Providers and deployers of AI systems: You only have a couple of weeks left until you must explicitly inform users when they are interacting with AI content.

To assist in the effort, the European Commission (Commission) has published guidelines to help AI deployers get in line with the AI Act’s transparency obligations, which will begin to go into effect on August 2.

After that, companies providing AI systems must alert users when they are interacting with AI. They must also tell users when they have been exposed to deepfakes, “emotion recognition,” or biometric categorization systems, or when they are given AI-manipulated content in matters of “public interests without human review or editorial control.”

Henna Virkkunen, the Commission’s executive VP for tech sovereignty, security and democracy, said in a statement, “with today’s guidelines, the Commission supports the smooth and effective application of the AI Act to make AI systems interacting with people such as chatbots and AI agents and AI content more transparent and trustworthy. These guidelines support providers and deployers in meeting their obligations under the AI Act, while helping citizens know when they are interacting with AI.”

Systems must include machine-readable markers to reveal such content, to reduce “the risk of deception and manipulation” and build public trust in AI.

“Generative systems have collapsed the cost of producing convincing content while the cost of judging it stands where it always stood,” said Sanchit Vir Gogia, chief analyst at Greyhound Research. This requirement is “an attempt to restore friction to that imbalance.”

A company’s non-compliance could result in fines anywhere from €750K (about $856K) to €15M (about $17 million), or even up to 3% of its total worldwide annual revenue.

Transparency requirements

The EU AI Act’s transparency requirements apply to “natural or legal persons,” public authorities, agencies, or other bodies that develop AI systems, or have them developed, and place them on the EU market or into use under their name or trademark. This means all companies, regardless of whether or not they are EU-based.

“Systems placed on the European market, put into service there, or producing outputs used there are inside the field, wherever the developer sits,” Gogia noted.

Applicable systems must be intended to interact directly with “natural persons”; these systems include AI-enabled chatbots or conversational agents, AI companions, or coding agents. However, AI-enabled tools like recommender systems, spam filters, authentication, search and retrieval, transcription, text and code auto-completion, or predictive maintenance do not fall under the rule.

Specific outputs such as AI-generated text, images, video, and audio must contain a machine-readable mark. Deepfakes and public interest-related text created by AI without human review or control must be clearly labeled, however, deepfake content that is “artistic, creative, satirical, or fictional” is largely exempt.

AI content must be marked with one of three labels: “AI,” “Fully AI-generated,” or “Partially AI-modified.” For instance, “Fully AI-generated” applies when news summaries, music, art, or videos have been created without any human oversight (apart from prompting), while “partially AI-modified” could mean a person’s face is swapped into an authentic photograph to create a deepfake.

The three icons are publicly available for free use; enterprises can download zip files in PNG and SVG formats.

Most of the Act’s transparency rules begin to go into effect on August 2. But AI systems placed on the market before then will have some leeway; they must be in compliance by December 2.

However, a four-month allowance “on one obligation, for one population of systems, contingent on one procedural step, is not a strategy,” Gogia emphasized. Enterprises should plan to comply by August 2 and “treat any relief that arrives as margin.”

A consistent code of practice

Along with the transparency guidelines, the Commission has introduced a code of practice that essentially serves as a gesture of good faith. When signed, it can provide “legal certainty” and a “simple and practical” way to demonstrate compliance with the AI Act, according to the Commission. Signatories can also collaborate through the ‘Signatory Taskforce,’ which will share practices and advance technologies around marking and labeling practices.

Providers that choose not to sign must comply through other methods and demonstrate that those methods are “adequate” through assessment by surveillance authorities, according to the Commission.

Non-signatories “keep their flexibility, and will face more case-by-case scrutiny for it,” said Gogia.

Criteria for compliance

Shashi Bellamkonda, principal research director at Info-Tech Research Group, pointed out that the transparency requirements apply to content only when three criteria are met: It has been published, is informative to the public, or is on matters of public interest.

B2B business content or blogs may not need an AI disclosure if they do not meet these criteria, he noted. Also, published text that has undergone human review or is under editorial control does not need to be labeled. Editorial control means that a person must hold the ultimate legal responsibility for the publication of the content.

Many companies like Google, Adobe, and LinkedIn have already established ways to identify images marked as AI-generated. Meta has made it a requirement, but the creator has to add the AI-generated label, Bellamkonda said.

“This is a good move for guardrails around public information, and companies with good compliance and ethical oversight may not have to worry about this,” he noted. But as a general practice, companies should disclose AI-generated content and state whether it has been human reviewed.

Creating a transparency pipeline

Establishing full transparency means identifying who carries the responsibility for the content, whether the marking survives real use, not just testing, and what evidence will defend the decision, Gogia said.

Concerns cluster around responsibility, durability and evidence. Several organizations usually touch one piece of content, and none controls the whole chain, which is why contracts become the “pressure point,” he said. Most current agreements were written to deliver software and say “almost nothing” about provenance persistence, verification access, or evidence retention.

The durability concern is the most difficult, Gogia noted, because marking performs well in controlled settings but “badly in ordinary life.” Meta, for one, said its invisible watermark was designed to survive cropping; a published test, however, found the company’s preview detector missed 55% of cropped images.

“CIOs should ask which platform can actually provide evidence before believing its dashboard,” said Gogia.

Disclosure of AI use must be “clear, distinguishable and accessible,” he emphasized. “A notice buried in lengthy terms, or reachable only through determined clicking, satisfies nobody, least of all a market surveillance authority.”

Sustained compliance is a “living control” requiring a central record of systems, duties and evidence; testing taking place where the user meets the control rather than where the developer built it; and continuous supplier assurance. Enforcement will vary by country, so keep one common baseline with local overlays, Gogia said.

His advice: Inventory every system that talks to people, generates content, or gauges sentiment; classify provider and deployer roles; place disclosures at first interaction; define substantive human review; keep the evidence.

Marks and provenance signals should be tested after content undergoes cropping, compression, translation, transcription, and other editing, Gogia said. A useful audit starts from a real output and follows its “pulse” through generation, editing and publication, identifying at “each beat” the responsible party, the surviving mark, and evidence for exceptions. Missed labels should also be traced for root cause and recurrence.

To ensure compliance, before August 2, enterprises need a prioritized inventory, live disclosures on the highest-risk use cases, and a “named owner for every control,” he noted. In the first 30 days, they should stabilize and test; in the first 90 days, push requirements into procurement processes as a standing discipline. Procurement must secure commitments on marking methods, known failure modes, and evidence access, with explicit notice if/when any of them change.

“The sensible architecture is a common transparency baseline carrying traceability, responsibility, and evidence, with jurisdictional overlays for language, sector rules, and local practice,” Gogia said.

This article originally appeared on CIO.com.

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.

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.

In public-sector and regulated-cloud work, I learned that sovereignty rarely starts as a national strategy. It starts as an auditor’s question: Who can prove where the data went, which system made the decision and what changes when the vendor or infrastructure does? That question is now moving into AI, and most sovereign-AI debates answer the wrong version of it.

They ask whether a country can build its own model on domestic data and hardware. For the United States and China, which together hold more than 90% of global AI data-center capacity, per a January 2026 Tony Blair Institute analysis, that question is worth asking. However, for almost every other government, it is the wrong place to start. The operative question is narrower: Once AI is embedded in public services, who controls the stack?

The 5 layers of public-sector control

For a CIO, sovereign AI means enforceable control across the AI lifecycle; model ownership is a separate question. Control has five layers:

• Data control: Where sensitive public data sits, and whether it can train a vendor’s model.
• Model control: Which models clear which workloads, and under what validation.
• Infrastructure control: Whether critical workloads run in approved environments.
• Operational control: Whether AI-assisted actions are logged, monitored and reversible.
• Vendor control: Whether the agency keeps portability, audit rights and a real exit.

Those five layers are the control plane for public-service AI. Floyd Dcosta recently made the enterprise case in “AI without sovereignty is just outsourced intelligence”: capability is what a tool can do; authority over how and when it does it is something a buyer can quietly lose. For public services, losing that authority plays out in the public eye.

Public-sector AI risk differs from enterprise risk. A retailer’s bad recommendation costs a sale; a government’s AI touches benefits, tax enforcement, policing and emergency response, raising the bar to due process, records retention and continuity of operations. A government that cannot reconstruct an AI-assisted decision lacks operational sovereignty, even in a domestic data center.

Evaluating risk: Concentration, jurisdiction and shadow AI

Foreign dependency is a real risk, but the exposure that matters is a sudden cutoff: A model you cannot audit, switch or exit, shut off by someone else’s order. A vendor’s nationality is a poor guide to that risk; control is.  Two markers matter. The first is concentration. In July 2024, a single faulty CrowdStrike update crashed about 8.5 million Windows machines, disrupting airlines, hospitals, banks and governments worldwide. No attacker was involved; one homogeneous dependency failed everywhere at once. The lesson points away from vendor nationality and toward uniformity as the fault line, making portability and provider diversity resilience controls.

The second is jurisdiction. In June 2025, Microsoft’s legal director for France told a Senate inquiry, under oath, that it could not guarantee that French public-sector data, even in French data centers, would be protected against US demands under the 2018 CLOUD Act. No such request had been made, and EU data has stayed in the EU since January 2025; senators called the assurance purely declarative. For the most sensitive data, residency does not equal control; the parent’s jurisdiction can matter as much as the server’s. Three US hyperscalers hold about 70% of the European cloud market, while European providers’ share fell from 29% in 2017 to roughly 15%. Concentration plus jurisdiction is the exposure a CIO must price. I have watched teams treat vendor selection as the moment risk was solved; it rarely was.

The wrong response is self-isolation. Most countries will never build frontier models, advanced chips, hyperscale clouds and talent pipelines at once; the Tony Blair Institute calls full self-sufficiency “too expensive, too slow and, for most countries, simply impossible.” The better test is workload sensitivity. Low-risk uses, such as drafting, translation and summarization, can run on commercial platforms with controls; high-risk uses, such as benefits eligibility, fraud investigation and healthcare triage, demand stricter control over data, model behavior and auditability.

Mandating domestic-only provision before a competitive option exists inverts sovereignty. Europe 2031, a five-year scenario from June 2026 by European technologists and policy researchers, illustrates the failure mode: A 2027 “buy European” mandate lands as offensive cyber capability spreads, and agencies that switched to weaker providers are locked out and paying ransoms. The scenario is fiction; the mechanism is not. Leverage comes from being indispensable, not half-hearted self-sufficiency. The closer-to-home effect is shadow AI: Mandate an inferior sanctioned tool and staff bypass it, the way shadow IT grows up around tools people find too slow. A rule that pushes sensitive work into ungoverned shadow AI reduces control instead of adding it.

Regulation and data-residency rules belong in any serious strategy, but carry failure modes. Blanket localization raises hosting costs and slows adoption without guaranteeing control, and a “sovereign cloud” on a foreign parent’s stack can amount to sovereignty theater. The more useful pattern tiers requirements by sensitivity. India’s BHASHINI shows the application layer done well: A public platform serving 100 million-plus inferences a month across 22-plus languages on a vendor- and cloud-agnostic design that keeps data and switching rights public. Sovereignty resides in the portability, not in a national model.

Building an operational sovereignty strategy

Public trust is the constraint sovereignty rhetoric tends to skip. The OECD’s 2025 review of government AI warns that opaque systems make AI-assisted decisions hard to explain and can give public servants false confidence in tools that fail quietly. State-controlled AI is the same problem from the other side: A government that deploys models against its own citizens without audit or record has gained control and lost accountability. An agency that can log, explain and reverse an AI-assisted action can defend it to citizens, courts, auditors and elected officials. If it cannot, it has bought access and called it sovereignty.

None of this is new. AI sovereignty repeats earlier fights over cloud, telecom, semiconductors and cybersecurity. Europe’s flagship cloud project, GAIA-X, became a cautionary tale; the Dutch technologist Bert Hubert called it an “expensive distraction” that produced no European cloud, the familiar result of ambition without absorptive capacity. Cloud taught governments that outsourcing infrastructure does not outsource accountability; telecom, that vendor dependency becomes strategic exposure; chips, that supply chains matter before a crisis; cybersecurity, that trust must be verified continuously. AI inherits all four at once.

Over the next five to ten years, some countries will build national platforms, more will build trusted cloud and trusted model regimes, and most will run hybrids that pair domestic data control with global model access. Trade policy will harden those choices: Export controls on compute and data-localization rules will pull the vendor market into blocs that track alliances more than open markets. For a CIO, that turns a vendor and hosting decision into a five-year bet on whose rules and supply chains will still hold. The ones that succeed will treat sovereignty as an operating requirement, backed by leverage, not a slogan. Start with the control plane before the model: Most agencies will never own the model, and the controls are what decide whether the AI they do run stays accountable. Even when procurement policy is dictated from above, these questions remain within the CIO’s authority:

1. Can we classify AI workloads by public-service risk?
2. Can we prove where sensitive data goes across training, retrieval, inference, logging and retention?
3. Can we restrict which models are approved for which data classes and functions?
4. Can we reconstruct an AI-assisted action in enough detail to explain it?
5. Can we change providers without losing continuity or institutional knowledge?
6. Can we explain the system to citizens, regulators, auditors and elected officials?

A “no” to any of these does not mean the agency lacks AI. It means the agency has access it does not yet control. Public institutions can use global innovation without surrendering public authority, but only once they know what to hold, what to rent and where dependency turns into risk.

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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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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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What is a business analyst?

Business analysts (BAs) are responsible for bridging the gap between IT and the business using data analytics to assess processes, determine requirements, and deliver data-driven recommendations and reports to executives and stakeholders.

BAs engage with business leaders and users to understand how data-driven changes to process, products, services, software, and hardware can improve efficiencies and add value. They must articulate those ideas but also balance them against what’s technologically feasible and financially and functionally reasonable. Depending on the role, a business analyst might work with data sets to improve products, hardware, tools, software, services, or process.

The International Institute of Business Analysis (IIBA), a nonprofit professional association, considers the business analyst an agent of change, and says that business analysis is a disciplined approach to introduce and manage change to organizations, whether they’re for-profit businesses, governments, or nonprofits.

Impact of AI on business analyst role

As AI becomes commonplace in the tech industry, business analysts are embracing it as a tool to automate repetitive work in the role. AI tools can be used for workflow and diagramming, process mapping, data analysis, and to automate meeting minutes and transcribe meetings where requirements are established, all designed to speed up the process of analyzing data, creating visuals, and transcribing and writing user stories and acceptance criteria.

AI tools can also help identify patterns, insights, and unique data points that might go unnoticed by humans, and allow a faster time to generate insights for organizations.

Of course, as with all AI tools, they still require humans to oversee prompts, scripting, and evaluate AI outputs to ensure they’re accurate and valid. While they can’t replace the work of BAs, AI can help them spend more time on thoughtful analysis and decision making, rather than mundane tasks such as gathering and summarizing data, and querying.

Business analyst job description

BAs are responsible for creating new models that support business decisions by working closely with finance and IT teams to establish initiatives and strategies aimed at improving revenue and optimizing costs. They need a strong understanding of regulatory and reporting requirements, and have plenty of experience in forecasting, budgeting, and financial analysis combined with knowing KPIs, according to Robert Half Technology.

According to Robert Half, a BA’s job description typically includes budgeting and forecasting, planning and monitoring, variance analysis, pricing, reporting, and creating a detailed business analysis in an effort to outline problems, opportunities, and solutions for a business. It also says BAs should be able to define business requirements and report them back to stakeholders.

Since BAs are tasked with prioritizing technical and functional requirements, identifying what clients want, and determining what’s feasible to deliver, the role requires a deep understanding of systems, how they function, who’ll need to be involved, and the necessary steps to get everyone on board.  

The role is constantly evolving, especially as companies rely more on data to advise business operations. Every company has different issues that a business analyst can address, whether it’s dealing with outdated legacy systems, changing technologies, broken processes, poor client or customer satisfaction, or large, siloed organizations.

Business analyst skills

The BA position requires both hard and soft skills, as they need to know how to pull, analyze, and report data trends, share that information with others, and apply it to business goals and needs.

Not all BAs need a background in IT if they have a general understanding of how systems, products, and tools work. Alternatively, some have strong IT backgrounds and less experience in business, but are interested in shifting away from IT into this hybrid role, which often acts as a communicator between the business and IT sides of the organization. So having extensive experience in either area can be beneficial for BAs.

According to the IIBA, some of the most important skills and experience for a business analyst are:

• Oral and written communication skills
• Interpersonal, organizational, facilitation, and consultative skills
• Analytical thinking and problem solving
• Being detail-oriented and able to deliver a high level of accuracy
• Knowledge of business structure
• Stakeholder and cost-benefit analysis
• Processes modeling
• Understanding networks, databases, and other technologies

For a more in-depth look at what it takes to succeed as a business analyst, click here.

Business analyst salary

The average annual salary for an IT business analyst is $80,692, according to data from PayScale. The highest paid BAs are in New York, where the average salary is 14% higher than the national average. Dallas, Texas, is second, with reported salaries 6.4% higher than the national average, closely followed by Washington, D.C., where salaries are 6.3% higher than the national average.

Some skills are in higher demand than others, with the potential to boost salary. According to Payscale, these are associated with higher BA salaries. These skills, and the amount they can boost your salary, include:

For tips on boosting your salary, click here.

Business analyst certifications

Although business analysis is a relatively new discipline in IT, a handful of organizations already offer certifications to help boost your résumé and prove your merit as an analyst. Organizations such as the IIBA, IQBBA, IREB, and PMI each offer their own tailored certifications for business analysis. These include:

• IIBA Entry Certificate in Business Analysis (ECBA)
• IIBA Certification of Competency in Business Analysis (CCBA)
• IIBA Certified Business Analysis Professional (CBAP)
• IIBA Agile Analysis Certification (AAC)
• IQBBA Certified Foundation Level Business Analyst (CFLBA)
• IREB Certified Professional for Requirements Engineering (CPRE)
• PMI Professional in Business Analysis (PBA)
• Certified Analytics Professional (CAP)

For more information about how to earn one of these certifications — and how much they cost — click here.

Business analytics tools and software

BAs typically rely on software such as Microsoft’s Excel, PowerPoint, and Access, as well as SQL, Google Analytics, and Tableau. These tools help BAs collect and sort data, create graphs, write documents, and design visualizations to explain findings. You won’t necessarily need programming or database skills for a BA position, but if you already have these skills, they won’t hurt. The type of software and tools you’ll need to use, however, will depend on your job title and what the organization requires.

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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What is a business analyst?

Business analysts (BAs) are responsible for bridging the gap between IT and the business using data analytics to assess processes, determine requirements, and deliver data-driven recommendations and reports to executives and stakeholders.

BAs engage with business leaders and users to understand how data-driven changes to process, products, services, software, and hardware can improve efficiencies and add value. They must articulate those ideas but also balance them against what’s technologically feasible and financially and functionally reasonable. Depending on the role, a business analyst might work with data sets to improve products, hardware, tools, software, services, or process.

The International Institute of Business Analysis (IIBA), a nonprofit professional association, considers the business analyst an agent of change, and says that business analysis is a disciplined approach to introduce and manage change to organizations, whether they’re for-profit businesses, governments, or nonprofits.

Impact of AI on business analyst role

As AI becomes commonplace in the tech industry, business analysts are embracing it as a tool to automate repetitive work in the role. AI tools can be used for workflow and diagramming, process mapping, data analysis, and to automate meeting minutes and transcribe meetings where requirements are established, all designed to speed up the process of analyzing data, creating visuals, and transcribing and writing user stories and acceptance criteria.

AI tools can also help identify patterns, insights, and unique data points that might go unnoticed by humans, and allow a faster time to generate insights for organizations.

Of course, as with all AI tools, they still require humans to oversee prompts, scripting, and evaluate AI outputs to ensure they’re accurate and valid. While they can’t replace the work of BAs, AI can help them spend more time on thoughtful analysis and decision making, rather than mundane tasks such as gathering and summarizing data, and querying.

Business analyst job description

BAs are responsible for creating new models that support business decisions by working closely with finance and IT teams to establish initiatives and strategies aimed at improving revenue and optimizing costs. They need a strong understanding of regulatory and reporting requirements, and have plenty of experience in forecasting, budgeting, and financial analysis combined with knowing KPIs, according to Robert Half Technology.

According to Robert Half, a BA’s job description typically includes budgeting and forecasting, planning and monitoring, variance analysis, pricing, reporting, and creating a detailed business analysis in an effort to outline problems, opportunities, and solutions for a business. It also says BAs should be able to define business requirements and report them back to stakeholders.

Since BAs are tasked with prioritizing technical and functional requirements, identifying what clients want, and determining what’s feasible to deliver, the role requires a deep understanding of systems, how they function, who’ll need to be involved, and the necessary steps to get everyone on board.  

The role is constantly evolving, especially as companies rely more on data to advise business operations. Every company has different issues that a business analyst can address, whether it’s dealing with outdated legacy systems, changing technologies, broken processes, poor client or customer satisfaction, or large, siloed organizations.

Business analyst skills

The BA position requires both hard and soft skills, as they need to know how to pull, analyze, and report data trends, share that information with others, and apply it to business goals and needs.

Not all BAs need a background in IT if they have a general understanding of how systems, products, and tools work. Alternatively, some have strong IT backgrounds and less experience in business, but are interested in shifting away from IT into this hybrid role, which often acts as a communicator between the business and IT sides of the organization. So having extensive experience in either area can be beneficial for BAs.

According to the IIBA, some of the most important skills and experience for a business analyst are:

• Oral and written communication skills
• Interpersonal, organizational, facilitation, and consultative skills
• Analytical thinking and problem solving
• Being detail-oriented and able to deliver a high level of accuracy
• Knowledge of business structure
• Stakeholder and cost-benefit analysis
• Processes modeling
• Understanding networks, databases, and other technologies

For a more in-depth look at what it takes to succeed as a business analyst, click here.

Business analyst salary

The average annual salary for an IT business analyst is $80,692, according to data from PayScale. The highest paid BAs are in New York, where the average salary is 14% higher than the national average. Dallas, Texas, is second, with reported salaries 6.4% higher than the national average, closely followed by Washington, D.C., where salaries are 6.3% higher than the national average.

Some skills are in higher demand than others, with the potential to boost salary. According to Payscale, these are associated with higher BA salaries. These skills, and the amount they can boost your salary, include:

For tips on boosting your salary, click here.

Business analyst certifications

Although business analysis is a relatively new discipline in IT, a handful of organizations already offer certifications to help boost your résumé and prove your merit as an analyst. Organizations such as the IIBA, IQBBA, IREB, and PMI each offer their own tailored certifications for business analysis. These include:

• IIBA Entry Certificate in Business Analysis (ECBA)
• IIBA Certification of Competency in Business Analysis (CCBA)
• IIBA Certified Business Analysis Professional (CBAP)
• IIBA Agile Analysis Certification (AAC)
• IQBBA Certified Foundation Level Business Analyst (CFLBA)
• IREB Certified Professional for Requirements Engineering (CPRE)
• PMI Professional in Business Analysis (PBA)
• Certified Analytics Professional (CAP)

For more information about how to earn one of these certifications — and how much they cost — click here.

Business analytics tools and software

BAs typically rely on software such as Microsoft’s Excel, PowerPoint, and Access, as well as SQL, Google Analytics, and Tableau. These tools help BAs collect and sort data, create graphs, write documents, and design visualizations to explain findings. You won’t necessarily need programming or database skills for a BA position, but if you already have these skills, they won’t hurt. The type of software and tools you’ll need to use, however, will depend on your job title and what the organization requires.

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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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.

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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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.

Running containers on Windows has never been as easy as it should be. While there are versions of Docker Desktop and Podman that work with both the Windows Subsystem for Linux (WSL) and Hyper-V, I’ve found both overly complex and unstable. Where they have worked, it’s turned out that Hyper-V has been the best option, using a Linux virtual machine to host my containers. That all adds up to overhead, layers of virtual infrastructure that get in the way of work and that need to be rebuilt every time I restart my PC.

Part of the problem is WSL. It’s a good tool, but WSL2’s file-system integration is slow, and you’re left having to work with code using Visual Studio Code’s remote integration, which means putting a VS Code Server in every container you’re building and testing. If you’re working with Kubernetes, that’s even more complexity that needs to be managed, dragging you away from code.

I ended up running most of my container testing and development from a separate machine, a Linux server running containerd. But though it worked (and had all the resources of workstation-class device), it wasn’t portable, and for some reason I’ve yet to uncover, Ubuntu’s remote desktop access doesn’t work for me.

So, it was good to see Microsoft make several announcements around WSL at Build 2026 as part of a push to make Windows a developer platform again. The first, an improved WSL3, is still some way away, but the second, WSL-native container support, shipped at the end of June. It is already seeing community-driven development of Docker Desktop-like tooling to help monitor and manage your containers.

Delivering a WSL-based container platform fits in with the other developer-focused Windows announcements at Build. Making Windows behave more like Linux is Microsoft responding to developer needs, given that more than 50% of servers on Azure run a Linux distribution. Linux is the basis of cloud-native infrastructure, so developers need to be able to build on it wherever they are.

Getting started with WSL container

WSL container provides a new CLI that works in parallel to the familiar WSL, with commands to support the entire container life cycle, from creation to shut down. All you need to do to get started is upgrade your WSL installation to the current pre-release build (at the time of writing this was 2.9.3). Simply open an administrator PowerShell terminal and enter wsl --update --pre-release.

This downloads and installs the latest WSL release. Once you’ve closed and re-opened your terminal (to ensure that you’ve updated its context) you can check that WSLC has installed by entering wslc, which should list the available commands. The new CLI is aliased to WSL container, if you prefer to keep your container work separate from WSL (and avoid typos that might accidentally affect your WSL installations).

Under the hood Microsoft is using WSL container to trial new integration points for Linux in Windows. One key change is the use of a new file system that significantly speeds up access to Windows from inside a container. Another improvement gives WSL container a new networking mode that relays networking connections directly through the Windows network stack, ensuring it has access to the same resources and security as Windows.

Calling Linux containers from Windows applications

Things get more interesting when you start to use the WSL container API from inside your Windows code. Here you can include calls to Linux containers inside your desktop applications, taking advantage of existing services, building and deploying containers from inside your CI/CD pipeline. Using the new file system and networking stack helps reduce the friction that comes with crossing the boundaries between the two platforms.

The WSL container API is available as a NuGet package, with support for C, C#, and C++. It allows your code to start and stop containers, and interact directly with them, sending command-line calls and reading back responses. Where things get interesting is being able to launch a containerized service from your code, exposing its REST or gRPC APIs on a local network port. Microsoft has provided sample code to show you what’s possible at this early stage.

Microsoft is doing something revolutionary here. It’s taking the cloud-native, service-driven model and bringing it into Windows and using it to bridge decades of divergent development. You no longer have to rewrite a service that works on Linux to run in Windows; all you need to do is containerize the service and launch it from the WSL container API. When you’re done, the API will tidy up after you, shutting down the container and reclaiming the memory it used.

It’s important to remember that this is only the first public preview of a rapidly developing platform. There are many opportunities here to, say, build on the syscall translation layer developed for WSL1 to produce a native Windows-to-Linux application integration stack that removes the overhead of using web-based service calls. It will be interesting to see what develops, but this first release is very interesting indeed.

Manage Linux containers from Windows

If you want a Docker Desktop-like experience for building and testing containers on Windows developer hardware, you may not have long to wait. WSL container’s underlying API is already being used to build tools that manage and monitor containers for you. One such tool is the WSL Container Desktop, under development on GitHub. While there aren’t any release builds yet, it’s easy enough to compile and get running by cloning the source repository and building using the .NET CLI. You do need to have the Windows App SDK installed, and some features require access to the Azure CLI.

WSL Container Desktop is built in C#, with a WinUI front end. It’s currently only verified for use on x64, though I was able to compile and run it on an Arm64 PC and use it to test and run containers. Once running, it gives you a well-designed front end for your WSL-hosted containers, showing what’s running and what resources they are using. You can link WSL Container Desktop to container registries, like Docker’s and Azure’s, so you can quickly pull base containers and then use the WSL container environment to add your own code and customizations.

Your main interaction point is the WSL Container Desktop dashboard, which shows what containers are running and their current resource usage. Elements are displayed in cards, taking a cue from Windows’ own user interface and especially from its Settings app. From the dashboard, you can drill down into the available containers, with quick start, stop, and reload options, as well as an extended memory that includes the ability to open a web browser to the appropriate port. I tested this with a container that included an entire KDE webtop, giving me a Linux distro running in a container in my browser.

Other options include a details view that displays current logs and provides tools for inspecting the state of a container. This is the type of tool that comes in useful when debugging and testing container applications, as it can provide insights that the WSL container CLI doesn’t offer. Another option helps you clean up after you’ve downloaded an image and don’t need it anymore, with analytics that show the largest images and images you haven’t used for some time. On top of its tooling for working with WSL containers, WSL Container Desktop provides a basic settings tool that helps you configure its look and feel, as well as how it integrates with Windows.

Run Kubernetes inside Windows for cloud-native development

One of the more useful features of WSL Container Desktop is the ability to quickly stand up a K3s Kubernetes instance in WSL that can be used to host WSL containers, providing a local environment to build and test cloud-native applications wherever you might be. The K3s tooling offers a similar experience to the Kubernetes project’s own Headlamp UI, making it easy to go between your development environment and a production Kubernetes cluster.

It’s fair to describe WSL container as one of those Windows features you didn’t think you needed, but now it’s here you can’t live without it. WSL container simplifies building a container development tool chain in Windows, and at the same time allows you to think about a new generation of hybrid applications that take advantage of decades of development in both Windows and Linux.

The result is something that was unimaginable a few years ago: dropping a Linux container into the middle of a Windows application and treating it as another local service. As the WSL container platform evolves, you should expect to see more ways of bringing Linux and Windows together, using containers to deliver a hybrid platform that gives us the best of both worlds at long last.

In public-sector and regulated-cloud work, I learned that sovereignty rarely starts as a national strategy. It starts as an auditor’s question: Who can prove where the data went, which system made the decision and what changes when the vendor or infrastructure does? That question is now moving into AI, and most sovereign-AI debates answer the wrong version of it.

They ask whether a country can build its own model on domestic data and hardware. For the United States and China, which together hold more than 90% of global AI data-center capacity, per a January 2026 Tony Blair Institute analysis, that question is worth asking. However, for almost every other government, it is the wrong place to start. The operative question is narrower: Once AI is embedded in public services, who controls the stack?

The 5 layers of public-sector control

For a CIO, sovereign AI means enforceable control across the AI lifecycle; model ownership is a separate question. Control has five layers:

• Data control: Where sensitive public data sits, and whether it can train a vendor’s model.
• Model control: Which models clear which workloads, and under what validation.
• Infrastructure control: Whether critical workloads run in approved environments.
• Operational control: Whether AI-assisted actions are logged, monitored and reversible.
• Vendor control: Whether the agency keeps portability, audit rights and a real exit.

Those five layers are the control plane for public-service AI. Floyd Dcosta recently made the enterprise case in “AI without sovereignty is just outsourced intelligence”: capability is what a tool can do; authority over how and when it does it is something a buyer can quietly lose. For public services, losing that authority plays out in the public eye.

Public-sector AI risk differs from enterprise risk. A retailer’s bad recommendation costs a sale; a government’s AI touches benefits, tax enforcement, policing and emergency response, raising the bar to due process, records retention and continuity of operations. A government that cannot reconstruct an AI-assisted decision lacks operational sovereignty, even in a domestic data center.

Evaluating risk: Concentration, jurisdiction and shadow AI

Foreign dependency is a real risk, but the exposure that matters is a sudden cutoff: A model you cannot audit, switch or exit, shut off by someone else’s order. A vendor’s nationality is a poor guide to that risk; control is.  Two markers matter. The first is concentration. In July 2024, a single faulty CrowdStrike update crashed about 8.5 million Windows machines, disrupting airlines, hospitals, banks and governments worldwide. No attacker was involved; one homogeneous dependency failed everywhere at once. The lesson points away from vendor nationality and toward uniformity as the fault line, making portability and provider diversity resilience controls.

The second is jurisdiction. In June 2025, Microsoft’s legal director for France told a Senate inquiry, under oath, that it could not guarantee that French public-sector data, even in French data centers, would be protected against US demands under the 2018 CLOUD Act. No such request had been made, and EU data has stayed in the EU since January 2025; senators called the assurance purely declarative. For the most sensitive data, residency does not equal control; the parent’s jurisdiction can matter as much as the server’s. Three US hyperscalers hold about 70% of the European cloud market, while European providers’ share fell from 29% in 2017 to roughly 15%. Concentration plus jurisdiction is the exposure a CIO must price. I have watched teams treat vendor selection as the moment risk was solved; it rarely was.

The wrong response is self-isolation. Most countries will never build frontier models, advanced chips, hyperscale clouds and talent pipelines at once; the Tony Blair Institute calls full self-sufficiency “too expensive, too slow and, for most countries, simply impossible.” The better test is workload sensitivity. Low-risk uses, such as drafting, translation and summarization, can run on commercial platforms with controls; high-risk uses, such as benefits eligibility, fraud investigation and healthcare triage, demand stricter control over data, model behavior and auditability.

Mandating domestic-only provision before a competitive option exists inverts sovereignty. Europe 2031, a five-year scenario from June 2026 by European technologists and policy researchers, illustrates the failure mode: A 2027 “buy European” mandate lands as offensive cyber capability spreads, and agencies that switched to weaker providers are locked out and paying ransoms. The scenario is fiction; the mechanism is not. Leverage comes from being indispensable, not half-hearted self-sufficiency. The closer-to-home effect is shadow AI: Mandate an inferior sanctioned tool and staff bypass it, the way shadow IT grows up around tools people find too slow. A rule that pushes sensitive work into ungoverned shadow AI reduces control instead of adding it.

Regulation and data-residency rules belong in any serious strategy, but carry failure modes. Blanket localization raises hosting costs and slows adoption without guaranteeing control, and a “sovereign cloud” on a foreign parent’s stack can amount to sovereignty theater. The more useful pattern tiers requirements by sensitivity. India’s BHASHINI shows the application layer done well: A public platform serving 100 million-plus inferences a month across 22-plus languages on a vendor- and cloud-agnostic design that keeps data and switching rights public. Sovereignty resides in the portability, not in a national model.

Building an operational sovereignty strategy

Public trust is the constraint sovereignty rhetoric tends to skip. The OECD’s 2025 review of government AI warns that opaque systems make AI-assisted decisions hard to explain and can give public servants false confidence in tools that fail quietly. State-controlled AI is the same problem from the other side: A government that deploys models against its own citizens without audit or record has gained control and lost accountability. An agency that can log, explain and reverse an AI-assisted action can defend it to citizens, courts, auditors and elected officials. If it cannot, it has bought access and called it sovereignty.

None of this is new. AI sovereignty repeats earlier fights over cloud, telecom, semiconductors and cybersecurity. Europe’s flagship cloud project, GAIA-X, became a cautionary tale; the Dutch technologist Bert Hubert called it an “expensive distraction” that produced no European cloud, the familiar result of ambition without absorptive capacity. Cloud taught governments that outsourcing infrastructure does not outsource accountability; telecom, that vendor dependency becomes strategic exposure; chips, that supply chains matter before a crisis; cybersecurity, that trust must be verified continuously. AI inherits all four at once.

Over the next five to ten years, some countries will build national platforms, more will build trusted cloud and trusted model regimes, and most will run hybrids that pair domestic data control with global model access. Trade policy will harden those choices: Export controls on compute and data-localization rules will pull the vendor market into blocs that track alliances more than open markets. For a CIO, that turns a vendor and hosting decision into a five-year bet on whose rules and supply chains will still hold. The ones that succeed will treat sovereignty as an operating requirement, backed by leverage, not a slogan. Start with the control plane before the model: Most agencies will never own the model, and the controls are what decide whether the AI they do run stays accountable. Even when procurement policy is dictated from above, these questions remain within the CIO’s authority:

1. Can we classify AI workloads by public-service risk?
2. Can we prove where sensitive data goes across training, retrieval, inference, logging and retention?
3. Can we restrict which models are approved for which data classes and functions?
4. Can we reconstruct an AI-assisted action in enough detail to explain it?
5. Can we change providers without losing continuity or institutional knowledge?
6. Can we explain the system to citizens, regulators, auditors and elected officials?

A “no” to any of these does not mean the agency lacks AI. It means the agency has access it does not yet control. Public institutions can use global innovation without surrendering public authority, but only once they know what to hold, what to rent and where dependency turns into risk.

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Microsoft 365 Director Jeremy Chapman this month took to video to tell Windows admins that the days of delaying security patches are over.

Complex enterprise systems and historic incidents involving patch problems have caused many admins to hold fire on immediately applying security patches, in many cases deferring patch rollouts for two to four weeks or more to ensure stability. Microsoft argues that this cautious approach, though understandable, is no longer viable because AI is accelerating the discovery and exploitation of software vulnerabilities.

As a result, Microsoft has advised admins to act on patches within three days.

Independent experts agree with Microsoft’s diagnosis of the problems posed by AI-powered vulnerability discovery, but many say Microsoft’s three-day remediation window is unrealistic for large enterprises with heavy testing, change-control, and compatibility constraints.

Instead of taking a blanket approach, enterprises need to focus more on quickly resolving those vulnerabilities that are under active exploitation and relevant to their environments, according to critics of Microsoft’s revised approach.

Tighter patching deadlines

Microsoft’s revised vulnerability remediation advice comes in the wake of its work with Anthropic’s Project Glasswing and findings from Microsoft’s own MDASH multi-model agentic scanning harness. Tighter patching deadlines are configurable via Windows Autopatch and Microsoft Intune or update tooling options such as Microsoft Configuration Manager and Windows Server Update Services.

As IT environments become increasingly more complex, inadvertent issues can occur with what appears to be a simple patch.

Unique or complex deployments may not be compatible with a patch, resulting in potential data corruption, system shutdown, or the dreaded “Blue Screen of Death.” Multiple vendors in the operating system and the enterprise software and security market have released patches that have broken products and caused outages, so the issue goes well beyond Windows shops.

Increasing both the volume and the speed of patching is unsustainable for most security teams because organizations are already struggling with successful remediation as it is.

“Many organizations have patch windows, review cycles, and test environments to identify these issues prior to patching production environments,” says Scott Caveza, senior research manager at exposure management and vulnerability assessment firm Tenable. “Organizations lacking the resources for extended validation risk deploying faulty patches that cause downtime or force last-minute configuration changes.”

Caveza adds: “The mitigation steps will vary for each organization, but blindly relying on auto-updates without contextual validation is not a defensible security posture.”

CISA’s Known Exploited Vulnerabilities list and other industry data suggest that only a small fraction of disclosed vulnerabilities are confirmed as exploited in the wild.

“[Enterprises should focus on] identifying vulnerabilities with credible and functional PoCs, verified exploitation, or sustained attention from ransomware groups, threat actors, and botnets,” says Caitlin Condon, vice president of security research at VulnCheck. “Timely exploit intelligence helps organizations identify the bugs that require immediate attention, while allowing lower-risk issues to proceed through appropriate testing and change control.”

Other independent experts are more sympathetic to Microsoft’s argument that AI has made vulnerability discovery and exploit development faster than ever and, as a result, the risks of delaying patches are far greater.

“Organizations sometimes delay patches to protect the uptime of critical systems, and many updates still require a restart,” says Danny Jenkins, CEO and co-founder at endpoint protection technology vendor ThreatLocker. “Some teams also stay one update cycle behind because they are concerned that a new patch could introduce bugs or break an overlooked dependency. Unfortunately, delaying patches to preserve uptime is becoming much harder to justify.”

Jenkins adds: “Organizations should not leave critical systems exposed while waiting for the next maintenance window. Patches should still be tested, but that process needs to move quickly, with the highest priority given to vulnerabilities that are actively exploited or exposed to the internet. A controlled interruption is usually far less costly than a successful attack exploiting a known vulnerability.”

Wider cross-industry impact

Microsoft’s three-day recommendation reflects a fundamental change in the threat landscape. Other vendors might be expected to follow suit and that means CISOs need to revise their approach to vulnerability remediation.

“Organizations should expect faster disclosure-to-exploitation timelines to become the norm, which means security programs must emphasize automation, trusted software supply chains, and continuous visibility rather than relying on periodic maintenance windows,” says Mike Nelson, VP and field CTO at DigiCert.

AI is compressing the time between vulnerability discovery and exploitation, and the industry is moving rapidly from 30-, 60-, and 90-day patching windows toward a matter of days.

However a “blanket three-day requirement for every vulnerability is neither realistic nor safe for most large organizations,” says Jeff Williams, founder and CTO at Contrast Security.

Failing to patch opens up security threats, but rushing an inadequately tested patch into production creates operational risk.

“The goal cannot be to treat every CVE [vulnerability] as an emergency,” according to Williams. “It has to be identifying, within hours, which vulnerabilities are actually exploitable and require immediate action.”

Holistic remediation

Security teams are already facing significant pressure to patch faster and to remediate a rising tide of new vulnerabilities, yet many practitioners are losing ground. Verizon’s Data Breach Investigation Report, published earlier this year, found that the median time to patch had actually increased to 43 days.

Patch deployment in enterprise environments involves configuration changes, reviews, testing, and validation.

Enterprises need to become more proficient at exposure management so that they have a holistic view of their environment that’s necessary to identify which assets are at greatest risk.

“By pinpointing the misconfigurations, identity flaws, and specific vulnerabilities that pose the greatest risk to their environment, security teams can prioritize exactly what to patch first,” Tenable’s Caveza says. “The idea of ‘patch everything’ is really outdated, and ‘patch faster’ isn’t feasible with the rapidly increasing number of vulnerabilities disclosed each day.”

CISOs will have to re-engineer their vulnerability and exposure management processes. “The traditional model of scanning everything, assigning generic severity scores, and tilting at a massive and expanding backlog is no longer fast enough,” says Contrast Security’s Williams.

Organizations need to identify the small number of vulnerabilities that matter, protect against them immediately, and remediate them on a timeline the business can safely support.

Enterprises should prioritize on resolving “internet facing, remotely exploitable vulnerabilities and any of the CISA Known Exploited Vulnerability list,” says Jose Lejin, an IEEE senior member.

Businesses that cannot safely validate and deploy patches within three days still have options, including “compensating controls, reducing an asset’s exposure, or in some cases removing the component entirely, all of which shrink the exploitable risk and buy time to patch properly,” says Brad Hibbert, CSO of vulnerability management provider Brinqa.

Oracle is expanding its Cloud@Customer on-premises portfolio with a managed database offering that it says will enable enterprises to run databases, applications, and AI agents in their own data centers, helping CIOs modernize mid-sized workloads while meeting data residency, regulatory, and low-latency requirements.

The hybrid cloud offering, Base Database Cloud@Customer, combines existing database and infrastructure services such as the Base Database Service and Data Infrastructure Cloud@Customer X11 platform. It is designed for enterprises that do not need the scale of Exadata Cloud@Customer but still want their infrastructure and AI capabilities on-premises, managed by Oracle, the company said.

The Cloud@Customer X11 platform itself consists of two Oracle X11 compute servers and shared all-flash storage, offering up to 60 usable processor cores and 660 GB of memory per server, 47.2 TB of storage, and 10/25 GbE networking.

For regulated industries or restricted connectivity

Analysts see the new offering filling a gap for enterprises that want the operational and economic benefits of the cloud but cannot send their data to a public cloud because of legal restrictions or technology limitations.

These enterprises, according to Ashish Chaturvedi, executive research leader at HFS Research, are likely to be in regulated industries such as financial services, healthcare, government, and defense that must comply with data residency requirements, or needing low-latency access from remote sites to operational databases.

The offering could also appeal to enterprises modernizing mid-sized workloads at remote locations or within individual business units that could never justify the investment in a full Exadata rack, said Amit Chandak, chief analytics officer at IT consulting firm Kanerika.

In all cases, Chaturvedi said, the appeal of the offering is its managed nature, which takes away the burden of looking after the underlying infrastructure.

Deployment and maintenance becomes easier too, said Michael Leone, principal analyst at Moor Strategy and Insights: “They get automation that mid-size teams rarely have the staff to build. Clustering, patching, standby databases, and backups arrive configured instead of hand-assembled because the offering is managed.”

The economics are equally compelling, Chaturvedi said. The pay-as-you-go pricing model, combined with online compute scaling, helps enterprises avoid overprovisioning and paying license fees for idle cores, which is a “classic waste” of fixed on-premises systems, he said.

Private AI behind the firewall

Beyond the operational and economic benefits, the architecture of the new offering enables databases, applications, VMs, and AI agents to be collocated on the same platform, removing what Chaturvedi called “the single biggest blocker” to AI adoption in regulated environments: the need to keep private data behind the firewall.

“For a CIO in a regulated sector who wants to deploy AI agents but can’t let regulated data touch an external model API, that’s a real unlock,” Chaturvedi said.

More so because most AI offerings, at least in their present form and state, cannot guarantee sensitive data protection, said Igor Ikonnikov, advisory fellow at Info-Tech Research Group.

Even if Base Database Cloud@Customer turns out more expensive than fully cloud-based options, “It’s still attractive as it eliminates reputational and economic risk caused by possible AI-induced data leakage,” Ikonnikov said.

The offering’s consolidation of databases, applications, and AI agents will also simplify deployment of AI-based workflows, said Forrester principal analyst Noel Yuhanna. “It reduces stack complexity and helps accelerate development cycles, deliver real-time data, and eliminate data movement challenges.”

Despite those advantages, Chandak cautioned that the offering is unlikely to see broad adoption outside Oracle’s existing customer base: “If a company isn’t already on Oracle, the pull is weak. You don’t buy into Oracle’s database just to get this.”

Enterprises seeking similar hybrid cloud capabilities have no shortage of alternatives: AWS, Microsoft, Google Cloud, IBM, Dell Technologies, and HPE all offer combinations of on-premises infrastructure, cloud management, and AI services.

However, those alternatives typically require customers to integrate multiple software and hardware components rather than consume them as a single managed offering.

Oracle’s differentiation, although narrow, is hard to match, Chaturvedi said: “The vertical integration of database, engineered hardware, cloud management, high-availability architecture, and now private AI, all engineered together and delivered as a managed on-prem subscription should be genuinely convenient and attractive.”

The offering is compatible with Oracle AI Database 26ai and Oracle Database 19c in Enterprise Edition and Standard Edition configurations. It also supports Oracle Real Application Clusters, Oracle Data Guard, and Zero Data Loss Recovery Appliance through Oracle-managed cloud automation for high availability and disaster recovery, the company said.

Base Database Cloud@Customer is now generally available, Oracle said. It did not provide pricing.

This article first appeared on CIO.

Oracle is expanding its Cloud@Customer on-premises portfolio with a managed database offering that it says will enable enterprises to run databases, applications, and AI agents in their own data centers, helping CIOs modernize mid-sized workloads while meeting data residency, regulatory, and low-latency requirements.

The hybrid cloud offering, Base Database Cloud@Customer, combines existing database and infrastructure services such as the Base Database Service and Data Infrastructure Cloud@Customer X11 platform. It is designed for enterprises that do not need the scale of Exadata Cloud@Customer but still want their infrastructure and AI capabilities on-premises, managed by Oracle, the company said.

The Cloud@Customer X11 platform itself consists of two Oracle X11 compute servers and shared all-flash storage, offering up to 60 usable processor cores and 660 GB of memory per server, 47.2 TB of storage, and 10/25 GbE networking.

For regulated industries or restricted connectivity

Analysts see the new offering filling a gap for enterprises that want the operational and economic benefits of the cloud but cannot send their data to a public cloud because of legal restrictions or technology limitations.

These enterprises, according to Ashish Chaturvedi, executive research leader at HFS Research, are likely to be in regulated industries such as financial services, healthcare, government, and defense that must comply with data residency requirements, or needing low-latency access from remote sites to operational databases.

The offering could also appeal to enterprises modernizing mid-sized workloads at remote locations or within individual business units that could never justify the investment in a full Exadata rack, said Amit Chandak, chief analytics officer at IT consulting firm Kanerika.

In all cases, Chaturvedi said, the appeal of the offering is its managed nature, which takes away the burden of looking after the underlying infrastructure.

Deployment and maintenance becomes easier too, said Michael Leone, principal analyst at Moor Strategy and Insights: “They get automation that mid-size teams rarely have the staff to build. Clustering, patching, standby databases, and backups arrive configured instead of hand-assembled because the offering is managed.”

The economics are equally compelling, Chaturvedi said. The pay-as-you-go pricing model, combined with online compute scaling, helps enterprises avoid overprovisioning and paying license fees for idle cores, which is a “classic waste” of fixed on-premises systems, he said.

Private AI behind the firewall

Beyond the operational and economic benefits, the architecture of the new offering enables databases, applications, VMs, and AI agents to be collocated on the same platform, removing what Chaturvedi called “the single biggest blocker” to AI adoption in regulated environments: the need to keep private data behind the firewall.

“For a CIO in a regulated sector who wants to deploy AI agents but can’t let regulated data touch an external model API, that’s a real unlock,” Chaturvedi said.

More so because most AI offerings, at least in their present form and state, cannot guarantee sensitive data protection, said Igor Ikonnikov, advisory fellow at Info-Tech Research Group.

Even if Base Database Cloud@Customer turns out more expensive than fully cloud-based options, “It’s still attractive as it eliminates reputational and economic risk caused by possible AI-induced data leakage,” Ikonnikov said.

The offering’s consolidation of databases, applications, and AI agents will also simplify deployment of AI-based workflows, said Forrester principal analyst Noel Yuhanna. “It reduces stack complexity and helps accelerate development cycles, deliver real-time data, and eliminate data movement challenges.”

Despite those advantages, Chandak cautioned that the offering is unlikely to see broad adoption outside Oracle’s existing customer base: “If a company isn’t already on Oracle, the pull is weak. You don’t buy into Oracle’s database just to get this.”

Enterprises seeking similar hybrid cloud capabilities have no shortage of alternatives: AWS, Microsoft, Google Cloud, IBM, Dell Technologies, and HPE all offer combinations of on-premises infrastructure, cloud management, and AI services.

However, those alternatives typically require customers to integrate multiple software and hardware components rather than consume them as a single managed offering.

Oracle’s differentiation, although narrow, is hard to match, Chaturvedi said: “The vertical integration of database, engineered hardware, cloud management, high-availability architecture, and now private AI, all engineered together and delivered as a managed on-prem subscription should be genuinely convenient and attractive.”

The offering is compatible with Oracle AI Database 26ai and Oracle Database 19c in Enterprise Edition and Standard Edition configurations. It also supports Oracle Real Application Clusters, Oracle Data Guard, and Zero Data Loss Recovery Appliance through Oracle-managed cloud automation for high availability and disaster recovery, the company said.

Base Database Cloud@Customer is now generally available, Oracle said. It did not provide pricing.

This article first appeared on CIO.

Oracle is expanding its Cloud@Customer on-premises portfolio with a managed database offering that it says will enable enterprises to run databases, applications, and AI agents in their own data centers, helping CIOs modernize mid-sized workloads while meeting data residency, regulatory, and low-latency requirements.

The hybrid cloud offering, Base Database Cloud@Customer, combines existing database and infrastructure services such as the Base Database Service and Data Infrastructure Cloud@Customer X11 platform. It is designed for enterprises that do not need the scale of Exadata Cloud@Customer but still want their infrastructure and AI capabilities on-premises, managed by Oracle, the company said.

The Cloud@Customer X11 platform itself consists of two Oracle X11 compute servers and shared all-flash storage, offering up to 60 usable processor cores and 660 GB of memory per server, 47.2 TB of storage, and 10/25 GbE networking.

For regulated industries or restricted connectivity

Analysts see the new offering filling a gap for enterprises that want the operational and economic benefits of the cloud but cannot send their data to a public cloud because of legal restrictions or technology limitations.

These enterprises, according to Ashish Chaturvedi, executive research leader at HFS Research, are likely to be in regulated industries such as financial services, healthcare, government, and defense that must comply with data residency requirements, or needing low-latency access from remote sites to operational databases.

The offering could also appeal to enterprises modernizing mid-sized workloads at remote locations or within individual business units that could never justify the investment in a full Exadata rack, said Amit Chandak, chief analytics officer at IT consulting firm Kanerika.

In all cases, Chaturvedi said, the appeal of the offering is its managed nature, which takes away the burden of looking after the underlying infrastructure.

Deployment and maintenance becomes easier too, said Michael Leone, principal analyst at Moor Strategy and Insights: “They get automation that mid-size teams rarely have the staff to build. Clustering, patching, standby databases, and backups arrive configured instead of hand-assembled because the offering is managed.”

The economics are equally compelling, Chaturvedi said. The pay-as-you-go pricing model, combined with online compute scaling, helps enterprises avoid overprovisioning and paying license fees for idle cores, which is a “classic waste” of fixed on-premises systems, he said.

Private AI behind the firewall

Beyond the operational and economic benefits, the architecture of the new offering enables databases, applications, VMs, and AI agents to be collocated on the same platform, removing what Chaturvedi called “the single biggest blocker” to AI adoption in regulated environments: the need to keep private data behind the firewall.

“For a CIO in a regulated sector who wants to deploy AI agents but can’t let regulated data touch an external model API, that’s a real unlock,” Chaturvedi said.

More so because most AI offerings, at least in their present form and state, cannot guarantee sensitive data protection, said Igor Ikonnikov, advisory fellow at Info-Tech Research Group.

Even if Base Database Cloud@Customer turns out more expensive than fully cloud-based options, “It’s still attractive as it eliminates reputational and economic risk caused by possible AI-induced data leakage,” Ikonnikov said.

The offering’s consolidation of databases, applications, and AI agents will also simplify deployment of AI-based workflows, said Forrester principal analyst Noel Yuhanna. “It reduces stack complexity and helps accelerate development cycles, deliver real-time data, and eliminate data movement challenges.”

Despite those advantages, Chandak cautioned that the offering is unlikely to see broad adoption outside Oracle’s existing customer base: “If a company isn’t already on Oracle, the pull is weak. You don’t buy into Oracle’s database just to get this.”

Enterprises seeking similar hybrid cloud capabilities have no shortage of alternatives: AWS, Microsoft, Google Cloud, IBM, Dell Technologies, and HPE all offer combinations of on-premises infrastructure, cloud management, and AI services.

However, those alternatives typically require customers to integrate multiple software and hardware components rather than consume them as a single managed offering.

Oracle’s differentiation, although narrow, is hard to match, Chaturvedi said: “The vertical integration of database, engineered hardware, cloud management, high-availability architecture, and now private AI, all engineered together and delivered as a managed on-prem subscription should be genuinely convenient and attractive.”

The offering is compatible with Oracle AI Database 26ai and Oracle Database 19c in Enterprise Edition and Standard Edition configurations. It also supports Oracle Real Application Clusters, Oracle Data Guard, and Zero Data Loss Recovery Appliance through Oracle-managed cloud automation for high availability and disaster recovery, the company said.

Base Database Cloud@Customer is now generally available, Oracle said. It did not provide pricing.

For many engineering teams, AI adoption means individual engineers write code faster while overall team velocity remains stagnant. Individual speed and team speed are produced by different things, and AI has mostly accelerated the first but not the second.

The step from individual AI adoption to team advantage is one many organizations haven’t taken yet, but it’s the step where real ROI lives. Make the leap and every individual gain starts compounding into something the whole team feels.

Faster individuals, but the same team pace

A developer with a good AI assistant can produce more and produce faster, but ten developers all doing that, each in their own way, with their own tools and their own context, don’t add up to a team that is ten times better. More often they add up to a team moving faster in ten different directions.

The speed stays with the person who created it. The reasoning, context, and decisions that the rest of the team would need to build on that speed gets lost.

These three structural problems explain why:

Problem #1: Context evaporates at scale

An engineer spends an hour with an AI agent working through a hard design decision. They land somewhere good. The code ships. But the reasoning, the alternatives they ruled out, and the constraints they discovered stay in a chat history nobody else will ever open. Six weeks later a teammate touches the same system, has no idea any of that thinking happened, and starts over.

You can’t prompt your way out of a context vacuum. Agents and teammates alike are only as good as the context they start with, and right now most of that context is being generated and immediately lost. The teams that pull ahead will be the ones that treat the reasoning around the work as something worth capturing.

Problem #2: Misalignment creates duplicative work

When individuals move fast in parallel without a shared source of truth, they start stepping on each other’s toes. Two people solve the same problem two different ways. An agent generates a change against a spec that quietly went stale last week. A confidently written pull request follows the wrong internal standard because the standard lived in someone’s head, not in the workflow.

This problem gets worse as more of the work becomes agent-driven. Agents overwrite each other. Specs drift out of date faster than anyone updates them. The faster the individual pieces move, the more expensive the collisions become.

Problem #3: Trust doesn’t scale

The quiet tax on AI-assisted work is review. If an individual developer can’t see how a piece of work was produced, what the intent was, what the agent was told, what standards it was working against, then they can’t confidently build on it. So, they re-check it, or rewrite it, or route around it. The individual saved an hour. The team spent two earning back the trust.

Trust transfers when intent is legible. When a teammate or a reviewer can see what was meant, what was decided, and what guardrails applied, they can accept the work and move on. When they can’t, every handoff becomes a re-litigation.

Turning adoption into advantage

The through-line across all three problems is the same. The value of AI at the team level does not live in the code any single person or agent produces. It lives in whether the intent and context around that work is captured, shared, and reusable by everyone else, human and agent.

That reframes the leadership job. It’s not about driving more adoption, because your teams already handled that. It’s about building the connective layer that turns individual output into team capability.

The window is now

This matters more every month, because the individual productivity story is about to become an agent orchestration story. The organizations that turn individual adoption into team advantage now, while the habits are still forming, will be the ones whose agents actually compound.

See how engineering leaders are building the connective layer between individual AI adoption and team-level compound returns at jira.dev.

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.

This article is published as part of the Foundry Expert Contributor Network.
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I use a very cool and relatively new web framework called Astro. The keen insight that the Astro team had was that most websites are made up of static content, so they made it really easy to add content to a website. To add a blog post to my personal website, all I have to do is create a Markdown file with some front matter, deploy it, and the blog post automatically appears. If I need to reach deeper for more dynamic functionality, I can easily do that with TypeScript, React, or almost any other framework. It’s really cool.

And these days, I really don’t write any code. Claude Code does most (all?) of the work. Since Astro is an open-source project and has excellent documentation, Claude knows all about how Astro works. It has no trouble at all managing my site and making the improvements I ask for.  

And that got me thinking, how does Astro get built? Is the Astro team building with agentic coding? Astro itself has many dependencies, including big projects like Vite and Node. And of course, Vite and Node have dependencies, too. Are those dependencies being developed by hand, or are those development teams also using AI agents to code?

My curiosity got the best of me, and I asked Claude to dig deeper. It turns out that the Astro repository has an AGENTS.md file, and some of the commits even have commit message trailers indicating that they were at least co-authored by Claude and GitHub Copilot. Further down, there is a .agents/skills directory with skills covering development, merging, triage, and more. I poked around for a look, and someone has done a great job building agentic support.

Now my interest is really piqued, and further investigation reveals quite a bit of interesting stuff. About a year ago, documentation started appearing about how to build Astro sites with coding agents.  Around that same time, the docs team released an MCP server that gives developers coding agents deeper, easier access to the Astro documentation.  

And there are small steps in the Astro codebase that indicate it is “agentic ready.” For instance, the command-line development server can tell when it is being started by an agent, and the application itself can tell if it is being driven by an agent. Small things, but steps in the direction of embracing Astro developers who use coding agents. 

Okay, that was a fun spelunking trip. But so what?

The “so what” is that code is going to be commoditized. As an Astro developer I am using AI agents pretty much all of the time. The Astro development team is starting to use AI agents more and more. The folks building the Astro dependencies are using AI agents. Shoot, the people building Claude Code and the agents themselves are “eating their own dogfood” and using their own tools to build the next frontier model. Before we know it, it will be turtles all the way down. 

No one says “who generated that electricity?” or “who wove the fabric in that shirt?” any more. And it won’t be long before no one says “Who wrote the code for that app?” because it won’t matter. Just as we don’t look at the assembly code written by our compilers, we’ll stop looking at the “regular” code written by our agents. I’m not even sure anyone is writing assembly code anymore. Soon we’ll be saying that about TypeScript, Python, and C++.

If you ask us in an official setting, our official position is that software engineering norms still apply. Rigorous CI/CD pipelines, elegant architectural patterns, and an unyielding commitment to maintainable code remain the standard. We will use weighty words like “determinism,” “scalability,” “idempotency,” and “domain-driven design.”

But behind closed doors, late at night, bathed in the glow of a dark-mode IDE, a different and more sordid reality is exposed. Hunched over the console with a manic gleam in the eye, the programmer has become power-drunk on LLMs. Like mad wizards casting spells, we summon the awesome powers of models and agents to satisfy our every programming whim—and commit acts of software engineering that would make Fred Brooks blush.

Let’s just be honest about what is actually happening.

Esoteric knowledge is superfluous

Forget OOP and FP. Forget the CAP theorem, the holy crusade of DRY, and the design patterns. Honestly, you can even forget what frameworks, runtimes, and deployment platforms you are using. The AI will figure out what is best to use and understand what is already in place. We have more mental bandwidth for working on our side project (a novel about AI taking over the world). 

Of course, I exaggerate. A little.

The docs are dead to us

We still say RTFM, but the truth is, we haven’t really read a page of vendor documentation since 2023. Stack Overflow, once our Internet Mecca, is a husk. When a package throws a weird exception, we don’t trace the execution path or read the release notes. We highlight the red text, copy the entire 200-line stack trace, dump it into the chat, and wait for the machine to spoon-feed us the solution.

Better yet, we just have the agentic IDE spot the error, divine a solution, and ask us if it’s OK. We might glance at the problem-solution description, if we have gone around the circle on the problem for a few cycles. Maybe. If we don’t have the agent set up for auto-confirm.

We used to buy heavy tomes like “Rust In Action” that were more like masonry blocks than literature. Now? We just ask an AI to transliterate our JavaScript logic into Rust. We are no longer engineers methodically learning a system. We are glorified copy-paste orchestrators hoping that the stochastic parrot behind the prompt guesses the syntax correctly.

We ignore how the back end is wired

We act like we meticulously designed the data flows, carefully crafted the relational constraints, and mindfully mapped the API relationships. The reality is rather more disturbing: We asked the AI to scaffold a modern deployment, hooked it up to a back-end database, and just sort of… ran it.

It created security rules we don’t fully understand. They do seem to work, however, which is nice. 

It generated a schema that we skimmed for about four seconds. It looks reasonable.

It wrote infrastructure-as-code scripts that provisioned cloud resources we are hoping don’t blow a hole in the budget. Presumably, whoever is in charge of that will manage it by stuffing the metrics into another chatbot.

We nodded, committed the code, and went to lunch. If management asked us to manually deploy the stack from scratch, configure the environment variables, and wire the API routes without our chat window, we would give them a vacant stare.

We understand that management is also using AI to manage the project.

Our tests are uncomfortably incestuous

Test-driven development (TDD) used to be a beautiful dream, ever just beyond reach. It made us feel glorious and despondent at turns. It would burden us with sprawling dependencies if implemented too religiously. (See The Grug Brained Developer in this regard.)

But now we can attain 95% test coverage almost effortlessly. Why not just add them in while we are auto-generating everything else?

We can now wax at length to anyone who will listen about our astounding test coverage and our automated quality assurance. Unit tests, integration tests, smoke tests, you name it. What we conveniently leave out is that the AI wrote the complex application logic, and then we asked the exact same AI to write the test suite to validate the code it just dreamed up.

It is a hermetically sealed loop of algorithmic self-congratulation. The mocks, the edge case, and the assertions are an echo chamber of the model’s original assumptions. The machine is grading its own homework, giving itself an A+.

And we are happy to accept this because, beautifully, when the code has to change, the AI will effortlessly hallucinate new tests to adapt to the churn.

We pass off the AI’s architecture as strategy

AI can produce astonishing design documents. Truly breathtaking. They are cogent, they’re beautifully formatted, and they seamlessly bridge the gap between high-level business goals and granular technical specs. They even include those auto-generated sequence diagrams that wow management.

When we present these spotless architectural proposals in the Tuesday sprint planning meeting, we lean back, take a long sip of coffee, and humbly wave away the team’s praise.

What we don’t mention is that we spent exactly four seconds generating it.

Are these AI-generated documents just as liable as human ones to hide severe, mortal flaws in scope and alignment? Absolutely. They might contain a foundational logic bomb that will eventually doom the entire project. But the markdown is so crisp, and the bullet points are so persuasive, that the eye just glides right over it. We will never truly know the depth of the disaster until it is far too late. But hey, we’ll burn that bridge when production catches fire. Until then, we are strategic visionaries.

We’re addicted to vibe coding (but only in secret)

We loudly mock the term on social media. We roll our eyes in Slack channels when the kids on TikTok talk about vibe coding their new startups. We fiercely cling to our identities as hardened, serious developers who understand memory management, garbage collection, and bitwise operators. We are professionals, damn it.

But late at night, when the managers are asleep and no one is looking? We absolutely love it. We love just throwing a chaotic, half-baked thought at the canvas, pouring a drink, and watching the AI magically build a functioning user interface based entirely on our long-deferred whims. I may finally build that working Ultima V clone. The thrill of typing “Create an app that tracks my cryptocurrency portfolio but makes it look like the interface from Neuromancer” and having it appear 30 seconds later is heady stuff.

The more deeply rooted in the hard, old-school realities of programming, the more profound is the joy the developer finds in the possibility of AI coding. 

We beat the problem into submission with prompts

Like Adam Sandler in “Uncut Gems,” we are convinced the next round will fix everything. This is us with prompts. When things are going really off the rails, instead of putting our boots on and wading into the brambles of complexity, we resort to tonal adjustments. These range from the condescending:

This problem is not fixed. Look at it closely. The error is right here.

To the desperate:

We have been working on this same problem for hours now!

To the pathetic:

Can’t you find a different approach to try?!

The astonishing part? It often works.

But there is no poetry left at the bottom of the rabbit hole; it is verbal warfare. When the context window collapses, when the regressions start cascading, and when the AI stubbornly refuses to follow the most basic rules of temporal logic, the mask of professionalism drops away and something far more atavistic makes its appearance. We stop asking nicely, stop trying to understand the why, delete the pleasantries, and capslock our intent.

What we have here is a failure to communicate!

We feed the same failing stack trace back into the prompt over and over and over again, aggressively hammering the constraints, explicitly forbidding certain libraries, and pasting in release notes just to confirm that the AI lacks the latest APIs. We force the model down a narrower and narrower path until the code finally stops throwing errors. We don’t actually debug anymore, trace variables, or step through functions. We just apply relentless, iterative pressure until the machine surrenders. We beat it into submission. And then, we push to production.

In fact, there is a real skill here—a sheer “will to completion” that remains in the act of building software. We invest just as much time, energy, and heart wrestling the bot as we ever did emitting syntax.

A blacker box

The only profession more given over to using AI like a cursed Level 13 artifact than programming is writing. Writing of course is far more open to public scrutiny than code.

And while my tongue has been firmly in my cheek here, my faith in coders as good guys makes me more curious to see what we create than troubled by the dangers. 

It was once the case that only other programmers could understand what programmers were doing, what they were producing. Now not even that is true. Only the machine knows what the machine is doing. We just keep it tethered to our aims. Hopefully.

Microsoft and Mistral are betting that the future of enterprise AI is in sovereign infrastructure and model choice, rather than with one locked-in system. 

The companies have announced a “significant expansion” of their strategic partnership, which includes a multibillion dollar commitment from Microsoft. Mistral will add to its GPU infrastructure in Europe and extend access to its frontier multilingual models, while Microsoft will expand its sovereign cloud capabilities. The companies will also align on a joint go-to-market plan and will pursue enterprise opportunities together across Europe and globally, as well as funding proofs of concept (PoCs), offering Azure credits, and leading workshops to drive AI innovation with customers.

The partnership between the tech giant and the three-year-old French startup might seem an odd combination at first glance, analysts note, as both develop enterprise AI models and offer access as-a-service. But it reflects changing AI market dynamics.

“It’s possible to be both a competitor and a partner at the same time,” noted technology analyst Carmi Levy. Large cloud providers are becoming AI marketplaces in their own right, he pointed out, and are drifting away from exclusively promoting their own models. Building Mistral support into their infrastructure avoids platform lock-in and removes a “key objection for customers looking for options.”

“As much as Microsoft would want everybody standardizing on Copilot and Phi, it recognizes the simple fact that customers increasingly want to choose their own models,” said Levy.

Expands model access, sovereign cloud capabilities

As part of the agreement, Mistral will expand its Europe-based capacity with thousands of Nvidia Vera Rubin GPUs.

Mistral CEO and co-founder Arthur Mensch described a “slight gap” in compute capacity in Europe, noting that this expansion will provide more compute capability and support Microsoft’s cloud and AI services, providing a “shared platform for training, inference and large-scale deployment.” The companies call it a critical step to allow Microsoft customers to benefit from Mistral’s “scientific and compute innovations.”

In addition, Mistral Medium 3.5 and OCR 4 models are now available in Microsoft Foundry, and Mistral Medium 3.5 can be used in Microsoft Copilot Studio.

The partnership also extends Microsoft’s sovereign cloud infrastructure as well as combining Mistral’s frontier models with Microsoft’s security, compliance, and cloud-to-edge platform. This gives enterprises, particularly those in regulated markets, the ability to deploy AI where they see fit, while maintaining control over their data and workloads, according to the companies.

Further, customers will be able to build AI using the same models, tools, APIs, and workflows they’re used to, across Microsoft Foundry, Foundry Local, and Azure Local, and opt for fully Azure-hosted cloud environments; cloud-connected, controlled Azure Local environments that only use cloud-based Azure when necessary; and fully-disconnected environments that can operate independently for more sensitive scenarios.

“Europe should have access to the world’s most capable AI without compromising control over their data, operations or digital future,” said Brad Smith, vice chair and president, Microsoft, noting that with this partnership, the company is honoring its European digital commitments and giving customers a foundation for AI so they can “operate on their own terms.” Customers with “heightened sovereignty needs” will be able to exercise more control with “resilience and assurance” and continued access to Mistral’s open-weight models.

Enterprise credibility

Gartner distinguished VP analyst Arun Chandrasekaran noted that there’s no doubt that this agreement strengthens Microsoft’s sovereignty messaging and its position in regulated industries, and the tech giant benefits by expanding its AI portfolio with a “credible European frontier model provider”

He pointed to key differences from the initial partnership struck by the two companies in 2024; whereas originally Microsoft was hosting Mistral’s models, it is now consuming capacity built by Mistral in Europe.

Ultimately, the deal emphasizes European data centers, customer-controlled deployments, Azure Local, and fully-disconnected environments, addressing many of the concerns that surrounded the original Azure cloud only relationship, Chandrasekaran explained.

For Mistral, the partnership provides “enterprise credibility, and repeatable infrastructure revenue” that can fund continued AI platform development, he said. The combination of Microsoft’s enterprise AI platform with Mistral’s models and European AI infrastructure will give joint customers more deployment flexibility and expand options around data residency, sovereign AI deployments, and disconnected/on-premises environments.

“It also gives customers more model choice, reducing dependence on a single AI provider,” said Chandrasekaran.

A complementary partnership

Mistral continues to innovate with its frontier AI models and its chat and coding agent, Vibe (formerly Le Chat), yet it doesn’t attract as much attention as Claude or ChatGPT.

One of the company’s key differentiators is its targeted business model. Levy pointed out that not every workload requires “full-flight GPT.” For customers trying to rein in costs and limit exposure with on-premises deployments, Mistral’s “more focused capabilities can represent a cost-effective alternative.”

Chandrasekaran pointed to Mistral’s combination of high-performance open-weight models, strong multilingual capabilities, and a “focus on efficient inference that lowers deployment costs.”

Unlike many frontier AI companies, it offers customers greater flexibility to self-host and customize models; this makes it particularly attractive for enterprises and governments with sovereignty or regulatory requirements, he said. Its European roots also position it as the leading alternative for organizations seeking cutting-edge AI outside the US and Chinese ecosystems.

Bill Wong, research fellow at Info-Tech Research Group, also pointed to Mistral’s high-quality models and “adeptness as a sovereign AI leader.” There is growing demand for AI companies that comply with regional laws and data residency, and Mistral is established as “one of the most prominent European players.”

“Such a strategic position makes it a great partner for Microsoft to further expand its AI offerings beyond just being a single-model provider,” he said. Customers get freedom of choice while complying with data sovereignty and regulatory limitations without having to execute a separate AI deployment, while Mistral, for its part, can go beyond Europe and gain more visibility with international businesses.

Mistral brings both “technological and political advantages,” Levy noted. The startup’s European roots give Microsoft more credibility “at a fraught time for geopolitical relationships.” Customers in Europe and beyond are concerned about US exposure, and Mistral can provide a safer choice.

Meanwhile, Microsoft can deploy European-developed AI models running on European infrastructure, thus maximizing regulatory compliance while offering next-level enterprise marketing scale that Mistral “simply couldn’t achieve on its own,” said Levy. Mistral-based workloads deployed on Azure will also benefit from Microsoft’s “comprehensive security certifications, governance frameworks, and monitoring.”

Bottom line: Both companies can maximize their unique roadmaps through the partnership, he said. “As the rules of the AI economy continue to evolve, expect more eyebrow-raising deals like this to be signed.”

Providers and deployers of AI systems: You only have a couple of weeks left until you must explicitly inform users when they are interacting with AI content.

To assist in the effort, the European Commission (Commission) has published guidelines to help AI deployers get in line with the AI Act’s transparency obligations, which will begin to go into effect on August 2.

After that, companies providing AI systems must alert users when they are interacting with AI. They must also tell users when they have been exposed to deepfakes, “emotion recognition,” or biometric categorization systems, or when they are given AI-manipulated content in matters of “public interests without human review or editorial control.”

Henna Virkkunen, the Commission’s executive VP for tech sovereignty, security and democracy, said in a statement, “with today’s guidelines, the Commission supports the smooth and effective application of the AI Act to make AI systems interacting with people such as chatbots and AI agents and AI content more transparent and trustworthy. These guidelines support providers and deployers in meeting their obligations under the AI Act, while helping citizens know when they are interacting with AI.”

Systems must include machine-readable markers to reveal such content, to reduce “the risk of deception and manipulation” and build public trust in AI.

“Generative systems have collapsed the cost of producing convincing content while the cost of judging it stands where it always stood,” said Sanchit Vir Gogia, chief analyst at Greyhound Research. This requirement is “an attempt to restore friction to that imbalance.”

A company’s non-compliance could result in fines anywhere from €750K (about $856K) to €15M (about $17 million), or even up to 3% of its total worldwide annual revenue.

Transparency requirements

The EU AI Act’s transparency requirements apply to “natural or legal persons,” public authorities, agencies, or other bodies that develop AI systems, or have them developed, and place them on the EU market or into use under their name or trademark. This means all companies, regardless of whether or not they are EU-based.

“Systems placed on the European market, put into service there, or producing outputs used there are inside the field, wherever the developer sits,” Gogia noted.

Applicable systems must be intended to interact directly with “natural persons”; these systems include AI-enabled chatbots or conversational agents, AI companions, or coding agents. However, AI-enabled tools like recommender systems, spam filters, authentication, search and retrieval, transcription, text and code auto-completion, or predictive maintenance do not fall under the rule.

Specific outputs such as AI-generated text, images, video, and audio must contain a machine-readable mark. Deepfakes and public interest-related text created by AI without human review or control must be clearly labeled, however, deepfake content that is “artistic, creative, satirical, or fictional” is largely exempt.

AI content must be marked with one of three labels: “AI,” “Fully AI-generated,” or “Partially AI-modified.” For instance, “Fully AI-generated” applies when news summaries, music, art, or videos have been created without any human oversight (apart from prompting), while “partially AI-modified” could mean a person’s face is swapped into an authentic photograph to create a deepfake.

The three icons are publicly available for free use; enterprises can download zip files in PNG and SVG formats.

Most of the Act’s transparency rules begin to go into effect on August 2. But AI systems placed on the market before then will have some leeway; they must be in compliance by December 2.

However, a four-month allowance “on one obligation, for one population of systems, contingent on one procedural step, is not a strategy,” Gogia emphasized. Enterprises should plan to comply by August 2 and “treat any relief that arrives as margin.”

A consistent code of practice

Along with the transparency guidelines, the Commission has introduced a code of practice that essentially serves as a gesture of good faith. When signed, it can provide “legal certainty” and a “simple and practical” way to demonstrate compliance with the AI Act, according to the Commission. Signatories can also collaborate through the ‘Signatory Taskforce,’ which will share practices and advance technologies around marking and labeling practices.

Providers that choose not to sign must comply through other methods and demonstrate that those methods are “adequate” through assessment by surveillance authorities, according to the Commission.

Non-signatories “keep their flexibility, and will face more case-by-case scrutiny for it,” said Gogia.

Criteria for compliance

Shashi Bellamkonda, principal research director at Info-Tech Research Group, pointed out that the transparency requirements apply to content only when three criteria are met: It has been published, is informative to the public, or is on matters of public interest.

B2B business content or blogs may not need an AI disclosure if they do not meet these criteria, he noted. Also, published text that has undergone human review or is under editorial control does not need to be labeled. Editorial control means that a person must hold the ultimate legal responsibility for the publication of the content.

Many companies like Google, Adobe, and LinkedIn have already established ways to identify images marked as AI-generated. Meta has made it a requirement, but the creator has to add the AI-generated label, Bellamkonda said.

“This is a good move for guardrails around public information, and companies with good compliance and ethical oversight may not have to worry about this,” he noted. But as a general practice, companies should disclose AI-generated content and state whether it has been human reviewed.

Creating a transparency pipeline

Establishing full transparency means identifying who carries the responsibility for the content, whether the marking survives real use, not just testing, and what evidence will defend the decision, Gogia said.

Concerns cluster around responsibility, durability and evidence. Several organizations usually touch one piece of content, and none controls the whole chain, which is why contracts become the “pressure point,” he said. Most current agreements were written to deliver software and say “almost nothing” about provenance persistence, verification access, or evidence retention.

The durability concern is the most difficult, Gogia noted, because marking performs well in controlled settings but “badly in ordinary life.” Meta, for one, said its invisible watermark was designed to survive cropping; a published test, however, found the company’s preview detector missed 55% of cropped images.

“CIOs should ask which platform can actually provide evidence before believing its dashboard,” said Gogia.

Disclosure of AI use must be “clear, distinguishable and accessible,” he emphasized. “A notice buried in lengthy terms, or reachable only through determined clicking, satisfies nobody, least of all a market surveillance authority.”

Sustained compliance is a “living control” requiring a central record of systems, duties and evidence; testing taking place where the user meets the control rather than where the developer built it; and continuous supplier assurance. Enforcement will vary by country, so keep one common baseline with local overlays, Gogia said.

His advice: Inventory every system that talks to people, generates content, or gauges sentiment; classify provider and deployer roles; place disclosures at first interaction; define substantive human review; keep the evidence.

Marks and provenance signals should be tested after content undergoes cropping, compression, translation, transcription, and other editing, Gogia said. A useful audit starts from a real output and follows its “pulse” through generation, editing and publication, identifying at “each beat” the responsible party, the surviving mark, and evidence for exceptions. Missed labels should also be traced for root cause and recurrence.

To ensure compliance, before August 2, enterprises need a prioritized inventory, live disclosures on the highest-risk use cases, and a “named owner for every control,” he noted. In the first 30 days, they should stabilize and test; in the first 90 days, push requirements into procurement processes as a standing discipline. Procurement must secure commitments on marking methods, known failure modes, and evidence access, with explicit notice if/when any of them change.

“The sensible architecture is a common transparency baseline carrying traceability, responsibility, and evidence, with jurisdictional overlays for language, sector rules, and local practice,” Gogia said.

This article originally appeared on CIO.com.

Providers and deployers of AI systems: You only have a couple of weeks left until you must explicitly inform users when they are interacting with AI content.

To assist in the effort, the European Commission (Commission) has published guidelines to help AI deployers get in line with the AI Act’s transparency obligations, which will begin to go into effect on August 2.

After that, companies providing AI systems must alert users when they are interacting with AI. They must also tell users when they have been exposed to deepfakes, “emotion recognition,” or biometric categorization systems, or when they are given AI-manipulated content in matters of “public interests without human review or editorial control.”

Henna Virkkunen, the Commission’s executive VP for tech sovereignty, security and democracy, said in a statement, “with today’s guidelines, the Commission supports the smooth and effective application of the AI Act to make AI systems interacting with people such as chatbots and AI agents and AI content more transparent and trustworthy. These guidelines support providers and deployers in meeting their obligations under the AI Act, while helping citizens know when they are interacting with AI.”

Systems must include machine-readable markers to reveal such content, to reduce “the risk of deception and manipulation” and build public trust in AI.

“Generative systems have collapsed the cost of producing convincing content while the cost of judging it stands where it always stood,” said Sanchit Vir Gogia, chief analyst at Greyhound Research. This requirement is “an attempt to restore friction to that imbalance.”

A company’s non-compliance could result in fines anywhere from €750K (about $856K) to €15M (about $17 million), or even up to 3% of its total worldwide annual revenue.

Transparency requirements

The EU AI Act’s transparency requirements apply to “natural or legal persons,” public authorities, agencies, or other bodies that develop AI systems, or have them developed, and place them on the EU market or into use under their name or trademark. This means all companies, regardless of whether or not they are EU-based.

“Systems placed on the European market, put into service there, or producing outputs used there are inside the field, wherever the developer sits,” Gogia noted.

Applicable systems must be intended to interact directly with “natural persons”; these systems include AI-enabled chatbots or conversational agents, AI companions, or coding agents. However, AI-enabled tools like recommender systems, spam filters, authentication, search and retrieval, transcription, text and code auto-completion, or predictive maintenance do not fall under the rule.

Specific outputs such as AI-generated text, images, video, and audio must contain a machine-readable mark. Deepfakes and public interest-related text created by AI without human review or control must be clearly labeled, however, deepfake content that is “artistic, creative, satirical, or fictional” is largely exempt.

AI content must be marked with one of three labels: “AI,” “Fully AI-generated,” or “Partially AI-modified.” For instance, “Fully AI-generated” applies when news summaries, music, art, or videos have been created without any human oversight (apart from prompting), while “partially AI-modified” could mean a person’s face is swapped into an authentic photograph to create a deepfake.

The three icons are publicly available for free use; enterprises can download zip files in PNG and SVG formats.

Most of the Act’s transparency rules begin to go into effect on August 2. But AI systems placed on the market before then will have some leeway; they must be in compliance by December 2.

However, a four-month allowance “on one obligation, for one population of systems, contingent on one procedural step, is not a strategy,” Gogia emphasized. Enterprises should plan to comply by August 2 and “treat any relief that arrives as margin.”

A consistent code of practice

Along with the transparency guidelines, the Commission has introduced a code of practice that essentially serves as a gesture of good faith. When signed, it can provide “legal certainty” and a “simple and practical” way to demonstrate compliance with the AI Act, according to the Commission. Signatories can also collaborate through the ‘Signatory Taskforce,’ which will share practices and advance technologies around marking and labeling practices.

Providers that choose not to sign must comply through other methods and demonstrate that those methods are “adequate” through assessment by surveillance authorities, according to the Commission.

Non-signatories “keep their flexibility, and will face more case-by-case scrutiny for it,” said Gogia.

Criteria for compliance

Shashi Bellamkonda, principal research director at Info-Tech Research Group, pointed out that the transparency requirements apply to content only when three criteria are met: It has been published, is informative to the public, or is on matters of public interest.

B2B business content or blogs may not need an AI disclosure if they do not meet these criteria, he noted. Also, published text that has undergone human review or is under editorial control does not need to be labeled. Editorial control means that a person must hold the ultimate legal responsibility for the publication of the content.

Many companies like Google, Adobe, and LinkedIn have already established ways to identify images marked as AI-generated. Meta has made it a requirement, but the creator has to add the AI-generated label, Bellamkonda said.

“This is a good move for guardrails around public information, and companies with good compliance and ethical oversight may not have to worry about this,” he noted. But as a general practice, companies should disclose AI-generated content and state whether it has been human reviewed.

Creating a transparency pipeline

Establishing full transparency means identifying who carries the responsibility for the content, whether the marking survives real use, not just testing, and what evidence will defend the decision, Gogia said.

Concerns cluster around responsibility, durability and evidence. Several organizations usually touch one piece of content, and none controls the whole chain, which is why contracts become the “pressure point,” he said. Most current agreements were written to deliver software and say “almost nothing” about provenance persistence, verification access, or evidence retention.

The durability concern is the most difficult, Gogia noted, because marking performs well in controlled settings but “badly in ordinary life.” Meta, for one, said its invisible watermark was designed to survive cropping; a published test, however, found the company’s preview detector missed 55% of cropped images.

“CIOs should ask which platform can actually provide evidence before believing its dashboard,” said Gogia.

Disclosure of AI use must be “clear, distinguishable and accessible,” he emphasized. “A notice buried in lengthy terms, or reachable only through determined clicking, satisfies nobody, least of all a market surveillance authority.”

Sustained compliance is a “living control” requiring a central record of systems, duties and evidence; testing taking place where the user meets the control rather than where the developer built it; and continuous supplier assurance. Enforcement will vary by country, so keep one common baseline with local overlays, Gogia said.

His advice: Inventory every system that talks to people, generates content, or gauges sentiment; classify provider and deployer roles; place disclosures at first interaction; define substantive human review; keep the evidence.

Marks and provenance signals should be tested after content undergoes cropping, compression, translation, transcription, and other editing, Gogia said. A useful audit starts from a real output and follows its “pulse” through generation, editing and publication, identifying at “each beat” the responsible party, the surviving mark, and evidence for exceptions. Missed labels should also be traced for root cause and recurrence.

To ensure compliance, before August 2, enterprises need a prioritized inventory, live disclosures on the highest-risk use cases, and a “named owner for every control,” he noted. In the first 30 days, they should stabilize and test; in the first 90 days, push requirements into procurement processes as a standing discipline. Procurement must secure commitments on marking methods, known failure modes, and evidence access, with explicit notice if/when any of them change.

“The sensible architecture is a common transparency baseline carrying traceability, responsibility, and evidence, with jurisdictional overlays for language, sector rules, and local practice,” Gogia said.

Convenience store and gas station chain Sheetz announced it is replacing VMware across its network of more than 830 retail locations with StorMagic’s SvHCI hyperconverged infrastructure platform, marking one of the larger publicly announced migrations away from VMware.

The rollout is already well underway. According to StorMagic, Sheetz has completed migrations at more than 600 stores and is averaging roughly 200 store conversions per month. At that rate, the company is on track to finish the project in about four months.

The migration is being carried out entirely remotely, eliminating the need for hardware upgrades or on-site IT visits. This lets the chain continue using its existing Dell PowerEdge R440 and R450 servers.

The two companies have a relationship dating back to 2020, when Sheetz first deployed StorMagic’s SvSAN software as the hyperconverged storage layer with VMware across hundreds of store locations to virtualize critical in-store application. The setup supported mission-critical applications such as payment processing, loyalty programs, kitchen management and store operations.

The new deployment replaces VMware entirely with StorMagic’s integrated SvHCI virtualization stack, simplifying infrastructure while reducing software complexity and operating costs.

By employing existing hardware and managing migrations remotely, Sheetz expects to minimize disruption while standardizing virtualization across its nationwide footprint. StorMagic said the completed platform will provide a highly available infrastructure for business-critical in-store applications while extending the useful life of existing server hardware.

“Our initial rollout proved StorMagic could deliver the resilience and centralized management needed across a large, distributed retail environment,” said Gary Sliver, director of platform engineering at Sheetz in a statement.

“StorMagic worked to understand our needs and requirements, to include a 24/7/365 operating environment, and ultimately delivered a product and plan that is allowing us to migrate hundreds of locations from VMware quickly and with minimal downtime, without requiring hardware replacements or having to send technicians to every site. This project is proof that large-scale edge migrations don’t have to be disruptive, drawn-out or scary affairs.”

Last year Anthropic gave away one of the most successful things it has ever built. And, no, I’m not talking about Claude. I’m referring to MCP, the now ubiquitous Model Context Protocol, which Anthropic donated to the Linux Foundation’s new Agentic AI Foundation⁠. At the time, MCP was pulling nearly 100 million monthly SDK downloads across more than 10,000 active servers⁠, prompting the question as to why any company would give up such a popular piece of technology.

Google did much the same months earlier, handing its Agent2Agent (A2A) protocol to the Linux Foundation⁠ with AWS, Cisco, Microsoft, Salesforce, SAP, and ServiceNow signing on as founding members. OpenAI, not to be outdone, supports remote MCP servers in its Responses API⁠, sits on the MCP steering committee, and contributed AGENTS.md to that same foundation alongside its fiercest rival’s protocol.

It’s like Game of Thrones, except the principal AI powers seek regime change through seeming acts of beneficence rather than violence. For those who have been around for a while, it’s also entirely predictable, following a similar script we’ve seen in the cloud, on-premises servers, and more. Platform companies don’t give away technologies they’ve stopped caring about. They give away technologies they no longer need to own because competitive advantage has shifted to new ground.

What does this mean for AI?

Gravity has shifted before

Google has long been an exceptionally active contributor to open source. As I wrote in 2017, Google wasn’t open sourcing TensorFlow and Kubernetes out of generosity but rather turning these open source assets into on-ramps for Google Cloud. Google was playing catch-up to AWS and Microsoft. As then Google product manager Martin Buhr said, the company hoped to “create a gravity well in the market for container-based apps [so] that a significant percentage of them will end up with us.”

In other words, platform companies routinely commoditize one layer of the stack so they can compete somewhere where they hold a stronger hand.

GitHub may be an even better example. Git is open. Anyone can host a Git repository and, once upon a time, different companies did just that. Yet GitHub became the default place software development happens for millions of developers. Nobody pays for Git, but lots of people pay for GitHub. We’re seeing this same phenomenon play out in AI.

Trading contributions for control

Anthropic and OpenAI have both pretended at being all for humanity’s good, but that’s not a good explanation for why they’re racing to give away things like MCP. The deeper reason is that the model itself has turned out to be a poor place to build a lasting moat, and they’re trying to figure out what’s next. As I pointed out recently, the frontier model leaderboards change almost weekly. As such, enterprises shouldn’t build their AI strategy around the assumption that any one vendor will remain permanently ahead on model quality. Instead, as I suggested, AI may be sexy, but the “dull reality” is connecting those models to enterprise data, workflows, etc.

The AI companies understand this better than anyone. Sure, they’ll continue spending billions training ever more capable models because frontier models attract developers, generate headlines, and open enterprise doors. But they’re also quietly acknowledging that benchmark leadership alone doesn’t create a durable platform.

Developers return to the places where their tools, workflows, teammates, and accumulated work already live. Enterprises double down on the systems where their data, permissions, governance, and business processes are already connected. Every new integration makes that destination a little harder to leave, and every new workflow increases its pull. That’s what MCP, A2A, etc., are all about: increasing gravity around the models.

Every major AI company wants to become the place where AI-assisted work naturally happens, and they’re now amassing armies of forward deployed engineers and trying other means to get legacy infrastructure to tie back to their frontier models. The enterprise incumbents want the same thing, but from the opposite direction. They don’t need to own the frontier; instead they need to connect the frontier to the systems that already safely run the business.

That’s why I’m skeptical whenever someone confidently predicts that AI will sweep away enterprise software. I’ve seen this movie before. Developers absolutely live on the frontier, but enterprises don’t. Enterprises create value by connecting new capabilities to decades of accumulated applications, data, policies, and business processes. The newest model matters, and so does the newest agent framework. But neither creates much business value until it’s connected to customer records, financial systems, supply chains, HR data, and everything else enterprises already depend on.

That’s where incumbents still possess enormous gravitational pull. My employer, Oracle, certainly believes so, just as Microsoft, SAP, Salesforce, and ServiceNow do. (Disclosure: I run developer relations at Oracle, which participates in the Agentic AI Foundation.) Ironically, open protocols strengthen that position rather than weaken it. If every model can speak MCP and every agent can interoperate through common standards, enterprises gain the freedom to adopt whichever frontier technology looks best without rebuilding every integration. The protocol becomes interchangeable.

Open standards don’t stop gravity

None of this diminishes the importance of open standards. MCP succeeded because it solves a genuine problem. Developers shouldn’t have to build a custom connector every time an AI application needs access to a database or other business system. Neutral governance also matters because nobody wants foundational infrastructure controlled by a direct competitor. But we shouldn’t confuse open interfaces with open markets.

An enterprise may find it easy to swap one MCP-compatible model for another while still remaining deeply dependent on the place where its prompts, evaluations, security policies, and employee habits have accumulated. Again, we’ve seen this before. Kubernetes made workloads dramatically more portable without making AWS, Microsoft Azure, and Google Cloud interchangeable. SQL has been standardized for decades, yet databases remain fiercely differentiated businesses. Standards reduce friction, but they rarely eliminate competitive advantage. They simply move it.

In like manner, Anthropic, Google, OpenAI, and others are happily standardizing how models, agents, tools, and enterprise systems communicate because they don’t expect the connection itself to determine the winner. Instead they expect to win by becoming the place where AI-assisted work naturally accumulates. Along the way, we’re going to see copious quantities of code given away, increasing developer productivity for all and outsized financial bonanzas for a few. Game on.

The biggest and loudest prediction about AI is that it will eliminate millions of jobs. It is dramatic and easy to repeat. But from what I’ve seen, inside most enterprises the more immediate problem has turned out to be something else entirely: a growing mass of tools, agents, models and usage costs spreading faster than most organizations can govern or connect to real business value, also known as AI sprawl.

None of that invalidates the initial fear. Indeed, AI can clear backlogs, speed up analysis, draft usable content and reduce time spent on repetitive work. In my opinion, what goes wrong is the assumption that those gains will scale seamlessly, and that more AI will automatically produce more value.

What really matters is not only how much AI a company can deploy, but whether its use fits inside a growth strategy, an operating model and an organization that can use it well.

The early results of AI use made the logical progression feel obvious, even a foregone conclusion. If it could already improve output in narrow use cases, then broader deployment should produce broader gains. Simple! Better models were expected to deliver better results. More agents were expected to drive more automation. For many companies, this logic held for long enough to encourage overexpansion.

But this logic has started to break down as usage continues to scale. I’ve seen returns diminish much quicker than expected. To illustrate, one industry analysis found that developers who used AI most heavily produced about twice the output of moderate users, but consumed roughly ten times the compute.  

At a certain point, more AI does not create proportionally more value – it simply becomes more expensive. But where, exactly?

From experimentation to sprawl

Experimentation played a key role in this downturn, but it’s not the culprit. As AI continues to sprawl, the problem continues that AI is spreading faster than most companies can coordinate. Teams often solve the same problem in parallel, paying for overlapping capabilities and layering new tools atop existing ones without any clear inventory of what ‘s already in place. What can appear as momentum is really turning into redundancy.

I’ve seen versions of this play out repeatedly. At one financial firm, several business units were pursuing AI projects aimed at automating research and reporting. Each team moved independently; selecting their own tools, building their own workflows and creating separate data pipelines, with little to no coordination between teams. In some cases, different groups were developing nearly identical capabilities without realizing it, solving the same problems twice without any shared visibility into each other’s work.

Individually, the projects showed real promise. Collectively, the projects created duplication, fragmented data and inconsistent standards business and enterprise wide.

By the time leadership stepped back to assess, the company found itself paying for overlapping capabilities, maintaining multiple versions of the same underlying data, and struggling to determine which solutions were actually delivering value versus which were simply consuming budget and eating at engineering time.

Perhaps most troubling: nobody at the enterprise level had a complete view of what was being built, by whom or why. What began as healthy, well-intentioned experimentation had, without anyone deciding it should, evolved into full-blown AI sprawl, creating a patchwork of disconnected initiatives that was difficult to govern, harder to secure and far more expensive than a coordinated approach could and should be.

Early wins encourage a still wider rollout, but many organizations expand usage before they put real controls in place. Experimentation becomes sprawl. Budgets grow quickly, and few leaders have a reliable view of who is using what or why.

AI strategy cannot sit beside growth strategy

This is where I see many companies still get the issue wrong. They treat AI and growth strategy as two separate efforts, then wonder how adoption gets so messy. A business cannot drop AI into its operations and expect momentum to take over. The technology has to support a clear path to growth, whether that means improving margin, speed, service, capacity or decision-making. At the same time, growth plans cannot assume AI changes nothing about delivery, design or operating leverage. The real challenge is in ensuring the two work together.

Personally, I’ve seen better results when AI initiatives are tied to a specific business objective from the beginning, rather than launched as broad, abstract or transformative effort. One mattress retailer I’ve worked with took this approach, starting with a single, focused and well-defined use case rather than trying to transform or overhaul the entire organization at once. The company introduced an AI-powered training platform for store associates, giving employees a low-pressure way to practice sales conversations and product recommendations before applying them to external situations with customers on the floor.

Because employees experienced immediate and tangible value from the tool, adoption spread quickly across locations, with minimal need for top-down mandates. Early, visible success helped to build internal credibility and generate momentum, which leadership then leveraged to expand into more complex AI initiatives across areas such as inventory management, demand forecasting and replenishment planning.

Ultimately, the technology succeeded not because it was innovative for its own sake, but because it was connected to a larger growth strategy: improving sales effectiveness on the floor, driving operational efficiency behind the scenes and strengthening workforce capability at entry level. A major lesson we walked away with here was that starting small and specific, with a clear throughline to business value creates a strong foundation for sustainable and scalable AI use.

What implementation actually takes

All this takes more than a few easy guardrails. It takes strategy. Leaders need a real inventory of the tools, agents and assistants already in use across the business, who owns them, what data they can access and everything that they support.

They also need financial controls that match the economics of token-based usage, including role-based access, thresholds and review processes that make spend visible before it becomes a surprise. Similarly, they need metrics that go beyond mere activity. More prompts do not mean more value. If a deployment cannot be tied to throughput, margin, quality, cycle time or another tangible result, it is still unfinished.

This is also why blunt shutdowns rarely work. If leaders clamp down too hard, employees often move to unsanctioned tools and create a larger shadow AI problem, or the unauthorized use of artificial intelligence tools, models or chatbots by employees, without the knowledge or approval of IT and security teams, with even less visibility and more risk. The better answer is disciplined adoption: clear ownership, rules, metrics and enough flexibility for teams to use AI where it works.

That matters for the people as much as it does for the budget. Those that modernize well end up with better work – not just less of it.

The story of the moment isn’t about AI replacing people – or even AI in general. It’s about whether companies know their own businesses well enough to keep incorporating powerful new tools without mistaking activity for progress. As technological capabilities continue to appear, the winners will be the organizations that understand where it belongs, what it can improve and how to turn each new wave into something permanent.

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Major AI labs are unleashing forward-deployed engineers (FDEs) to try and grab enterprise customers. Large consultancies are dishing out tokens and assembling armies of consultants — both human and agent — to do the same.

But smaller firms are in the mix now, as well. AI is helping 28Stone Consulting, a New York-based, 230-person technology consultancy for capital markets, punch above its weight against larger rivals in the rush to deliver FDEs.

In this Q&A, Thomas Dolan and Frank Erickson, founders of 28Stone, argue that agentic AI isn’t a one-size-fits-all solution in vertical markets; success takes discipline, deep domain expertise, and human involvement to mitigate risk.

Many enterprises continue to struggle with the use of AI agents, which is consultancies are stepping in to get projects off the ground. 28Stone is among those that have published blueprints and methodologies on the development and delivery of agentic AI workflows with humans in the loop.

Computerworld spoke with both founding partners about why companies are still stumbling with agentic AI rollouts, and what a disciplined delivery process actually looks like.

After 15 years of delivering software for capital markets firms, is ‘AI-first’ a real distinction or just positioning?

Dolan: “We’re not shying away from being AI-forward. What needs to shine through is AI done intelligently — not stuff you get by buying some tokens for somebody on the trading desk. We’re an AI-first firm.”

Erickson: “And it’s temporary. At some point, AI is going to be synonymous with software development.

“The whole idea of an AI SDLC (software development lifecycle) versus an SDLC is going to be one and the same, a lot like cloud computing today. To not include AI in your strategy, you’d look like a COBOL vendor.”

What does agentic AI delivery look like?

Dolan: “We’ve got several AI initiatives delivering a pure agentic approach. We’ve doubled down on the human expertise wrapper in the SDLC. That doesn’t mean sacrificing any of the benefits of the AI models — quite the opposite.

“You don’t achieve anywhere near the same level of value from applying AI without keeping that expertise — industry, functional and technical — throughout the process.”

Where do humans stay in the loop once agents are doing the work?

Dolan: “We’re believers in starting with requirements discovery. Someone who knows the analytical nuances of a good business analyst is critically important; shaping a product owner’s business information through a markup file that can be fed into a BA agent, then treating the output as if it came from a very fast junior BA. Only then is the story complete.

“The developer takes that story, transforms it into the most efficient input, then owns the output, because they’re accountable for that code. A developer should own the code on both the input and output side.

“Your product owner, who knows the business, that’s great. But expecting them to interact with an agent and output enterprise code is ridiculous. It’s not a great plan.“

Why not just put one do-everything person in charge of AI and agents?

Erickson: “Every analyst, programmer or software engineer isn’t a great requirements analyst. And a great domain analyst with some technical background won’t know if the agent’s code is garbage, maintainable, performant.

“It’s unrealistic to expect one individual to have that breadth across domain, software engineering, testing, deployment. Clients ask all the time, and we push back: ‘Great, if you can find that guy, they’re few and far between.’ To deliver at the enterprise level, you need the human expertise, at depth.“

Dolan: “There’s system speed and latency, important in parts of finance. Then there’s speed of delivery, because other areas evolve quickly and time-to-market is critical.

“Our human wrapper may at first pass come across as a little slowed down. Maybe it is. But [Erickson] has a good analogy about one of the dangers of AI: you can end up going really fast in the wrong direction. By the time you look up, you’re way off base and have to backtrack.“

What about AI in your sector do you think is overhyped?

Dolan: “The hype around the ease of use of AI and the democratization of enterprise software delivery — that ‘anybody could do it now, it’s all being done by machines’ — is another idea that could prove costly in the long run.

“This do-it-yourself reaction is dangerous for clients, and for trust in the overall AI benefit, which is real. We compare it to the beginning of offshoring 20, 30 years ago: a golden idea that was going to cure everything. A lot of firms did it thoughtlessly, thinking it’s just labor arbitrage, and it almost inevitably failed. That all-or-nothing mentality missed that offshoring is an amazing way of getting better value for your dollar, but it has to be done thoughtfully, so the delivery process — the thing that ties it all together — stays unsevered.

“We’re seeing that now. I’ve heard, ‘We’ll just push a button, the machine’s building the system.’ The machine is not building the system. It might be writing the code, the story, running the tests.

The system is built by a team of engineers you bring in and trust. My fear is that people will say, ‘We don’t need this vendor or this technology team. I’ve got a product team. They might not be able to code at all, but they know the business,’ and it fails dramatically. 

“Then people say, ‘We played with AI, it’s not ready yet,’ and throw it all away. One of the best things we can do is ensure clients know the benefit is real.“

Erickson: “The hype can be summed up in a single phrase: vibe coding. That has done AI a massive disservice, because there’s a huge difference between vibe coding and enterprise software development, and some of the loudest proponents of AI are too latched on to it. In our industry, the only way to succeed would be a stable of unicorns. It just doesn’t scale. I get perturbed when our people internally refer to AI tooling as vibe coding; if they think that’s what they’re doing, they’re misunderstood.“

When you engage clients at different levels of AI maturity, how do you get them to a understand what works?

Dolan: “95% of our take on an agentic approach is in line with everyone else’s, but that 5% matters, especially in requirements discovery, in who’s giving the requirements and how they’re thought of. It can set you up for dramatic errors, given the speed at which you’re moving.

“There’s a dangerous human tendency we’re seeing among clients to try and cut corners at the start of a project and — in lieu of having deep, expert driven discovery sessions — just summarize what they may want using AI.

“We would hope our clients are collaborative, everyone understanding it’s early days. If a client insists on doing something we feel strongly against, like a product owner completely owning everything right up to code generation, that’s an issue we have to either push back strongly on or step out of the accountability for.“

AI body shops — LLM providers and giant consultancies — are emerging to help enterprises deploy AI. Does that model work?

Dolan: “Whether you’re partnering with an LLM or with an AI-first, generic software provider — ‘Hey, we’re not industry guys, but we know AI delivery’ — you end up, if you’re a bank or a broker-dealer, saying: ‘All right, we know our business, these guys know the AI side of it. What could go wrong? Put us together and we’ll have quality engineering.’

“The problem is what you miss: the know-how of putting industry and technical expertise together and actually delivering financial services systems. The people working at the generic delivery firms, whether an AI-only firm or a body shop somewhere, don’t have that capability.“

Does AI change the economics for smaller consultancies like yours competing against the big firms, and does it cut both ways?

Dolan: “Over our 15 years pre-AI, there were two recurring reasons we’d lose a project. One: ‘We’d love to work with you guys, given your subject matter expertise, but the costs just aren’t there compared to my budgets. I’m being forced to go to a body shop or an [offshore] delivery center.’ The other side of that coin: ‘We love your capabilities, but you’re a firm of 230 people and I need 300, 400 people.’

“AI changes the options for clients. You don’t have to sacrifice the niche vendor who knows your space just because you need a larger team or a cost target. AI levels the playing field and should allow smaller firms to compete with the larger, big-box generic firms, the Accentures of the world.“

Erickson: “It redefines what scale means. You can look at velocity as a measure of your cost to deliver, not a rate card. Scale can’t be defined in terms of headcount anymore. It’s got to be defined in terms of output.

“There’s a threat in it, too. If you’re an Accenture with hundreds of thousands of low-cost software engineers, how do you train all those people? I feel for them. But for us, a couple hundred people with a specific domain focus, it’s a huge opportunity.“

How has the profile of the people you and others hire changed with this agentic process?

Erickson: “You’re still looking for people with strong engineering and design backgrounds, and communication skills, because they interact across the software development lifecycle more than in the past.

“Many take too much joy in typing out perfect code. Sorry, I don’t need you writing for-loops and classes anymore. I need you reviewing them, understanding them, operating at a higher level. That’s a different kind of person: an engineer, not a programmer or a coder. On the [business analyst] side it’s similar: people took great pride in detailed user stories covering every path. Now it’s conversations, prompts, reviewing output — less doing, more interacting.

“More than ever, they have to be interested in the domain. They can’t just be, ‘I want to learn everything there is to know about Java.’ That’s too narrow. They don’t have to be an expert; they have to be interested. In our case, capital markets is a specific niche. The biggest challenge is getting familiar with the tools — finding time, while delivering for customers, to ramp up and make the mistakes you need to without jeopardizing projects.“

What about governance? Who’s keeping AI delivery and its costs under control?

Erickson: “This is evolving rapidly. People aren’t sure how to put governance around this. The most obvious is financial governance. People are starting to get hefty bills. One of our clients spent a million dollars on tokens over the last eight weeks alone. Sticker shock. The token-maxing policies are starting to show their flaws. It’s wild west still: learn on the fly, then figure out what needs to be governed.“

Are CIOs actually opening their wallets? And when they do, what’s the smarter way to invest?

Erickson: “There’s still a lot of caution. Forecasts keep going down on how long something should take. So: ‘I could wait three months and maybe still get it delivered by the same date someone’s promising me now, but for half the price. I’m going to wait and see when equilibrium is met.’ We haven’t seen the wallets open up like crazy — it’s slow adoption.“

Dolan: “One of our clients is looking at it from a productivity-boost perspective: instead of doing the same for less, I can do much more for the same. AI lets clients pull the trigger on things they wouldn’t have in the past — projects that might not have been approved pre-AI, where the costs have come down to a point that’s palatable with the business.“

Erickson: “And that’s the story we’re hoping to hear more of. There isn’t a huge cost anymore to exploring a business opportunity. The time and money that would have gone to a return-on-investment study could be spent on a proof-of-concept with AI, and the project done a few weeks later. Maybe [there’s] a hint of things to come, where decisions start being made quicker. 

“There’s a little fear on our side, though: a lot of tiny little projects is tough for a consulting business.“

Dear Microsoft,

I don’t want to have a love-hate relationship with Visual Studio Code, but you’re making it really hard.

Once upon a time, Visual Studio Code was just an editor. You configured it with add-ons to make it do whatever job you needed.

And that was great! I gravitated towards using VS Code for multiple jobs in various languages. I could set up a Python workflow with extensions to add database-wrangling functionality. I could put together an environment for digital book publishing. I could even set up a project for screenwriting! (Yes, I have a screenplay in progress. A man can dream.)

Now, it’s not like all this went away yesterday. I can still do all of the above. But literally every new feature in VS Code these days is all about agents, AI, and LLMs. It makes me wonder if there’s anyone left in the building who is working on the actual editor anymore.

In the release notes for VS Code 1.127, literally every single new feature save one was about agents and AI. Ditto the version before that. The version before that was a little better, but the trend has been clear for some time now: Visual Studio Code is fast becoming an agent front end first, and everything else is a distant second.

One argument I’ve heard is that VS Code is now a mature project. Because there just isn’t much left to be done to improve the core, you have directed your attention towards other features that will attract new users. And because agent-and-AI mania is still burning through the enterprise (and everyone’s budgets), agent-and-AI features are the order of the day.

But do these features really need to be IDE-level features? Instead of drastically retooling VS Code to support agents, and making AI features native elements of the IDE, shouldn’t the real mission be to support VS Code’s native extensibility? After all, VS Code was built to be extended, and thousands of AI add-ons — including GitHub Copilot and dozens of your own extensions — already take advantage of that.

Is all this really about what AI features VS Code can support natively, or is it more about making VS Code a default first point of contact for agents and AI — specifically GitHub Copilot? Is this less about developer convenience, and more about guaranteeing — however obnoxiously — that agents and AI tools always have a central place in VS Code?

Whatever the goal is, if you think every VS Code user wants an “agentic development environment” instead of an IDE, I think you’re dead wrong.

No doubt AI tools are here to stay. But I do think they will experience a reckoning. Frontier models that do everything and six more things on top of that are becoming of real use only to the big vendors who stick API tollbooths in front of them and construct wetland-devouring data centers the size of the Vegas strip to power them. The future looks more like smaller, locally-hosted models that handle highly specialized tasks and require far fewer resources to train, deploy, and serve. (Even you seem to be moving in that direction, with the Aion on-device models.)

The deeper we go into that reckoning, the less it makes sense to have cart-before-the-horse arrangements like VS Code’s native AI features. How long before these features get hoisted back out of VS Code and moved to an add-on (albeit one we get nagged to install every time we fire up our IDE)? Sooner rather than later, I’d bet.

Still, until that fine day comes, I’m resigning myself to the idea that my current favorite editor will be stuffed with more and more AI features, whether or not they even make sense in my use case, for a long, wearying time to come.

At least I can turn all that stuff off. For now.

As I was writing this (in VS Code, no less), I got an update to VS Code 1.128. There’s one nice feature in there I could see myself using quite widely: the ability to register OS-level keyboard shortcuts. But the rest? All AI, all agents, all the time.

Last year Anthropic gave away one of the most successful things it has ever built. And, no, I’m not talking about Claude. I’m referring to MCP, the now ubiquitous Model Context Protocol, which Anthropic donated to the Linux Foundation’s new Agentic AI Foundation⁠. At the time, MCP was pulling nearly 100 million monthly SDK downloads across more than 10,000 active servers⁠, prompting the question as to why any company would give up such a popular piece of technology.

Google did much the same months earlier, handing its Agent2Agent (A2A) protocol to the Linux Foundation⁠ with AWS, Cisco, Microsoft, Salesforce, SAP, and ServiceNow signing on as founding members. OpenAI, not to be outdone, supports remote MCP servers in its Responses API⁠, sits on the MCP steering committee, and contributed AGENTS.md to that same foundation alongside its fiercest rival’s protocol.

It’s like Game of Thrones, except the principal AI powers seek regime change through seeming acts of beneficence rather than violence. For those who have been around for a while, it’s also entirely predictable, following a similar script we’ve seen in the cloud, on-premises servers, and more. Platform companies don’t give away technologies they’ve stopped caring about. They give away technologies they no longer need to own because competitive advantage has shifted to new ground.

What does this mean for AI?

Gravity has shifted before

Google has long been an exceptionally active contributor to open source. As I wrote in 2017, Google wasn’t open sourcing TensorFlow and Kubernetes out of generosity but rather turning these open source assets into on-ramps for Google Cloud. Google was playing catch-up to AWS and Microsoft. As then Google product manager Martin Buhr said, the company hoped to “create a gravity well in the market for container-based apps [so] that a significant percentage of them will end up with us.”

In other words, platform companies routinely commoditize one layer of the stack so they can compete somewhere they hold a stronger hand.

GitHub may be an even better example. Git is open. Anyone can host a Git repository and, once upon a time, different companies did just that. Yet GitHub became the default place software development happens for millions of developers. Nobody pays for Git, but lots of people pay for GitHub. We’re seeing this same phenomenon play out in AI.

Trading contributions for control

Anthrophic and OpenAI have both pretended at being all for humanity’s good, but that’s not a good explanation for why they’re racing to give away things like MCP. The deeper reason is that the model itself has turned out to be a poor place to build a lasting moat, and they’re trying to figure out what’s next. As I pointed out recently, the frontier model leaderboards change almost weekly. As such, enterprises shouldn’t build their AI strategy around the assumption that any one vendor will remain permanently ahead on model quality. Instead, as I suggested, AI may be sexy, but the “dull reality” is connecting those models to enterprise data, workflows, etc.

The AI companies understand this better than anyone. Sure, they’ll continue spending billions training ever more capable models because frontier models attract developers, generate headlines, and open enterprise doors. But they’re also quietly acknowledging that benchmark leadership alone doesn’t create a durable platform.

Developers return to the places where their tools, workflows, teammates, and accumulated work already live. Enterprises double down on the systems where their data, permissions, governance, and business processes are already connected. Every new integration makes that destination a little harder to leave, and every new workflow increases its pull. That’s what MCP, A2A, etc., are all about: increasing gravity around the models.

Every major AI company wants to become the place where AI-assisted work naturally happens, and they’re now amassing armies of forward deployed engineers and trying other means to get legacy infrastructure to tie back to their frontier models. The enterprise incumbents want the same thing, but from the opposite direction. They don’t need to own the frontier; instead they need to connect the frontier to the systems that already safely run the business.

That’s why I’m skeptical whenever someone confidently predicts that AI will sweep away enterprise software. I’ve seen this movie before. Developers absolutely live on the frontier, but enterprises don’t. Enterprises create value by connecting new capabilities to decades of accumulated applications, data, policies, and business processes. The newest model matters, and so does the newest agent framework. But neither creates much business value until it’s connected to customer records, financial systems, supply chains, HR data, and everything else enterprises already depend on.

That’s where incumbents still possess enormous gravitational pull. My employer, Oracle, certainly believes so, just as Microsoft, SAP, Salesforce, and ServiceNow do. (Disclosure: I run developer relations at Oracle, which participates in the Agentic AI Foundation.) Ironically, open protocols strengthen that position rather than weaken it. If every model can speak MCP and every agent can interoperate through common standards, enterprises gain the freedom to adopt whichever frontier technology looks best without rebuilding every integration. The protocol becomes interchangeable.

Open standards don’t stop gravity

None of this diminishes the importance of open standards. MCP succeeded because it solves a genuine problem. Developers shouldn’t have to build a custom connector every time an AI application needs access to a database or other business system. Neutral governance also matters because nobody wants foundational infrastructure controlled by a direct competitor. But we shouldn’t confuse open interfaces with open markets.

An enterprise may find it easy to swap one MCP-compatible model for another while still remaining deeply dependent on the place where its prompts, evaluations, security policies, and employee habits have accumulated. Again, we’ve seen this before. Kubernetes made workloads dramatically more portable without making AWS, Azure, and Google Cloud interchangeable. SQL has been standardized for decades, yet databases remain fiercely differentiated businesses. Standards reduce friction, but they rarely eliminate competitive advantage. They simply move it.

In like manner, Anthropic, Google, OpenAI, and others are happily standardizing how models, agents, tools, and enterprise systems communicate because they don’t expect the connection itself to determine the winner. Instead they expect to win by becoming the place where AI-assisted work naturally accumulates. Along the way, we’re going to see copious quantities of code given away, increasing developer productivity for all and outsized financial bonanzas for a few. Game on.

In one ransomware response I observed, the master operational dashboard remained green while the underlying environment told a very different story. It was a classic example of what we in the IT audit profession call the “watermelon effect”—green on the outside, red on the inside.

Beneath that dashboard sat an unmapped web of legacy technical debt, undocumented service accounts and shadow cloud instances. For years, presenting a green dashboard to the audit committee could give technology leaders a false sense of comfort. If a catastrophic breach occurred, it was generally treated as an unpredictable operational tragedy, managed via cyber insurance, a carefully calibrated public relations pivot and perhaps a quiet executive transition.

Today, that corporate shield is thinner than many technology leaders assume. For technology leaders in regulated or public-company environments, executive exposure is no longer only a theoretical debate. The regulatory environment has made plausible deniability much harder to sustain.

The erosion of the corporate shield

With the application of the European Union’s Digital Operational Resilience Act (DORA) for financial entities, alongside the broader NIS2 Directive for essential and important entities, cybersecurity governance has become harder to separate from board-level oversight. DORA places ultimate responsibility for ICT risk management on the management body of financial entities, while NIS2 requires management bodies to approve and oversee cybersecurity risk-management measures. In the United States, the U.S. Securities and Exchange Commission’s cybersecurity disclosure rules require public companies to disclose material cyber incidents and describe their cyber risk management, strategy and governance in annual filings. The new burden is not simply to operate controls; it is to show, after the fact, that leadership decisions matched the risk evidence available at the time.

The serious risk to a modern CIO is not simply the occurrence of a sophisticated security incident. The true danger is the inability to reconcile what leadership presented externally to investors, regulators and the board with what the internal evidence showed inside the environment.

When a serious crisis breaks, you may find yourself surrounded by corporate defense counsel, regulatory investigators and outside forensic lawyers all asking variations of the same uncomfortable questions: What did you know, when did you discover it and what specific actions did you take next?

When those questions are asked, a slide deck asserting that your security posture is “aligned with industry best practices” will not be enough. A post-incident review may recognize that sophisticated attacks occur. What creates greater exposure is evidence that known risks were ignored, understated or left outside structured governance. To survive that level of post-incident review, one of your strongest assets is a disciplined, independent evidence trail showing that risks were identified, challenged, escalated and acted on before the first indicator of compromise appeared.

Why point-in-time comfort letters fail regulatory scrutiny

The reality we face is that legacy compliance evidence often falls short under regulatory scrutiny. For years, the annual SOC 2 Type II report or a standardized ISO 27001 certification was brandished by technology teams as the definitive proof of a functional control environment. I have sat in dozens of scoping meetings where an engineering director pointed to a freshly minted compliance report as if it were a complete defense against scrutiny.

But a compliance report is a historical artifact—a retrospective evaluation of how specific controls operated during a defined window of time months in the past. It tells an investigator that on a random afternoon in Q2, your production change-management approvals conformed to a baseline policy. It says absolutely nothing about the configuration drift, unauthorized API keys or emergency patch bypasses that developers introduced the following weekend to hit a product release deadline.

Modern regulators, boards and investors are no longer satisfied by historical comfort letters alone. Under contemporary frameworks, especially regimes focused on operational resilience, static compliance evidence is no longer enough. The expectation of due care has shifted from a passive state of compliance to an active state of continuous challenge. Increasingly, post-incident reviews look for evidence that leadership identified system vulnerabilities, formally escalated material deficiencies, evaluated systemic risk to the business and tracked remediation progress with measurable rigor.

When an architecture fails, post-incident reviews often focus quickly on ownership, escalation and whether known risks were acted upon. If your defensive documentation consists entirely of static policy documents and green dashboards, you leave an evidentiary vacuum that can invite difficult questions about executive oversight. Post-incident reviews rarely turn on perfection. They turn on whether the organization can show a traceable chain of governance.

5 non-negotiable artifacts for your executive evidence engine

This reality requires a complete reframing of your relationship with your IT audit department. Historically, this dynamic has been defined by friction. Technology leaders frequently view my peers and me as compliance traffic cops—bureaucrats who interrupt core engineering sprints to demand evidence samples, user access reviews and system configurations.

It is time to view IT audit through a pragmatic lens: we are your independent evidence engine. We are one of the few corporate functions tasked with independently challenging your control environment, documenting where exceptions were escalated and showing how management responded. When an auditor identifies a control gap and partners with you to draft a management action plan, they are not creating a bureaucratic roadblock. They are helping you construct an evidence trail that can show risk was identified, escalated and acted upon.

To transform your IT audit function into an effective executive shield, you must shift focus away from superficial check-the-box exercises and collaborate on specific artifacts. The most effective exercise you can run with your audit leadership is to flip the timeline completely and ask: if this program were reviewed six months from now, which evidence would show we governed the risk before it failed?

1. Board-facing risk registers with escalation history: A risk register that sits unreviewed on an intranet page for 12 months is not a management tool; to an investigator, it can look like evidence that known risks were not actively governed. Your material technology, cybersecurity and dependency risks must be centrally logged. More importantly, this artifact must contain a clear, chronological escalation history showing exactly when the risk was presented to leadership committees and the board, along with related minutes, decisions or follow-up actions.
2. Granular risk acceptance records: You cannot remediate every vulnerability instantly. Business continuity, legacy software limitations and budgetary boundaries require you to accept certain operational exposures. When this occurs, ensure your risk acceptance records are airtight. A defensible record must document the specific technical variance, the precise financial or operational rationale for the delay, a definitive expiration date, explicit executive sign-off and the active compensating controls deployed to reduce the blast radius in the interim.
3. Tabletop and operational simulation records: Independent frameworks such as ISACA’s Digital Trust Ecosystem Framework can help structure this evidence, but boards and regulators will still look for proof that the testing actually happened. Your audit trail should contain comprehensive records of cyber incident, disaster recovery and third-party dependency simulations. These records must detail the scenario tested, the executive participants, the control failures identified during the drill and a formalized tracking schedule showing when those gaps were closed.
4. AI governance inventories and data-flow mappings: The rapid deployment of generative AI tools across enterprise operations has created a massive blind spot for technology executives. In one audit, we found developers using an unapproved public large language model to accelerate debugging with sensitive internal code. To protect yourself, work with your audit team to build an active enterprise AI inventory that maps data lineage, identifies model business owners, documents risk classification approvals and demonstrates active technical monitoring for unauthorized data exfiltration.
5. Synchronized disclosure-control handoffs: When a material security incident or system outage occurs, the clock begins ticking for regulatory reporting. Your incident response playbook must be technically linked to your corporate disclosure controls. The audit trail should show that a documented, synchronized handoff occurred between your technical response leaders, general counsel, chief financial officer and corporate communications team. This evidence helps show that your external statements match internal technical realities.

In the modern corporate ecosystem, technology leadership is no longer just an engineering challenge; it is an exercise in rigorous, evidence-based governance. The regulatory landscape has changed, and the expectation of continuous traceability cannot be avoided.

Open and direct collaboration with your IT audit team will not prevent a zero-day exploit, an unexpected cloud outage or a critical third-party vendor failure. That is not the purpose of enterprise risk management.

The true value is far more practical: when a serious incident puts your program under review, you will not be forced to defend your reputation with a feeling, an unverified assumption or a misleadingly green dashboard. Instead, you will have an independent record showing that risk was actively seen, appropriately challenged, properly escalated and responsibly managed. In today’s regulatory environment, that disciplined trail of evidence may be the difference between a failure that can be explained and one that begins to look negligent.

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The European Union is stepping up its actions against US tech giants under the Digital Markets Act, which is intended to ensure fair competition between digital platforms. On Thursday, the European Commission issued two rulings to limit Google’s dominance.

The Commission ordered Google to open up the Android operating system to AI assistants other than its own Gemini, ensuring that they had the same access to applications and operating system services. A second ruling ordered Google to share search data that only it is big enough to collect with other search engines.

Google has hit back at the measures, warning that they could create security issues for users. “Today’s decisions risk undermining vital privacy and security guardrails for millions of Europeans. We have repeatedly offered solutions to safeguard users while satisfying the DMA’s goals, but these rulings discount extensive evidence of user harm,” said Kent Walker, Google’s President of Global Affairs, in a company blog post.

The EU move doesn’t just cause problems for Google but for CISOs as well, warned Roman Stanek, CEO of Good Data AI. “Enterprise security has always leaned on a simple assumption, that apps are boxes, and the OS decides what crosses the box. But once multiple agents get equal system-level reach, access to screen context, cross-app actions, background execution, that assumption breaks.

“CISOs need to stop treating ‘AI assistant’ as a single, well-understood permission and start treating it as a category risk, one they have to govern like they govern app stores and MDM policies today. That requires device policies that name which agents can hold system-level permissions, not just which apps are installed. It means DLP and conditional access rules that account for an agent reading and acting on data, not just an app requesting it.,” he said.

This article first appeared on Computerworld.

The European Union is stepping up its actions against US tech giants under the Digital Markets Act, which is intended to ensure fair competition between digital platforms. On Thursday, the European Commission issued two rulings to limit Google’s dominance.

The Commission ordered Google to open up the Android operating system to AI assistants other than its own Gemini, ensuring that they had the same access to applications and operating system services. A second ruling ordered Google to share search data that only it is big enough to collect with other search engines.

Google has hit back at the measures, warning that they could create security issues for users. “Today’s decisions risk undermining vital privacy and security guardrails for millions of Europeans. We have repeatedly offered solutions to safeguard users while satisfying the DMA’s goals, but these rulings discount extensive evidence of user harm,” said Kent Walker, Google’s President of Global Affairs, in a company blog post.

The EU move doesn’t just cause problems for Google but for CISOs as well, warned Roman Stanek, CEO of Good Data AI. “Enterprise security has always leaned on a simple assumption, that apps are boxes, and the OS decides what crosses the box. But once multiple agents get equal system-level reach, access to screen context, cross-app actions, background execution, that assumption breaks.

“CISOs need to stop treating ‘AI assistant’ as a single, well-understood permission and start treating it as a category risk, one they have to govern like they govern app stores and MDM policies today. That requires device policies that name which agents can hold system-level permissions, not just which apps are installed. It means DLP and conditional access rules that account for an agent reading and acting on data, not just an app requesting it.,” he said.

We are inundated with promises that artificial intelligence will save us and that the next governance framework will protect us. Buy this platform, adopt that model and the hard part finally gets easier. After 15 years in this field, I have wanted that shortcut as much as anyone.

But both promises are downstream of something neither one can produce. You cannot automate trust between two people. You cannot govern your way to a relationship. As AI moves into the core of how organizations operate, and accountability stops mapping cleanly to the org chart, what holds when the stakes are highest is not the platform or the policy. It is two human leaders who know each other well enough to carry the weight together.

I think about this often now, a year after publishing a book about the pressures bearing down on security leaders, “The CISO On The Razor’s Edge: Leading Cybersecurity When The System Is Designed To Break.” The partnership between the CIO and the CISO is the last human relationship in cybersecurity. AI raises the stakes. Governance sets the floor. The relationship is what holds.

I saw it work once, up close. When I worked in Washington State, the CIO, Bill Kehoe, talked to his CISO, Ralph Johnson, every day. Weekends included. Not because a policy required it, but because the mission did. That partnership is a large part of why the role stayed sustainable for them when it broke so many others.

The promise we keep believing

Walk any conference floor and you will hear the same pitch in a hundred variations. The next AI layer will close the gap. The next framework will lock down the risk. The technology is usually ready. The organization is not. I have watched too many well-funded programs stall to still believe the tool is the answer, and almost every time, the breakdown traced back to leaders who were not aligned before the work began. A framework run by misaligned leaders inherits the misalignment. You can buy the best controls on the market and still watch them fail when two leaders work from different assumptions about who owns what.

Bill and Ralph understood this. Security decisions were not handed to Ralph after the fact to bless or block. They were made with him, inside the technology decisions, because the two had already agreed on what mattered. That is not governance. That is leadership creating the conditions in which governance can work.

It is the real lesson I came to in the book. Technical knowledge matters, but it is not enough. As I wrote then, “Influence, trust and internal relationships are non-negotiable.” Without influence, CISOs cannot lead. Without technical substance, they cannot prioritize what matters. And without partnership, especially with their CIO, “they’re operating without a safety net.”

AI does not change that truth. It raises the cost of ignoring it.

When decisions move at machine speed

The ground under both roles is shifting. Work no longer flows through people alone. It moves across people, platforms, partners and agents at the same time, and it moves fast. Decisions that once waited for a meeting now form in seconds. The org chart, built for an era when humans did the work and reporting lines explained accountability, struggles to keep up.

This is where the partnership stops being a nicety and becomes infrastructure. When decisions form at machine speed, the human escalation path has to be instant. There is no time to negotiate a relationship in the middle of an incident. Either the trust is already there, built in the quiet stretches before anything goes wrong, or it is not there when it counts.

I asked Bill what he would lose if his daily calls with Ralph dropped to once a week. His answer cut straight to it.

“Cyber does not rest,” he told me. “It is active and dynamic and requires 24/7/365 attention.” Drop to a weekly check-in, he explained, and “I am treating the CISO like any other executive position.” For Bill, AI only raises the stakes on that daily contact. “Relationships and partnerships between the CIO and CISO will never die due to AI,” he said. “I can’t even imagine a scenario where I don’t talk to my CISO on a daily basis including weekends to discuss the latest risks and vulnerabilities or news on potential AI attacks.”

That is the point most of the market misses. A platform can flag the anomaly. It cannot decide what the organization is willing to risk, who carries that decision or how two leaders stand behind it together. The faster the machines move, the more the partnership has to already be in place.

The loneliest seat in the building

There is a reason some now call the CISO job the least desirable role in business. The seat carries enormous accountability and rarely the authority to match. As one security leader put it, the pressure has never been higher and the control has never felt lower. People are burning out and walking away from a role that has never mattered more.

Here is the hard part. There is no log file for burnout. No alert fires when the weight finally exceeds the leader. That drain is invisible right up until it is not, and it raises organizational risk as surely as any unpatched system. The structural fixes the industry debates are all real and all slow.

The fastest source of relief available to a CISO is not a framework. It is a CIO who treats the relationship as a daily partnership rather than a line on a chart. An isolated CISO is a vulnerability. A partnered one is an asset.

You see what that partnership is worth in the worst moment. I asked Bill what it looks like when an incident hits and public trust is on the line. He did not reach for a tool.

“I am accountable as CIO to everything that occurs in the state from a technology lens including cyber,” he said. When a severe incident hits, the call comes to him from agency leadership or the Governor’s Office. Then he follows the plan, but never alone: “I will be in constant contact with the CISO on the details of the incident.”

That is the safety net made real. The CISO is not carrying the mission alone at the moment it matters most. On the razor’s edge, leadership keeps you upright. Partnership keeps you in the fight.

The work no tool will do for you

In my advisory work, I sit with C-suite leaders who share values and still cannot find alignment. The barrier is rarely disagreement. It is that they are not communicating clearly or often enough to build the trust that alignment requires. I have watched negotiations that could only happen by proxy, over email, because two capable leaders had stopped talking directly.

I recently sat in an hour-long discussion where alignment and shared values were present the whole time. It did not become clear until the final fifteen minutes. That is what real alignment costs: patience, persistence and a stubborn commitment to clarity. If leaders cannot do that work themselves, no AI model or governance tool will do it for them.

This is why I stand up an AI review board for the organizations I work with and host the leadership conversations that decide whether a company’s AI ambitions thrive or stall. The board itself matters less than what it provides: neutral ground, a regular cadence and an agenda that forces the hard issues into the open before a crisis forces them. If your organization has no venue like that, that absence is its own form of dysfunction. The cadence is what makes communication effective. Not easy. Effective.

Build the bond on purpose

You cannot framework your way to trust. But you can build it deliberately, and that is a leadership act, not a governance one. The partnership and stakeholdering skills that once looked like soft extras are now the core executive work. A few moves matter most:

• Set a standing contact rhythm with your counterpart before you need one, daily or near-daily, not quarterly
• Make decision rights and accountability explicit while it is calm, so no one improvises them mid-incident
• Translate security into business outcomes together, so the board hears one aligned voice

Build the relationship as deliberately as you would build any critical control, because that is what it is. If you cannot connect the partnership to outcomes the business actually feels, you have a friendship, not a performance lever.

A year after writing “The CISO On the Razor’s Edge,” I am even more convinced that strong leadership precedes effective governance and partnership precedes them both. This is the good news, not the hard news. The CIO and CISO who build real trust do not just reduce risk. They move faster than their competitors, because they spend no energy fighting each other. They earn the board’s confidence, because the board hears one clear voice. And they unlock the AI strategy everyone else is still struggling to govern, because they have already done the human work that makes governance hold.

That is the upside waiting on the other side of this relationship. AI will keep advancing. Governance will keep maturing. But the organizations that win the next decade will be the ones where two leaders decided the partnership was worth building before they needed it. Bill and Ralph knew it every day, weekends included. The edge is there for anyone willing to do the same.

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As AI use ratchets up, demand for data center capacity is higher than it’s ever been. But New York State is telling the industry: Not so fast.

New York Governor Kathy Hochul this week signed an Executive Order described as the “nation’s first moratorium” on new hyperscale data centers, massive factories that typically comprise thousands of servers devouring tens or hundreds of megawatts of power.

During this up to one year pause, the state will halt issuance of environmental permits for data centers as it develops a regulatory framework to protect ratepayers, the energy grid, the environment, and local communities.

Like other states, New York is seeing “unprecedented” demand for data center development that would ultimately require “massive amounts” of energy and water, Hochul noted. And community backlash seems to be accelerating at the same pace.

This is “a symptom of a bigger, nationwide issue,” said Matt Kimball, VP and principal analyst for data center technologies at Moor Insights & Strategy. “Compute demand is far outpacing the grid,” prompting state and local leaders to pause and figure out how to manage things more effectively.

Creating a blueprint for local development, community support

New York already requires data centers to pay more for energy, or to supply their own, to keep costs affordable for residents. Hochul also plans to pursue legislation that would repeal sales tax exemptions for massive data centers already existing in the state.

During the moratorium, New York will develop a “Generic Environmental Impact Statement” (GEIS) to assess the potential environmental impacts of data center construction and operation, including their water and energy demands and impact on air quality. Once it’s lifted, new data center projects will only be allowed to proceed if they strictly observe state, zoning, and other local approvals.

On a shorter 60-day timeline, the state will issue a Community Investment Framework (CIF) to provide guidance to local governments negotiating large-scale data center deals, and to ensure operators are investing in and partnering with host communities and workforces. This will set standardized expectations for projects and establish baseline thresholds for data center operators’ investment into local communities.

Notably, New York is proposing a contribution of $1 million per megawatt (MW) of anticipated utility demand per project. Thus, 50 megawatts of use would require data center operators to reinvest $50 million into their host community; 400 megawatts would require $400 million.

The framework will include ‘Good Neighbor Commitments’ around landscaping, design, and mitigation of noise and light pollution; labor commitments to give organized labor “a seat at the table” to determine wage standards, local hiring, and workforce development; and a community investment fund to support the host community’s “long-term economic vitality and quality of life.”

Data center operators, for instance, could provide direct financial support to host communities, or invest in public infrastructure, housing improvements, workforce development and training programs, or in broadband expansion.

“Having a published playbook for how to make this work across a state versus having to negotiate this on a county-by-county basis should be a win for everybody,” Moor’s Kimball noted.

Separately, New York is also considering establishing a fund that would require data centers to invest in the state’s aging grid infrastructure and support new clean energy procurement.

What enterprises and other states should be watching

Realistically, a data center buildout takes anywhere from 3 to 5 years from the point of site selection to turning on the switch for the first time, Kimball pointed out. The one-year moratorium doesn’t do too much for that.

What matters more is what New York does during that pause, he noted, for example, establishing a regulatory framework to re-price the cost of hyperscale deployment, determining costs for grid upgrades or “bring your own power” expectations, developing requirements for more formalized operator contributions to the local community, or considering the repeal of tax exemptions.

“And really, this subsidizing angle is the biggest,” said Kimball. States across the country have been subsidizing buildouts to get data center business for years. “This could signal the beginning of the end of those subsidies for many states.”

For enterprise IT leaders, the headline is the signal that power and permitting are now “first-order variables” for infrastructure strategies, right alongside cost and latency requirements, said Kimball.

So, if an enterprise’s cloud or co-location strategy or roadmap assumes hyperlocal capacity, that assumption now carries some risk. CIOs and IT leaders should therefore work with providers to gain more clarity on regional capacity.

The moratorium could result in some “border-hopping,” with enterprises hosting local servers in adjacent states like Pennsylvania, Connecticut, or New Jersey, but that’s not likely to be widespread, Kimball noted.

The realistic regional impact will be “more of a slow squeeze rather than a shock,” he said. This could result in tighter colocation availability and firmer pricing in the New York Metropolitan area over the next few years. Cloud providers may also steer new AI capacity to regions like Georgia, Ohio, Texas, and Utah, where power and permitting are more predictable.

An inflection point, but more trickle-down than direct impact

Indeed, noted Jeremy Roberts, senior director for research and content at Info-Tech Research Group, the moratorium is an “inflection point” and a “way to placate an increasingly angry public,”.

People don’t like the fact that, beyond the initial build, data centers don’t create many jobs, they take up a lot of space, they use a significant amount of power and resources, and they can be “noisy and smelly.”

However, the impact of the moratorium is likely going to be “macro” for everyday enterprises, as New York is specifically targeting hyperscale data centers.

“If you were planning on building a data center in New York and your name is not [Microsoft CEO] Satya Nadella, it’s probably not going to affect you,” said Roberts.

But the consequences of the move will certainly trickle down, for instance, with AI device or hardware purchases supplanting software acquisition. Roberts pointed to IBM’s history-making stock plunge this week, which the company attributed to enterprise buyers diverting IT budgets away from software and mainframes to stockpile AI hardware like servers and memory chips to get ahead of anticipated supply issues and price increases.

If enterprises plan to invest in anything that uses storage or CPUs, they will be paying more in the future, Roberts said. “It’s a symptom of a problem you’re going to feel.”

That said, constraints usually inspire innovation; if a hyperscaler can’t build a 50MW data center, it will likely find ways to string together smaller data centers or adapt in other ways. This could “percolate” across the industry, Roberts said. “People are endlessly creative.”

As AI use ratchets up, demand for data center capacity is higher than it’s ever been. But New York State is telling the industry: Not so fast.

New York Governor Kathy Hochul this week signed an Executive Order described as the “nation’s first moratorium” on new hyperscale data centers, massive factories that typically comprise thousands of servers devouring tens or hundreds of megawatts of power.

During this up to one year pause, the state will halt issuance of environmental permits for data centers as it develops a regulatory framework to protect ratepayers, the energy grid, the environment, and local communities.

Like other states, New York is seeing “unprecedented” demand for data center development that would ultimately require “massive amounts” of energy and water, Hochul noted. And community backlash seems to be accelerating at the same pace.

This is “a symptom of a bigger, nationwide issue,” said Matt Kimball, VP and principal analyst for data center technologies at Moor Insights & Strategy. “Compute demand is far outpacing the grid,” prompting state and local leaders to pause and figure out how to manage things more effectively.

Creating a blueprint for local development, community support

New York already requires data centers to pay more for energy, or to supply their own, to keep costs affordable for residents. Hochul also plans to pursue legislation that would repeal sales tax exemptions for massive data centers already existing in the state.

During the moratorium, New York will develop a “Generic Environmental Impact Statement” (GEIS) to assess the potential environmental impacts of data center construction and operation, including their water and energy demands and impact on air quality. Once it’s lifted, new data center projects will only be allowed to proceed if they strictly observe state, zoning, and other local approvals.

On a shorter 60-day timeline, the state will issue a Community Investment Framework (CIF) to provide guidance to local governments negotiating large-scale data center deals, and to ensure operators are investing in and partnering with host communities and workforces. This will set standardized expectations for projects and establish baseline thresholds for data center operators’ investment into local communities.

Notably, New York is proposing a contribution of $1 million per megawatt (MW) of anticipated utility demand per project. Thus, 50 megawatts of use would require data center operators to reinvest $50 million into their host community; 400 megawatts would require $400 million.

The framework will include ‘Good Neighbor Commitments’ around landscaping, design, and mitigation of noise and light pollution; labor commitments to give organized labor “a seat at the table” to determine wage standards, local hiring, and workforce development; and a community investment fund to support the host community’s “long-term economic vitality and quality of life.”

Data center operators, for instance, could provide direct financial support to host communities, or invest in public infrastructure, housing improvements, workforce development and training programs, or in broadband expansion.

“Having a published playbook for how to make this work across a state versus having to negotiate this on a county-by-county basis should be a win for everybody,” Moor’s Kimball noted.

Separately, New York is also considering establishing a fund that would require data centers to invest in the state’s aging grid infrastructure and support new clean energy procurement.

What enterprises and other states should be watching

Realistically, a data center buildout takes anywhere from 3 to 5 years from the point of site selection to turning on the switch for the first time, Kimball pointed out. The one-year moratorium doesn’t do too much for that.

What matters more is what New York does during that pause, he noted, for example, establishing a regulatory framework to re-price the cost of hyperscale deployment, determining costs for grid upgrades or “bring your own power” expectations, developing requirements for more formalized operator contributions to the local community, or considering the repeal of tax exemptions.

“And really, this subsidizing angle is the biggest,” said Kimball. States across the country have been subsidizing buildouts to get data center business for years. “This could signal the beginning of the end of those subsidies for many states.”

For enterprise IT leaders, the headline is the signal that power and permitting are now “first-order variables” for infrastructure strategies, right alongside cost and latency requirements, said Kimball.

So, if an enterprise’s cloud or co-location strategy or roadmap assumes hyperlocal capacity, that assumption now carries some risk. CIOs and IT leaders should therefore work with providers to gain more clarity on regional capacity.

The moratorium could result in some “border-hopping,” with enterprises hosting local servers in adjacent states like Pennsylvania, Connecticut, or New Jersey, but that’s not likely to be widespread, Kimball noted.

The realistic regional impact will be “more of a slow squeeze rather than a shock,” he said. This could result in tighter colocation availability and firmer pricing in the New York Metropolitan area over the next few years. Cloud providers may also steer new AI capacity to regions like Georgia, Ohio, Texas, and Utah, where power and permitting are more predictable.

An inflection point, but more trickle-down than direct impact

Indeed, noted Jeremy Roberts, senior director for research and content at Info-Tech Research Group, the moratorium is an “inflection point” and a “way to placate an increasingly angry public,”.

People don’t like the fact that, beyond the initial build, data centers don’t create many jobs, they take up a lot of space, they use a significant amount of power and resources, and they can be “noisy and smelly.”

However, the impact of the moratorium is likely going to be “macro” for everyday enterprises, as New York is specifically targeting hyperscale data centers.

“If you were planning on building a data center in New York and your name is not [Microsoft CEO] Satya Nadella, it’s probably not going to affect you,” said Roberts.

But the consequences of the move will certainly trickle down, for instance, with AI device or hardware purchases supplanting software acquisition. Roberts pointed to IBM’s history-making stock plunge this week, which the company attributed to enterprise buyers diverting IT budgets away from software and mainframes to stockpile AI hardware like servers and memory chips to get ahead of anticipated supply issues and price increases.

If enterprises plan to invest in anything that uses storage or CPUs, they will be paying more in the future, Roberts said. “It’s a symptom of a problem you’re going to feel.”

That said, constraints usually inspire innovation; if a hyperscaler can’t build a 50MW data center, it will likely find ways to string together smaller data centers or adapt in other ways. This could “percolate” across the industry, Roberts said. “People are endlessly creative.”

This article originally appeared on NetworkWorld.

Chinese tech giant Huawei is reportedly entering the DRAM manufacturing business in a bid to cash in on the insane profitability of memory sales.

Three firms – Micron Technology, SK hynix, and Samsung Electronics — account for 95% of the DRAM on the market worldwide. The rest is small players, mostly in China. One of them, CXMT, is gearing to make a run for the market and try and take a little bit of their business. But it is a small player, especially compared to Huawei.

Huawei’s strategy is complex. It is working with various entities to circumvent the U.S. trade sanctions specifically targeting it. According to SemiconductorInsider on X.com, the Chinese government and DRAM chip maker Swaysure (formed in 2022) are planning to introduce a DRAM manufacturing plant with a capacity of 140,000 wafers per month.

For perspective, Samsung manufacturers approximately 500,000 wafers per month, and Micron makes about 250,000 wafers per month.

It all fits in perfectly with Beijing’s drive for semiconductor self-reliance uh especially after all of the U.S. sanctions. And it would be US interference, not Huawei’s inexperienced with making memory that will be its greatest challenge, says one analyst.

“Their biggest problem will be tooling up, since the US has a lot of sway over the world’s semiconductor equipment makers, and it’s using that sway to prevent tools from being shipped to China,” said Jim Handy, president of Objective Analysis.

Handy said he hears that Huawei and Swaysure are working to produce DRAM starting at 28nm.  With that process they ought to be able to make 8Gb chips that yield reasonably but he doubts that they will be able to make HBM with that process, though.

Since he doesn’t know how far along they are in the process, Handy doesn’t know when something could come to market.  “They may be on the cusp of shipping something, or they may be a couple of years away, but I don’t think they will wait any longer than that, so let’s say 2028.  If there’s still a shortage in 2028, they are likely to ramp as hard as they can to get to something like 2-5% of the market by 2030.  If the shortage ends before then, they will probably take a much longer time,” he said.