Artificial intelligence (AI) return on investment (ROI) continues to be a challenge, driving business leaders to rethink their AI adoption strategies.
That’s a key finding from a new IBM study which revealed that only 25 percent of AI initiatives have delivered expected ROI over the last few years – with just 16 percent scaling enterprise wide.
Chief executives appear to be shifting from ‘fail fast’ to a slower, more intentional approach as a result, with 50 percent of surveyed leaders admitting that rapid investment has resulted in disconnected technology within their organization.
Earlier this week, separate research from PwC indicated that AI adoption is accelerating across all industries – including those less obviously exposed to AI technology.
What’s impacting AI ROI?
IBM surveyed 2,000 global CEOs. It found that executive respondents expect the growth rate of AI investments to more than double in the next two years, with 61 percent confirming they are actively adopting AI agents today and preparing to implement them at scale.
However, the research indicates organizations may be struggling to cultivate an effective data environment. Half of respondents acknowledge that the pace of recent investments has left their organization with disconnected, piecemeal technology.
To accelerate progress, two-thirds (65 percent) of respondents say their organization is leaning into AI use cases based on ROI, with 68 percent reporting that their organization has clear metrics to measure innovation ROI effectively. Just over half (52 percent) of respondents say their organization is realizing value from generative AI investments beyond cost reduction.
“As AI adoption accelerates creating greater efficiency and productivity gains, the ultimate pay-off will only come to CEOs with the courage to embrace risk as opportunity,” said Gary Cohn, vice chairman of IBM. “Meaning, focusing on what you can control, especially when there is so much you can’t. When the business environment is uncertain, using AI and your enterprise data to identify where you have leverage is a competitive advantage. At this point, leaders who aren't leveraging AI and their own data to move forward are making a conscious business decision not to compete.”
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Greater AI ROI expected by 2027
By 2027, 85 percent of surveyed CEOs expect their investments in scaled AI efficiency and cost savings to have returned a positive ROI, while 77 percent expect to see a positive return from their investments in scaled AI growth and expansion.
More than two-thirds (69 percent) of CEOs say their organization’s AI success is directly tied to maintaining a broad group of leaders with a deep understanding of strategy and the authority to make critical decisions. Meanwhile, 67 percent say that differentiation depends on having the right expertise in the right positions with the right incentives.
CEOs cite lack of collaboration across organizational silos, aversion to risk and disruption and lack of expertise and knowledge as top barriers to AI innovation in their organization. As a result, almost one-third (31 percent) of the workforce will require retraining and/or reskilling over the next three years, while 65 percent of businesses plan to use automation to address skill gaps. Over half (54 percent) of CEOs are hiring for roles related to AI that did not exist a year ago, IBM found.
“CEOs are balancing the pressures of short-term ROI and investing in long-term innovation when it comes to adopting AI,” said Mohamad Ali, SVP and head of IBM consulting. “We know that organizations that keep innovating, especially during periods of uncertainty, will emerge stronger and be better positioned to capitalize on new opportunities.”
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