A new study conducted by research firm ESI ThoughtLab and a coalition of artificial intelligence (AI) firms including Appen, Cognizant, Cortex, Dataiku, DataRobot, Deloitte and Publicis Sapient highlights businesses’ AI strategies post-COVID-19.
The majority of global companies are planning to boost their AI investments by an average of 8.3% annually over the next three years, bringing their annual AI spend from $38 million currently (or 0.75% of revenue) to over $48 million.
Of the 1,200 business executives surveyed, two-thirds and nearly nine out of ten leaders from the world’s largest enterprises believe that AI is vitally important for the future of their businesses and will be upping their investments in the post-pandemic era.
Yet their companies are now seeing an average return on investment (ROI) of only 1.3%, and 40% of AI projects are not yet profitable.
Generating ROI on AI is still a work in progress that requires a focus on strategic change, according to the study. This is so, because AI initiatives require time, expertise and scale to deliver on their promise of high returns.
With the pandemic speeding up the need for quick data-driven decision-making, companies should act now to develop the skills, platforms, and processes that can enable them to achieve the full strategic, operational, and financial benefits from AI, urges ESI Thoughtlab.
The value that AI can bring in a socially distancing, digital-first world includes access to time-critical data, events-driven forecasts, personalised digital experiences, flexible work processes, rapid decision-making, tighter cybersecurity, and greater cost efficiencies.
Other key study findings include:
Delivering ROI on AI can be elusive for the uninitiated and slow going even for experienced organisations.
Companies in earlier stages of AI adoption often see flat results. It is not until they scale AI more widely across their enterprises and become leaders that the ROI rises to 4.3%.
It takes an average of 17 months for a firm to reach break-even and months more to generate significant returns in the event the firm increases its investment in data preparation, technology adoption, and people development.
Most companies, even leaders, are still relatively early in their AI journey.
Only about one-quarter of AI projects are now in widespread deployment among AI leaders. Many AI projects are still in pilot or early deployment stages.
As companies progress in AI use, they often shift their focus from automating internal employee and customer processes to delivering on strategic goals.
Up to 31% of AI leaders report increased revenue, 22% greater market share, 22% new products and services, 21% faster time-to-market, 21% global expansion, 19% creation of new business models, and 14% higher shareholder value.
Automakers are at the forefront of AI excellence, as they rush to use AI to deliver on every part of their business strategy, from upgrading production processes and improving safety features to developing self-driving cars.
Of the 12 industries benchmarked in the study, automotive employs the largest AI teams (557 people on average vs. 370 for all industries) and has the largest AI budgets ($59.4 million on average vs. $38.3 for all industries).
With the government actively supporting AI under its Society 5.0 programme, Japanese companies lead the pack in AI adoption.
Unlike in the US, where AI is viewed often as a threat to jobs, firms in Japan tend to see AI as a way to fill the employment gap caused by an aging population and stringent immigration laws.
Lou Celi, ESI ThoughtLab CEO, said: “As the pandemic propels businesses into a digital-first world, AI will become a key driver of corporate growth and competitiveness. But building proficiency in AI is not easy.
“AI is not a magic bullet. It can fail to deliver results if the wrong business case is selected, the data is prepared incorrectly, or the model is not built for scale.”
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