure. 

“Nothing is foolproof, and having a sandbox is better than not having one,” he said. “But the belief that a sandbox removes all of the risk is incredibly dumb,” especially in the reality of today’s threat landscape, which contains “an endless conveyor belt of exploits.”

A sandbox security hole that could lead to remote code execution (RCE), patched last week by ServiceNow, is being actively exploited in the wild, according to a report from threat intel firm Defused. 

The report, posted on X, said the firm is “observing in-the-wild exploitation of the ServiceNow pre-auth sandbox-escape RCE (CVE-2026-6875).”

Defused CEO Simo Kohonen noted in an interview that it appeared that the attacker has changed its tactics from those documented in an earlier proof of concept (PoC) from researchers at Searchlight Cyber, in response to ServiceNow patches and defenses. The company had implemented five different mitigations in its code base, which “neutered” the initial attack methodology, he said, adding that, overall, his team is seeing more attack method tweaks than it used to see. 

“We are seeing a lot of [attack] variations, much more so than a year ago, for the same vulnerability,” Kohonen said. Attackers “now have more tools to build their own stuff.”

However, he admitted that his team has thus far only observed this exploit an in the wild exploitation “once, by one actor.” 

In response to the report, ServiceNow issued a statement saying that it has not yet directly seen any such exploitations. 

“ServiceNow is aware of a cybersecurity company’s recent publication regarding exploitation activity associated with a previously disclosed security vulnerability, identified as CVE-2026-6875. Based on our investigation to date, we have not observed evidence that this activity is related to instances that ServiceNow hosts,” the emailed statement said. “We have provided updates and patches designed to address this issue, and we encourage our self-hosted and ServiceNow-hosted customers to apply the relevant patches if they have not already done so.”

A ‘repeatable failure point’

Analysts and consultants said the bigger concern with this hole is that it focuses on the lack of protections in the sandbox, which many security and IT teams have relied on for years. 

“The vulnerability lets an attacker bypass ServiceNow’s scripting sandbox entirely, and researchers are now seeing exploitation using a different technique than the one originally published, which means signature-based defenses built on the first proof of concept are unlikely to catch every variant,” said Frank Dickson, group VP for security at IDC.

“A compromise that starts in the cloud tenant can end up inside the corporate network, turning a SaaS incident into an on-premises one,” he pointed out. “And because ServiceNow frequently houses HR records, CMDB asset data, and the ticketing system itself, an attacker sitting inside it may have visibility into how the incident response team is tracking the incident.”

Dickson added that this incident is further proof that both IT and security teams need to reevaluate their patching methodologies. 

“Enterprises outsource patching for platforms like ServiceNow to the vendor, but keep the risk that comes from what those platforms touch: HR records, CMDB inventories, and now on-premises systems through MID Server integration. Control sits with the vendor, liability sits with the enterprise, and that mismatch argues for treating core SaaS platforms as part of the internal attack surface, not externalized vendor risk,” he said, noting that as vendors embed more AI-driven scripting into their platforms, the sandbox boundary becomes “a repeatable failure point.”

Because of this, he advised, “CISOs should start asking every AI-enabled SaaS vendor how that boundary is architected and tested, before the next version of this story breaks elsewhere.”

Noah Kenney, principal consultant at Digital 520, said the sandbox escape is the more disturbing element of the issue. 

“The significance is not that ServiceNow had a critical bug, so much as the fact that the bug is a sandbox escape in the AI Platform, which means the containment layer specifically built to run untrusted AI-driven code safely is the thing that failed,” he said. “CISOs have been told repeatedly that the sandbox is what makes enterprise AI safe to deploy, but we’re now seeing the sandbox breaking and that should reframe how CISOs think about every feature sitting behind a similar wall.”

Addition of AI increases blast radius

This is yet another example where AI is fundamentally changing just about every IT and security rule, he pointed out.

“Enterprises are bolting AI onto their most privileged systems of record faster than anyone is updating the threat models for those systems, and the AI layer is becoming the softest part of the hardest targets,” Kenney said. “The real question for a CISO is how many of your critical platforms shipped an AI feature in the past year, and whether a single person in your organization can tell you what that did to the pre-auth attack surface. Most cannot, and that is the actual exposure.”

Aman Mahapatra, chief strategy officer for Tribeca Softtech, a New York City-based technology consulting firm, agreed.

“A vulnerability that gives an attacker a foothold in the ServiceNow instance is now also a vulnerability that gives them access to whatever AI agents are running inside that instance, along with any capability tokens, service accounts, or delegated permissions those agents hold,” Mahapatra said. “The blast radius of a ServiceNow compromise in 2026 is meaningfully larger than the same compromise would have been in 2023, and most enterprise security programs have not caught up to that shift.”

Defused’s Kohonen said that he did not disagree with the sandbox concerns, but he stressed that enterprise CISOs have long ago abandoned the belief that sandboxes are secure. 

“Nothing is foolproof, and having a sandbox is better than not having one,” he said. “But the belief that a sandbox removes all of the risk is incredibly dumb,” especially in the reality of today’s threat landscape, which contains “an endless conveyor belt of exploits.”

This article originally appeared on CSOonline.

As AI becomes embedded in customer experiences, internal workflows, and throughout the supply chain, security leaders are being asked to do more than manage risk. They are being asked to help the business make more informed decisions and move faster.

At the same time, AI has evolved faster than the programs built to govern it.

The result is a widening gap between the pace of transformation and the ability of security, risk, privacy, compliance, and third-party risk teams to understand where the business is exposed.

Move Fast, Don’t Break Things

AI introduces risks like prompt injection and jailbreaks, but the issues keeping CISOs awake at night are more familiar: over-permissioned accounts, poor logging, credentials left in old repositories, sensitive data scattered across systems, and weak access controls. 

AI gives those risks more speed, reach, and impact. 

When AI agents are connected to enterprise data, workflows, vendors, and applications, the blast radius of existing weak spots expands quickly. A low-severity incident now becomes harder to detect, more difficult to remediate, and more consequential for the business. 

This is why boards and executive teams are looking to security leaders for proactive guidance. They want to know whether the business can adopt AI at scale without creating risk that undermines long-term value. 

“Tell us, in real time, which initiatives are safe to accelerate, where we’re exposed, what could slow down our transformation, and what we need to act on right now.”

The CISO mandate has evolved from risk reporting to innovation enablement. 

When Everything is a Risk, Nothing is a Priority

In many organizations, risk context is spread across multiple teams. Security, procurement, privacy, IT, and third-party risk each have their own view.   

That fragmentation creates blind spots. 

Consider an AI agent that can retrieve customer records, access internal knowledge bases, and trigger downstream workflows. Security may know the agent exists, IT may know where it’s deployed, and procurement may know who purchased it. 

Without a holistic view, however, it becomes difficult to determine whether the agent has the right permissions, if it is operating within policy, or how it could expose the business.

But visibility is only half the battle. As AI systems, identities, vendors, and data change at a dizzying scale, organizations need to understand whether policy is actually being followed in real time.

A control that was effective six months ago may no longer suffice after a new AI integration, a vendor update, or a change in permissions. 

Today’s systems are too dynamic to be governed by the same operating model that worked for yesterday’s tech stack. 

From Risk Review to Risk Decisioning

CISOs are now being asked to help the business decide—quickly and defensibly—what can move forward, what needs guardrails, and what should stop. Meeting that mandate requires a different approach: 

• Treat AI risk as part of enterprise risk, not a separate discipline. AI is embedded in the same decisions organizations already make about data, vendors, identities, controls, and business processes.
• Start with the business process and context, not the model. Understand what processes depend on this system, the data it touches, and what happens if it fails. 
• Move from one-time approval to continuous assurance. What matters isn’t whether an AI project passed review six months ago, but whether it is operating within the organizations policies and risk appetite today.
• Measure decision velocity. Demonstrate how quickly the organization is able to determine what moves forward, what needs guardrails, and what must stop.

When risk is connected across the business, priorities become clear. Security leaders can understand not just what needs to be addressed, but what matters most, who owns it, and what the business impact could be. 

When there is a shared understanding of approved use, teams can move faster without relying on ad hoc reviews, static questionnaires, or blanket restrictions. The goal is to make technology and third-party risk visible, prioritized, and actionable at the speed the business now operates.

That shift helps security leaders say “yes” with confidence.

Safeguard Transformation and Scale Innovation

I know the pressure many CISOs are carrying right now. Your scope is getting larger while resources continue to shrink. 

Your leadership is asking you to protect every facet of the organization, support growing risk and compliance requirements, and now, to be a key voice in guiding business strategy.  

When you have clarity on what risks truly matter and have the tools to take action, your risk program can become a driver of responsible and scalable innovation. 

OneTrust helps build risk and compliance programs aligned with the complexity and the speed of your business. Learn more about our integrated risk solutions.

When a goal goes in during a tournament quarter-final and a hundred million people watch it at the same time, what they feel is the goal. The roar, the replay, the disbelief.

They do not feel the contribution feeds traversing private media networks across continents, or the edge nodes absorbing a traffic spike that appeared without warning.

They just feel the moment.

And that’s exactly how it’s supposed to work.

And as live sports viewership pushes into territory that makes previous records look modest (driven by a generation that expects to watch anything, on any device, anywhere, without waiting), the gap between getting that delivery right and getting it wrong has never been more consequential, or more public.

As audiences moved to digital platforms, the margin for error disappeared.

There is a version of this conversation that is easy to have: audiences expect more, technology has to keep up. True, but incomplete.

Audiences have always expected live sport to work. What changed is what “working” means, and how quickly they find out when it doesn’t.

Viewers no longer sit in front of a single screen. During a FIFA World Cup match, a household might have the main feed on the living room television, while someone else streams the highlights on a second TV in the bedroom, all while phones flash with live stats and tablets run separate commentary. From the infrastructure’s perspective, that isn’t just one household watching a game; it’s a chaotic web of concurrent demands triggered by the exact same split-second on the pitch.

Multiply that across tens of millions of viewers, and the scale of the challenge becomes clear. Social media raises the stakes further. When a platform fails during a World Cup knockout match, audiences report it in real-time on the same platforms they use to discuss the game. The complaint travels faster than the fix.

Broadcasters no longer have the luxury of resolving an incident before people notice. The incident becomes the story, and in many cases, travels further than the match itself.

What these viewership numbers actually mean for infrastructure

The shift in how people watch live sport has moved well beyond trend territory.

EMARKETER forecasts that digital live sports audiences in the US will grow to 114.1 million viewers, while traditional pay TV audiences decline to 82.0 million, highlighting the continued shift toward streaming.

The concurrency numbers generated by major sporting events now sit in a territory that would have seemed implausible a decade ago.

During the 2026 FIFA World Cup, for instance, streaming platforms shattered every historical ceiling, highlighted by Brazil’s CazéTV repeatedly breaking global YouTube records for concurrent viewership during the group stage. Meanwhile, in the United States, Peacock and Telemundo’s digital platforms logged an unprecedented 13 million concurrent viewers for a single knockout window. 

When tens of millions of people tune into the same live stream at the same moment, it’s a challenge unlike regular web traffic.

Historically, massive global audiences were insulated by geography. The load was spread across distinct regional networks: antenna signals, satellite downlinks, and physical cable architectures. The physical infrastructure of traditional television inherently absorbed the impact. 

Digital streaming removes that buffer. Traffic spikes all at once, often at the most critical moment. The tighter the match, the deeper the stoppage time, the sharper the spike. Network infrastructure is forced to handle its heaviest, most volatile traffic exactly when it has zero margin for error.

Social media compounds the pressure operationally. The second a crucial goal is scored, a wave of real-time reactions floods the internet, instantly dragging a secondary “curiosity audience” into the app. These are people who weren’t even watching the match, but saw the hype and decided to tune in, meaning the network has to absorb a massive new rush of users precisely while the primary stream is already maxing out its capacity.

To survive these surges while satisfying a modern audience, the underlying broadcast playbook has undergone a massive structural shift. It’s no longer just about handling traffic; it’s also about using modern technology like AI to manage it intelligently.

According to an industry survey, 25% of broadcasters integrated AI into live production workflows in 2025, a massive leap from just 9% the previous year, with 64% identifying AI as the single largest impact driver over the next five years. 

The network is no longer just delivering content. AI is now generating highlights and short clips in real time, producing millions of videos that keep fans engaged long after the live moment has passed.

Ultimately, the technical demand is driven by a shift in what viewers expect. An IBM sports study revealed that 56% of fans now want AI-driven insights layered directly onto their content, while 33% point to real-time, automated translation as the feature that most impacts their experience.

Whether it’s one screen or several, viewers don’t notice the edge infrastructure or AI powering the experience. They just expect the game to play without interruption.

The planning mistake most organisations make

Capacity planning is where most organisations spend their time when preparing to stream a major event. Can the system handle a million concurrent streams? Can it scale on demand if the numbers exceed projections? These are real questions. 

The lesson is not unique to sports streaming. Every digital business now experiences moments where demand, visibility, and customer expectations collide. Peak traffic events such as flash sales, ticket releases, and viral campaigns can drive website traffic 2 to 25 times above normal levels within seconds. The infrastructure may be different, but the pressure is remarkably similar.

Large-scale system failures occur when multiple components, each functioning as expected on its own, are overwhelmed by a surge in demand, rising latency, or regional blind spots at the same time.

The problem isn’t the individual systems. It’s how they work together.

Latency is the factor most consistently underestimated. A few seconds of delay is not a minor inconvenience in live sport. It is a fundamentally broken experience. 

A viewer whose stream is running four seconds behind will see a notification before the decisive moment appears on screen. Someone watching a service from the privacy of their room may hear a celebration from another room before seeing it on their screen.

Geography is another planning gap. Streaming growth is increasingly being driven by emerging markets. In Southeast Asia alone, premium video streaming subscriptions grew 19% in 2025, led by Indonesia, while viewing hours continued to climb across the region. Yet much of the world’s media infrastructure was originally designed around North American and Western European demand. An architecture that looks robust on paper can deliver very different experiences depending on where the viewer is.

The reason is simple: physical distance still matters. Every extra hop between the viewer and the content adds latency, making it harder to deliver a consistent experience at global scale.

Then there is the timing question. The decisions that determine whether a platform holds during the most-watched minutes of the year are not made on event day. They are made months earlier through choices around architecture, redundancy, testing, and operational readiness.

Once an event is underway, it’s too late to redesign the architecture behind it. If your system isn’t designed to handle the pressure before the crowd arrives, it’s already too late.

The hidden chain behind every live event

When a streaming disruption becomes public, people naturally look for a single point of failure: the app, the platform, or the provider.

A live event depends on dozens of systems working together, and any one of them can become a problem.

And the experience is only as good as the weakest handoff between them.

It all starts with the live camera feed moving from the venue to the production studio. This is a real-time stream, not a file download. If you drop even a single packet at the wrong moment, everything down the line breaks, no matter how perfect the rest of your setup is.

Remote and cloud-based production workflows have redefined how live sports are produced, enabling broadcasters to operate with greater agility and scale. As production becomes more distributed, success increasingly depends on ensuring every stage of the delivery chain works together seamlessly.

Each transition is a potential failure point. Managing them requires visibility that extends across providers, platforms, and networks simultaneously.

Behind every live stream, technologies like encoding, transcoding, packaging, rights management, and ad insertion are constantly at work. If any one of them fails, the stream can go down altogether.

Global distribution introduces another layer of complexity. Viewers in Asia, Africa, and South America may all be watching the same match, but each stream travels across different networks and infrastructure. That means performance can vary by region, and issues may affect one audience without impacting another. 

AI is increasingly helping operators detect anomalies in real time, pinpoint affected regions and trigger corrective actions before disruptions become widespread. Combined with point-to-point monitoring, it provides the visibility needed to keep live events running smoothly at global scale.

Edge delivery is where the difference between preparation and improvisation becomes most apparent. Bringing content closer to users reduces latency, absorbs local traffic surges, and improves performance in markets with variable connectivity. 

The value of technology investments such as AI and Edge becomes clearest during the moments when demand is highest.

Monitoring is what turns visibility into action. With AI helping analyze telemetry and detect anomalies in real time, operations teams can identify issues sooner and respond before they affect viewers. By the time customers start reporting a problem, the opportunity to prevent it has already passed.

What reliability is actually worth

For most of early broadcast history, audience tolerance provided some buffer. Disruptions happened. People accepted them. There was nowhere else to go, and the story rarely escaped the room.

Neither of those things is true now.

A streaming failure during a major match becomes public within seconds. Viewers don’t distinguish between a network issue, a processing failure, or a distribution problem; they simply see a service that failed. That single experience can shape the broadcaster’s reputation, credibility and customer loyalty, influencing whether viewers come back for the next event or recommend the service to others.

The commercial implications are significant. Global tournaments such as the FIFA World Cup illustrate just how valuable live sports rights have become. Their return depends on reliably reaching the audience that was promised.

Advertisers invest in live sport for one reason: to reach a large, engaged audience at the exact moment it matters most. If the stream fails during that window, the opportunity is lost. Those viewers, impressions, and advertising value cannot be recovered once the moment has passed.

The same principle increasingly applies outside media. Customers rarely know nor care whether an outage originated in the application, the cloud environment, the network or a third-party dependency. They experience a failure of the brand. In a digital-first economy, reliability has become part of the customer experience itself.

For broadcasters and streamers, reliability is no longer just an operational KPI. It directly influences audience trust, advertising revenue, and the long-term value of premium sports rights.

The demands ahead are bigger

AI-assisted production is already changing how live events are created. Broadcasters are using AI to automate highlight generation, camera selection and real-time clip packaging for social media, with new AI-assisted workflows producing sports highlights up to 80% faster than traditional methods. 

All of this processing happens within the live delivery chain, where every additional task must be completed without adding latency or compromising the viewing experience.

Personalisation at scale is the next significant challenge. Not personalisation in a vague sense, but the specific technical reality of delivering multi-language commentary tracks, different languages, different statistical overlays, and different camera angles to different viewers watching the same event simultaneously. 

Instead of one stream per event, the infrastructure has to manage a matrix of concurrent variants, each with its own encoding, storage, and delivery requirements. 

Interactive experiences add bidirectional data flows: real-time polls, integrated second-screen data, live wagering. These move data from the viewer back through infrastructure that was primarily built to push content outward. Managing that at scale is a different engineering problem from managing delivery.

Higher-resolution formats (4K now becoming a standard expectation in premium markets, 8K moving into early deployment) are bandwidth-intensive at exactly the scale where bandwidth is already under pressure. Consumer devices are ready. Infrastructure in many high-growth markets is not uniformly there yet.

Many of these capabilities are already being deployed for major global sporting events. The organisations investing seriously in technology, innovation, and infrastructure now are building toward a standard that will be the baseline requirement within a few years. Those that are not will be closing the gap under the worst possible conditions.

The technology you never think about

The broadcasters that succeed don’t leave reliability to chance. They plan for it from the outset, designing their infrastructure to handle peak demand long before the audience arrives.

This reality hits hardest during massive global events. When a stream glitches, millions of people feel it simultaneously in a matter of seconds. Keeping those streams alive doesn’t happen by accident; it takes massive scale, intense discipline, and deep experience controlling everything from the stadium camera to the viewer’s screen.

The lesson extends well beyond live sports. Every enterprise is becoming a real-time digital business, whether it’s delivering AI-powered applications, launching digital products, processing financial transactions, or handling a sudden surge in customer demand. Different industries may face different triggers, but the expectation is the same: the experience has to work, even when demand is at its highest.

Delivering that level of reliability is why many of the world’s largest sports brands rely on Tata Communications. Supporting the broadcast, production, and management of 80% of the world’s sporting events, and reaching more than two billion viewers across 190+ countries, Tata Communications operates in the invisible layers that make every live moment possible. We call this the “Virtual Stadium of the World”, the technology and infrastructure that connects fans, broadcasters, rights-holders, and sporting moments at a truly global scale.

By managing the critical handoffs across contribution networks, edge processing, and global media infrastructure, we engineer the resilience required to keep 120,000 live events running flawlessly every year.

Live sport may be the most visible test of digital infrastructure, but it won’t be the last. As AI, personalisation and real-time experiences become the norm across industries, the ability to deliver reliably at scale will define far more than match day.

To learn more, visit us here.