Two New IDC Reports Provide a Framework for Developing a Generative AI Strategy

Generative AI (GenAI) has captured the imagination of business leaders and IT decisions makers around the world, but organizations need guidance as they begin their adoption journey. To help organizations understand how to leverage GenAI technology for business success, two new International Data Corporation (IDC) reports outline the foundational activities associated with GenAI investment, provide guidance on prioritizing use cases, and identify the key stakeholders required to build and implement successful initiatives. The reports also feature a new framework ? the Generative AI Path to Impact ? that explains key activities and elements along the path to business impact.

Before any of the core technologies of GenAI are explored, IDC believes that the following set of key activities needs to be put in place:

• Establish a Responsible AI Policy: This must include defined principles around fairness, transparency, protections, and accountability relating to the data used to train models, as well as how the results are used. A responsible AI policy should also provide transparency on the roles and responsibilities of developers, users, and other stakeholders, while addressing legal and compliance issues.
• Build an AI Strategy and Road Map: A set of defined, measurable, and prioritized GenAI use cases is required to align the organization on the key areas that will deliver the maximum business impact in the short, medium, and long term.
• Design an Intelligence Architecture: Managing the life cycle and governance of data, models, and business context for every use case is critical. The architecture should also include protocols for data privacy, security, and intellectual property protection.
• Reskill and Train Staff: New competencies will be required to build and use GenAI models, such as ?prompt engineers' to write and test prompts for GenAI systems. Every organization must create a new skills map for core AI technologies and business capabilities to deploy GenAI at scale across the organization. Organizations should also build personalized training program for key roles.

Once the key activities are in place, organizations must develop a clear understanding of the core GenAI technologies, as well as their foundation models and capabilities. At the center of any GenAI system is a generative foundation model, including the well-known large language models (LLMs). The game changer in the AI market is the ability for these models to be trained on extraordinarily large amounts of semi-structured and unstructured content and generate new content based on simple prompt requests.

The next step in defining the path to GenAI impact is prioritizing an identified set of use cases. IDC defines a use case as a business-funded initiative enabled by technology that delivers a measurable outcome. There are three broad types of generative AI use cases that need to be assessed:

• Industry: These involve more custom work and, in some cases, may require organizations to build their own generative AI models. Examples include generative drug discovery in life sciences and generative material design for manufacturing. Specialized use cases tend to be built around specific models and model providers, with custom integration architectures designed for individual clients.
• Business Function: These use cases typically involve integrating a model (or multiple models) with corporate data for use by specific departments or business functions, such as Marketing, Sales, and Procurement. Many organizations are already testing these types of use cases but are concerned about intellectual property leakage and data governance.
• Productivity: These use cases are aligned with work tasks, such as summarizing reports, creating job descriptions, or generating Java code. GenAI functionality for productivity improvement is being infused into existing applications, such as Microsoft 360 Copilot or Duet AI for Google. For many of these use cases, business value can be delivered through the content and data that the underlying foundation models have been pretrained on.

Ultimately, GenAI will be widely adopted only if the data, models, and applications that use them are trusted by end users and customers. To achieve this, organizations need to establish a well-orchestrated trust and oversight program to ensure that GenAI technologies can be deployed in a sustainable manner. Organizations and AI vendors must understand the benefits and limitations associated with GenAI use and be prepared to remediate issues while complying with regional data privacy regulations.

Finally, IDC recommends adopting a "three horizons" framework to help organizations transform their business models using GenAI. Horizon 1 focuses on near-term, incremental innovation, followed by disruptive innovation in the medium-term Horizon 2 and long-term business model transformation in Horizon 3. The framework drives alignment across all business domains and helps prioritize key initiatives.

"As the industry moves forward with this fundamental transition to AI embedded into every business and technology function in the enterprise, IDC believes that every CEO will need to have an AI strategy ? and generative AI is the trigger," said Phil Carter, group vice president, Thought Leadership research at IDC. "It is best to get started quickly. We are hopeful that this framework will help every organization develop their own path to impact."

The report, Generative AI: The Path to Impact (Doc #EUR151153223), introduces a framework that framework helps organizations work through the key activities that need to be established, illustrates the core technologies required, and proposes how organizations should think about new use cases to deliver organization impact.

The report, IDC PlanScape: Developing Your Path to Impact with Generative AII (Doc #US51157323), provides business and technology leaders with a background on where GenAI technologies are in their evolution and the set of characteristics needed to develop an AI strategy to transform their business into an AI everywhere future.

About IDC
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,300 analysts worldwide, IDC offers global, regional, and local expertise on technology, IT benchmarking and sourcing, and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly owned subsidiary of International Data Group (IDG), the world's leading tech media, data, and marketing services company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC and LinkedIn. Subscribe to the IDC Blog for industry news and insights.