Despite skyrocketing demand, only 10% of AI initiatives are delivering substantial ROI

June 27, 2024

Yes, AI's impact on your business is potentially transformational. But it will take hard work, dedication, and a whole lot of resources to get where you want to be.

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PwC predicts AI-related innovations and productivity gains will contribute $15.7 trillion to the world economy and a 26% boost to local GDPs by 2030.

But there’s one area where AI is dead average: ROI.

Countless studies put the failure rate for digital transformation projects somewhere between 70% and 95%. And, according to a Wallaroo.AI study conducted in partnership with NewtonX, the failure rate for AI projects is slap bang within this range: 90% don’t deliver any substantial ROI, with 50% not even making it past the prototype stage.

So what sets the other 10% apart?

The Wallaroo.AI study, which surveyed 100 US-based AI, data science, and machine learning decision-makers, highlights three key things successful projects do differently.

The first, and least surprising, is strong investment.

Google, Meta, Amazon, and Microsoft — four of the Big 5 tech companies — have collectively invested $72.8 billion on AI, while Apple is reportedly investing $1 billion a year. Our research found that AI leaders intend to double down on this, with 61% planning to at least double their investments within the next three years and scale their models more than five-fold.

Second, the size of leaders’ AI teams match their ambitions. 71% have 100 or more staff working on machine learning. Given that the supply of AI specialists is nowhere near enough to meet demand, attracting and retaining such staff is undoubtedly the most challenging part of securing an AI project’s success.

Third, and perhaps a tad unexpectedly, the choice of infrastructure is also make or break.

Survey participants believe working in a public cloud environment is less risky than using a purpose-built, in-house machine learning platform. That said, regardless of which route they chose to take, 51% of respondents said the number of tools needed to go into production and the effort required to integrate them was also a major challenge.

Christopher White

As put by Christopher White, D.Sc, Technology & Digital Advantage Principal at BCG: “Generating ROI with AI, like with past technological advances, hinges on recognizing the importance of people and processes. It’s crucial to align AI with business goals, continuously upskill teams, and reimagine processes to fully leverage AI’s potential, rather than viewing it as a series of single use cases.”

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