Inspired by the vast potential of generative AI, many IT and business leaders are concluding the best way to realize the transformative potential of all forms of AI is by handing responsibility to a single leader — a chief AI officer (CAIO). Although AI itself is not new, putting a single individual in charge of it is a novel approach that is becoming mainstream. The first CAIOs are pioneers, staking their skills and expertise on a bet that they can make AI pay for their organizations.
“Because of its pervasiveness and depth, AI has a very large potential for disruption that’s different from previous technologies. This is a significant change moment,” says Rich Wiedenbeck, CAIO of Ameritas, an insurance and financial services company headquartered in Lincoln, Nebraska.
An IDC Quick Poll found that 53% of CIOs said their organization has or plans to have a single AI leader. Of those, nearly half (49%) said that leader will be part of the C-suite executive team.
IDC Quick Poll, September 2023
From CIO to CAIO
Wiedenbeck took on the CAIO’s role at Ameritas in January, shifting from his position as CIO and making room for another executive to take the CIO’s reins. Both Wiedenbeck and the new CIO report to the executive office, consisting of the CEO and the president/COO. Organizationally, Wiedenbeck is a member of Ameritas’ AI steering committee, called the “mission team,” which includes the legal and risk officers, along with the CIO. Reporting to Wiedenbeck is a team of some 20 people, mainly technologists.
In addition to having been CIO, Wiedenbeck’s background includes founding a start-up company focused on emerging technologies. “An understanding of how emerging technologies can be leveraged and used to drive business value is an important characteristic of the job,” says Wiedenbeck. And Wiedenbeck is no stranger to AI. Previously, he had led Ameritas’ efforts in AI, which included using machine learning (ML) to interpret dental x-rays in order to verify coverage.
According to IDC, Wiedenbeck’s background fits the profile of the new position. “A typical candidate for the CAIO role is someone with a proven track record of leading successful innovation programs and with a clear understanding of AI,” says David Weldon, adjunct research advisor with IDC’s Executive Programs (IEP) in IDC PlanScape: Chief AI Officer Role (May 2024). “They should have a vision for transforming the organization with AI, and that includes ensuring that AI is used with ethics and governance in mind. Quite simply, the CAIO will be expected to help champion an AI-first mindset, says Weldon.”
Gaining tangible value
As CAIO, Wiedenbeck’s job is to extract tangible business value from the potentially game-changing technology, not to pursue AI for its own sake. To that end, Wiedenbeck and his team are tackling “unit cost,” or the expense of specific products and services, such as writing a policy, servicing a claim, or handling a customer request. (See IDC PlanScape: Unit-Based Costing to Optimize IT Performance for an exploration of how unit cost can be applied to digital products and services.)
“Since one of the main success needles we want to move is unit cost, we decided that not having AI in the toolkit would be a big miss strategically,” says the CAIO. “The life insurance industry has not been historically focused on pure efficiency, but the cost-per-unit concept is coming into the business.”
In another AI initiative, Ameritas is applying GenAI to its automated agents to make them more human-like, a field known as “agentic” AI. Like unit cost reduction, the agentic AI work is focused on efficiency and productivity. Over time, however, Wiedenbeck aims to go far beyond incremental improvements. “We want to look at the whole end-to-end process, enabled by AI. We want to move from helping you get your work done to rethinking the work,” he says.
And Ameritas is using AI to determine which areas of the business can most benefit from AI. “To aid in prioritization of where to target our work, we are using various diagnostics to give us line of sight on the value and degree of impact. We don’t want to focus on an area where the total cost is $1 million with a 10% efficiency gain and miss an area where the total cost is $25 million with a 2% efficiency gain,” Wiedenbeck explains.
Avoiding risk of bias
In a highly regulated industry such as insurance, where bias, or its perception, could have serious consequences, Ameritas cannot risk blindly handing key decisions to AI algorithms that could yield flawed results due to bad data or poorly constructed models. For example, AI tools could deliver actuarial results that would call for higher premiums for some demographic groups, which might violate corporate fairness commitments. To avoid this risk, Ameritas is not yet applying AI to either underwriting or direct customer interaction. “We need to proceed carefully so there is not unintended bias. We want to make sure the outcome is where we want it to be,” says Wiedenbeck.
Measuring ROI for a sustainable future
To deliver value and assure AI’s importance with the organization, Wiedenbeck recognizes that he must demonstrate the value of AI and of his team. “Our goal is to be cost-neutral and within a year, to become self-funded,” he says. “Our benchmark studies tell us there is a $60 to $80 million efficiency opportunity. I’m responsible for $10 to $20 million in efficiency savings in a two-to-three-year time frame.” To reach those goals, his unit will have to do more than gather low-hanging fruit. “We have to do more than make easy changes, but harder changes – changing the way we work. That goal is not going to be easy to reach,” he says.
When you come to a fork in the road, take it
As an industry pathfinder, Wiedenbeck is learning from experience. To newly minted CAIOs, he offers this advice: “As with any technology, culture and adoption are the keys to truly gaining the value. Also remember that you cannot do this alone. Every part of the company must be engaged and work with you in partnership. If you build an island unto yourself, you will surely fail.”
He also recognizes the significant opportunity that has been given him. “AI will be a transformative technology in ways we cannot even imagine fully today. This is a true opportunity to shine, to show how to balance cost, risk, and value. Here is your chance to be that leader.”
Learn more about IDC’s research for technology leaders.
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Stanley B. Gibson is an adjunct research advisor with IDC’s IT Executive Programs (IEP), focusing on digital transformation, IT leadership, IoT, cybersecurity, and data management. An award-winning technology journalist and an experienced speaker at worldwide industry events, Gibson has been executive editor at eWEEK and PC Week, news editor at Communications Week, and software and systems editor at Computerworld. Gibson has interviewed the IT industry’s leading executives, including Oracle CEO Larry Ellison, Dell CEO Michael Dell, IBM CEO Samuel Palmisano, Cisco CEO John Chambers, Microsoft CEO Steve Ballmer, and many others.
