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Generative AI is rapidly revolutionizing the world of software engineering, driving efficiency, innovation, and business value from the earliest stages of design through to deployment and maintenance. This explosive development in technology enhances and transforms every phase of the software development lifecycle: from analyzing demand and modeling use cases in the design phase, to modernizing legacy code, assisting with documentation, identifying vulnerabilities during testing, and monitoring software post-rollout.

Given its transformative power, it’s no surprise that the ÎÚÑ»´«Ã½ Research Institute report, Turbocharging Software with Gen AI, reveals that four out of five software professionals expect to use generative AI tools by 2026.

However, our experience and research find that to fully realize the benefits, software engineering organizations must overcome several key challenges. These include unauthorized use, upskilling, and governance. This blog explores these challenges and offers recommendations to help navigate them effectively.

Prevent unauthorized use from becoming a blocker

Our research indicates that 63% of software professionals currently using generative AI are doing so with unauthorized tools, or in a non-governed manner. This highlights both the eagerness of developers to leverage the benefits of AI and the frustration caused by slow or incomplete official adoption processes. This research is validated in our field experience across hundreds of client projects and interactions. Often, such issues arise from an overly ‘experimental’ versus programmatic approach to adoption and scale.

Unauthorized use exposes organizations to various risks, including hallucinated code (AI-generated code that appears correct but is flawed), code leakage, and intellectual property (IP) issues. Such risks can lead to functional failures, security breaches, and legal complications.

Our ÎÚÑ»´«Ã½ Research Institute report emphasizes that using unauthorized tools without proper governance exposes organizations to significant risks, potentially undermining their efforts to harness the transformative business value of generative AI effectively.

To mitigate unauthorized use, organizations should channel the curiosity of their development teams constructively and in the context of managed transformation roadmaps. This approach should include consistently explaining the pitfalls of unauthorized use, researching available options, learning about best practices, and adopting necessary generative AI tools in a controlled manner that maintains security and integrity throughout the software development process.

Upskilling your workforce

Upskilling is another critical challenge. According to our ÎÚÑ»´«Ã½ Research Institute findings, only 40% of software professionals receive adequate training from their organizations to use generative AI effectively. The remaining 60% are either self-training (32%) or not training at all (28%). Self-training can lead to inconsistent quality and potential risks, as nearly a third of professionals may lack the necessary skills, resulting in functional and legal vulnerabilities.

A consistent observation from our field experiences is that alongside the issue of training is a correlated barrier to making sufficient time available for teams to apply training in practical ways, and to evolve the training outcomes into pragmatic, lasting culture change.  Because generative AI is such a seismic shift in the way we build software products and platforms, the upskilling curve is about far more than incremental training.

Managing skill development in this new frontier of software engineering will require an ongoing commitment to evolving skills, practices, culture, ways of working and even the ways teams are composed and organized.   As a result, software engineering organizations should embrace a long-term view of upskilling for success.

Those that are most successful in adopting generative AI have invested in comprehensive training programs, which cover essential skills such as prompt engineering, AI model interpretation, and supervision of AI-driven tasks. They have begun to build organizational change management programs and transformation roadmaps that look at the human element, upskilling and culture shift as a vital foundation of success.

Additionally, fostering cross-functional collaboration between data scientists, domain experts, and software engineers is crucial to bridge knowledge gaps, as generative AI brings new levels of data dependency into the software engineering domain. ÎÚÑ»´«Ã½’s research shows that successful organizations realizing productivity gains from AI are channeling these gains toward innovative work (50%) and upskilling (47%), rather than reducing headcount.

Establishing strong governance

Despite massive and accelerating interest in generative AI, 61% of organizations lack a governance framework to guide its use, as highlighted in the ÎÚÑ»´«Ã½ Research Institute report. Governance should go beyond technical oversight to include ethical considerations, such as responsible AI practices and privacy concerns.

A strong governance framework aligns generative AI initiatives with organizational priorities and objectives, addressing issues like bias, explainability, IP and copyright concerns, dependency on external platforms, data leakage, and vulnerability to malicious actors.

Without proper governance, the risks associated with generative AI in software engineering — like hallucinated code, biased outputs, unauthorized data & IP usage, and other issues ranging from security to compliance risks, can outweigh its benefits. Establishing clear policies, driven in practice through strategic transformation planning will help mitigate these potential risks and ensure that AI adoption aligns with business goals.

Best practices for leveraging generative AI in the software engineering domain

Generative AI in software engineering is still in its early stages, but a phased, well-managed approach toward a bold, transformative vision will help organizations maximize its benefits across the development lifecycle. In following this path, here are some important actions to consider:

Mitigate risks

• All productivity gains must be balanced within a risk management framework. Generative AI introduces new risks that must be assessed in line with the organization’s existing risk analysis protocols. This includes considerations around cybersecurity, data protection, compliance and IP management. Developing usage frameworks, checks and quality stopgaps to mitigate these risks is essential.

Support your teams

• Providing comprehensive training for all team members who will interact with generative AI is crucial. This training should cover the analysis of AI outputs, iterative refinement of AI-generated content, and supervision of AI-driven tasks. As our ÎÚÑ»´«Ã½ Research Institute report suggests, organizations with robust upskilling programs are better positioned to improve workforce productivity, expand innovation and creative possibilities, and mitigate potential risks.

Implement the right platforms and tools

• Effective use of generative AI requires a range of platforms and tools, such as AI-enhanced integrated development environments (IDEs), automation and testing tools, and collaboration tools.
• However, only 27% of organizations report having above-average availability of these tools, highlighting a critical area for improvement.  Beyond the current view of Gen AI as a high-productivity assistant or enabler, we strongly encourage every organization in the business of software engineering to look beyond the ‘copilot mentality’ and over the horizon to what .  The first wave of Gen AI and the popularity of these technologies as assistive tools will be a great benefit to routine application development tasks.
• For the enterprises that are building industrialized, commercial software products and platforms – and for the experience engineering of the next generation, we believe that the value and even the essentials of competitive survival depend on adopting and building a vision of far more sophisticated AI software engineering capability than basic ‘off the shelf’ code assist tools deliver.

Develop appropriate metrics

• Without the right systems to monitor the effectiveness of generative AI, organizations cannot learn from their experiences or build on successes. Despite this, nearly half of organizations (48%) lack standard metrics to evaluate the success of generative AI use in software engineering. Establishing clear metrics, such as time saved in coding, reduction in bugs, or improvements in customer satisfaction, is vital.
• We believe that organization-specific KPIs and qualitative metrics around things like DevEx (Developer Experience), creativity, innovation and flow are vital to consider, as the power of the generative era lies far more in the impact these intangibles have on the potential of business models, products and platforms than on the cost savings many leaders erroneously focus on. This is absolutely an inflection point, in which the value of the abundance mindset applies.

In conclusion

Generative AI is already well underway in demonstrating its potential to transform the software engineering lifecycle, improve quality, creativity, innovation and the impact of software products and platforms – as well as streamline essential processes like testing, quality assurance, support and maintenance. We expect its use to grow rapidly in the coming years, with continued growth in both investment and business impact.

Organizations that succeed in adopting generative AI as a transformative force in their software engineering ethos will be those that fully integrate it into their processes rather than treating it as a piecemeal solution. Achieving this requires a bold, cohesive vision, changes in governance, the adoption of new tools, the establishment of meaningful metrics, and, most importantly, robust support for teams across the software development lifecycle. 

At ÎÚÑ»´«Ã½ Engineering Software, we are ambitiously transforming our own world of capability, vision, approach, tools, skills, practices and culture in the way we view and build software products and platforms.  We’re here for you, to help you and your teams strike out on your journey of transformation in the generative software engineering era.

Download our ÎÚÑ»´«Ã½ Research Institute report: Turbocharging software with Gen AI to learn more.

Check out other blogs in the series:

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Boosting productivity in software engineering with generative AI

Jiani Zhang

Apr 16, 2025