Rapid advances in artificial intelligence are complicating the work of the family office professionals charged with evaluating, choosing and deploying technology for office operations.
“AI is changing the game,” says Stephanie Notarianni, managing director of technology and integration at Pitcairn. “Traditionally, we would approach technology strategy from a three- or five-year perspective. What is the shelf life of an AI strategy? It’s not three or five years. And it has its tentacles in your other technology and infrastructure. It’s challenging us to take a different approach. We can no longer just build the perfect five-year technology roadmap like we once did.”
The changing landscape can make it difficult to make a decision.
“The biggest concern for many family offices is that AI is moving so quickly, they almost feel frozen,” says Eric L. Johnson, U.S. family office tax leader for Deloitte LLP. “They’re hesitant to sign any type of long-term contract with any technology provider, because that investment reporting platform that looks good this month might get obviated by AI next month.”
The rapid advances in AI are proving exhausting for many people, but particularly for those responsible for evaluating potential software to adopt in the family office.
“They look at multiple different software systems, and then they test them out, and they have a due diligence process,” says Shannon Zur, family office director for Vogel Consulting. “Well, from when they started until now, the software has changed. It’s moving so fast — they aways feel behind. There’s a bit of AI fatigue.”
One solution would be to make the choice faster, but family offices often have a committee of family members involved in these decisions.
“You have different needs, and they have to come to an agreement. It’s a consensus, and that takes time,” Zur says. “One family had to restart their search for a software package twice because the software changed mid search.”
Making decisions while accounting for advances in technology has, of course, long been an essential skill for technology leaders. But the AI revolution feels different.
“Historically, technology has gone through a dramatic period of change followed by a stabilization period,” Notarianni says. “With cloud-based technologies, for example, there was a dramatic shift — but then nothing about cloud-based technologies really changed for a period of time, so people could adapt to the change. That’s not what we’re seeing with AI. The stabilization period is much shorter.”
One key to making sound decisions in this new technology world may be a greater tolerance for ambiguity.
“The old approaches to technology strategy are not going to necessarily work here, so people need to rethink and be a bit more open to ambiguity, as they approach their technology strategy for the next five years,” Notarianni says. “It’s more about figuring out what the shape of the puzzle piece is, but not figuring out what goes in a particular spot: The future technology that we need will look like this, but we’re not going to decide on the exact puzzle pieces immediately.”
This can make conversations about planning and budgets challenging.
“How do you approach the budgeting discussion with your CFO? Historically, it’s been very much connected to that three-year plan — what you anticipate buying — in a very linear way,” Notarianni says. “I have no idea nine months from now what AI tools are going to be available, so we may need a budget allocation that’s a bit more dynamic. This involves a different conversation with your CFO than you would have historically had. There’s definitely tension there.”
Notarianni has been focusing on creating a more adaptable organization to account for the shorter shelf life of technology plans.
“It used to be that professionals determined all the answers, and then you started implementing,” Notarianni says. “That approach needs to look dramatically different, and it comes with a lot of ambiguity, which can be hard.”