Organizations that plan to invest more than $50m into AI and Generative AI this year are 1.3 times more likely to see cost savings in 2024, according to new BCG report.
Despite the potential of Generative Artificial Intelligence (GenAI) to transform the way business functions, c-suite executives are struggling to convert that hype into reality, according to a new report by Boston Consulting Group (BCG).
More than 1,400 c-suite executives in 50 markets and 14 industries were surveyed for the report, BCG AI Radar: From Potential to Profit with GenAI. Of those, 66% expressed ambivalence or outright dissatisfaction with their organization’s progress on AI and GenAI so far. They cited three primary reasons for this dissatisfaction: a lack of talent and skills (62%), an unclear AI and GenAI roadmap and investment priorities (47%), and absence of strategy regarding responsible AI and GenAI (42%).
“This is the year to turn GenAI’s promise into tangible business success,” said Christoph Schweizer, BCG’s CEO. “Almost every CEO, myself included, has experienced a steep learning curve with GenAI. When technology is changing so quickly, it can be tempting to wait and see where things land. But with GenAI, the early winners are experimenting, learning, and building at scale.”
Seventy-one percent of executives surveyed say they plan to increase tech investments in 2024 — an 11-point jump from 2023 — and even more (85%) plan to increase their spending on AI and GenAI. Fifty-four percent of leaders already expect AI to provide cost savings this year, primarily through productivity gains in operations, customer service, and IT.
“Generative AI is radically reshaping businesses. Leading companies on the GenAI front are planning to realize up to $1 billion in productivity gains, and they are already looking at ways to reinvest into new business models and growth,” said Sylvain Duranton, global leader of BCG X and a coauthor of the research. “This is a second chance for companies who missed the first AI wave.”
Not The Time To Wait And See
Although a small percentage of companies are already reaping the rewards of AI and GenAI, others are either playing catch up or standing on the sidelines. More than 60% of executives surveyed say their firms are still waiting to see how AI-specific regulations develop, and just 6% of companies have trained more than 25% of their people on GenAI tools so far.
The report suggests that “winning” companies acknowledge GenAI’s permanence and recognize its potential for both enhanced productivity and topline growth. Several characteristics set the winners apart from observers. According to the report, winners:
- Invest for productivity and top-line growth. Organizations that plan to invest more than $50 million in AI and GenAI this year are 1.3 times more likely to see cost savings in 2024—and 1.5 times more likely to achieve more than 10% in cost savings.
- Are systematically upskilling. Twenty-one percent of organizations spending upward of $50 million on AI and GenAI this year have already trained more than a quarter of their people.
- Are vigilant about GenAI cost of use. Cost of use, which has serious long-term implications, is not commanding the attention it should. Only 19% of those surveyed consider cost the top concern when choosing an AI and GenAI solution.
- Build intentional relationships. Only 3% of executives consider preexisting partnerships a priority when looking for AI solutions.
- Implement responsible AI (RAI) principles. Of the companies surveyed that are investing more than $50 million in AI in 2024, 27% put the CEO in charge of their RAI strategy (versus 14% overall).
“To unlock GenAI’s full potential, executives should deploy it to improve efficiency of everyday tasks, reshape critical functions, and invent new business models,” said Schweizer. “Doing so can increase productivity by up to 20%, enhance efficiency and effectiveness by up to 50%, boost revenue, and create long-term competitive advantage.”
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