Australian CIOs warn AI ambition outpaces governance

Logicalis Australia has released the Australian findings from its Global CIO Report 2026, which found that 95 per cent of Australian organisations have increased their appetite for artificial intelligence over the past year.

The report also highlights a gap between interest in AI and the ability to deploy it across organisations. Almost four in five CIOs, or 79 per cent, said they were not strongly confident their organisation could scale AI beyond pilots and proofs of concept. Another 84 per cent were not strongly confident their AI spending had delivered measurable business value.

Australian companies continue to increase spending on the technology. More than two-thirds, or 67 per cent, said they plan further investment in generative AI over the next 12 months, while 56 per cent expect to invest in agentic AI systems that can complete tasks and coordinate activity with less human intervention.

Strategic alignment appears to be a major obstacle. Only 34 per cent of Australian organisations said their AI strategy was fully aligned with their broader business plan or key performance indicators. Nearly three-quarters, or 72 per cent, said business units and central IT leadership were not fully aligned on AI priorities and direction, while 71 per cent lacked strong confidence in their AI roadmap for the next two to three years.

The report suggests this is placing more responsibility on technology leaders. Almost half of Australian CIOs, 47 per cent, said they are the final decision-maker for AI implementation. Yet only 17 per cent said they were extremely confident their organisation had the guidance, governance and practical frameworks needed to manage AI initiatives effectively, compared with 36 per cent globally.

Lisa Fortey, General Manager, Logicalis ANZ, pointed to the level of unease among senior technology executives.

"Perhaps the most sobering finding from the research is that more than 50 per cent of CIOs said they wished AI had never been invented. While this is not a rejection of AI's potential, it reflects the unprecedented challenge technology leaders face in governing its rapid adoption. The pace of AI innovation has outstripped many organisations' ability to implement the strategy, governance and data frameworks needed to manage it responsibly.

"As AI becomes embedded across every function, establishing these foundations is no longer optional. It is essential to unlocking AI's full potential while managing risk.

"Australian organisations have moved quickly from exploring AI to making it a core business priority. The challenge now is converting that ambition into reliable, measurable outcomes. The findings show that enthusiasm alone isn't enough. Organisations need clear business alignment, strong data foundations, practical governance and access to the right skills before AI can operate effectively at scale. For CIOs, this is becoming a leadership and organisational design challenge as much as a technology challenge."

Skills and data

Internal skills shortages were identified as the most common barrier to AI adoption in Australia, affecting 93 per cent of organisations. Regulatory and security compliance, along with organisational culture, were barriers for 91 per cent, while 89 per cent reported data challenges.

Most organisations, 92 per cent, described their approach to AI as "learning as we go". The report said this may support experimentation, but it can also leave projects without the operating models needed for scale, auditability and regulatory scrutiny.

Even so, respondents reported results in selected use cases. Predictive analytics forecasting was cited by 60 per cent as the area with the strongest impact, followed by improved service delivery at 58 per cent and enhanced customer service at 44 per cent.

Fortey said many of those gains remain limited in scope.

"These results often remain concentrated within individual teams or functions rather than forming part of a repeatable enterprise capability."

Security pressure

The findings also highlight growing concern over the security and governance risks linked to AI adoption. Three-quarters of Australian organisations said they had experienced a cybersecurity incident during the past 12 months. Phishing was the most commonly reported threat at 34 per cent, followed by malware and ransomware at 33 per cent, and data breaches at 32 per cent.

More than a quarter of CIOs also identified AI itself as a significant source of risk. The report found that 64 per cent said employees were putting data security at risk through their use of AI tools, while 66 per cent believed their organisation did not provide enough education on responsible AI use and AI-related risks.

Only 20 per cent said they were extremely confident they had full visibility of the AI tools and services being used. Meanwhile, 57 per cent admitted compromising AI governance standards because of limited knowledge or capability, and 34 per cent said cybersecurity incident response times had worsened.

Fortey said governance should not be seen as blocking adoption.

"AI is becoming part of the security attack surface at the same time as organisations are still working to understand where and how it is being used. Visibility, education and accountability must keep pace with deployment.

"However, governance shouldn't be treated as a barrier to innovation. Done well, it gives organisations the confidence to move faster because risks, responsibilities and decision rights are clear."

Supplier shift

The report also points to changes in how companies expect to source the skills needed to support AI. Almost all Australian organisations, 92 per cent, said they expect to use managed service providers over the next two to three years, indicating a shift away from direct technology ownership towards coordinating internal teams, platforms and outside specialists.

Other findings underline broader uncertainty in the market. Some 49 per cent said managing risk and compliance was a key driver of greater AI adoption, while 43 per cent said they were becoming bolder in their AI initiatives after seeing a strong business case or returns from early projects. At the same time, 32 per cent believed AI adoption in their organisation was already moving too quickly.

Environmental and supplier concentration concerns also featured. Only 27 per cent said they were extremely confident their organisation measures and manages the environmental impact of AI, while 52 per cent said their organisation was becoming increasingly dependent on a single AI vendor for critical functions. A further 64 per cent said they were concerned about the stability and maturity of the AI market, and 36 per cent said they were outsourcing elements of cybersecurity to address capability gaps.

"As AI becomes more autonomous, organisations will need to make increasingly complex decisions about authority, accountability and control. The CIO's role is evolving from managing systems to designing an environment where people, intelligent technologies and external partners can work together safely.

"The organisations that make the most progress will be those that combine ambition with discipline: aligning AI with business priorities, strengthening governance and data foundations, and building the capability required to produce sustainable outcomes."