The lofty promises of generative AI have been dangled in front of business leaders for more than a year, and the returns have been holding steady for some, but nothing like what they’d been led to expect by the enormous hype. But that ROI appears to be turning a corner, as new research from global business consultancy Ernst & Young (EY) finds leaders reporting that they are already seeing a return on their AI investments and plan to increasingly become more bullish. However, despite the forecasted investment boom, the research also found that many leaders are ignoring the foundational functions AI needs to thrive.
The firm’s new EY AI Pulse Survey reports that among the 95 percent of 500 senior leaders surveyed who report that their organizations are currently investing in AI, the number of companies investing $10 million or more in the technology is set to nearly double next year to 30 percent, up from 16 percent currently investing at that level.
The new survey. the first in a series, asked senior leaders across industries about their AI technology investments, impacts and challenges. As leaders look to create sustainable momentum toward full-scale AI adoption, the study finds that senior leaders whose organizations are investing in AI are seeing tangible impact across business functions, including about three-quarters who are experiencing positive ROI on:
- Operational efficiencies (77 percent)
- Employee productivity (74 percent)
- Customer satisfaction (72 percent)
“The world in which we do business has been forever altered by the emergence of generative AI,” said Dan Diasio, EY Global artificial intelligence consulting leader, in a news release. “Nearly all companies are investing in AI, but we’re seeing a divergence between companies experimenting in small ways and those making larger investments, with the leaders who continue prioritizing investments in AI increasingly ahead of the pack and experiencing positive returns.”
Investment matters—those committing 5 percent or more of budget see outsized returns
Senior leaders whose organizations are investing in AI and whose current budgets for AI investments are 5 percent or more of their total budgets saw higher rates of positive return across dimensions surveyed when compared with those who spend less than 5 percent, including in employee productivity (76 percent vs. 62 percent, respectively), cybersecurity (74 percent vs. 58 percent), product innovation (71 percent vs. 55 percent) and creating competitive advantages (73 percent vs. 47 percent).
The positive impacts of AI are setting up an investment boom cycle. Among senior leaders at organizations that invest in AI, about half (51 percent) admit that three years ago, their organizations spent less than 5 percent of their total budgets on AI investments. Today, 88 percent of those same leaders spend 5 percent or more of their total budgets on AI, with the number set to grow even higher as half (50 percent) of senior leaders said they will dedicate 25 percent or more of their total budgets toward AI investments in the coming year.
“Business leaders are beginning to shape their future by raising strategic AI investments,” said Traci Gusher, EY Americas AI, data and automation leader, in the release. “But the survey uncovered significant risks on the path to enterprise-wide AI adoption, including data infrastructure, ethical frameworks and talent acquisition. These are key to fully maximizing AI’s abilities and will allow organizations to differentiate themselves in the marketplace.”
Without a strong infrastructure foundation, efforts to maximize AI’s full potential are sure to fail
While its ability to revolutionize the workplace is without question, AI is only as good as the underlying infrastructure, the governance framework it operates within and the talent development needed to properly use the technology. Without a strong foundation from which to harness the power of AI, leaders risk their investments cracking and crumbling beneath them. Yet few leaders reported that their organizations were taking these steps:
- Data infrastructure: Only 36 percent of senior leaders say that they’re investing in data infrastructure (i.e., quality, accessibility and governance of data) fully and at scale—meaning AI is missing crucial information that would enable it to produce better, more accurate results.
- Responsible AI: Senior leaders acknowledged the importance of ethical AI use, but just about half (54 percent) of senior leaders whose organizations are investing in AI said that organizational focus on ensuring AI operates ethically will increase over the next year, and only about a third said their organizations are building an AI governance framework fully and at scale (34 percent) or is addressing bias in AI models fully and at scale (32 percent).
- Talent attraction and retention: 83 percent of senior leaders prioritize attracting workers who are knowledgeable of AI, yet only 37 percent of senior leaders said that their organizations are training/upskilling employees on AI fully and at scale, exposing a gap for leaders to capitalize on by developing AI capabilities internally, given the challenging state of the AI talent market.
“AI is clearly moving out of the hype phase and firmly toward being a viable means of productivity for organizations,” added Gusher. “As we move into the next phase of full-scale AI integration, leaders will need to develop a holistic strategy that completely reimagines the entire enterprise system to create an AI-centric business that best harnesses the transformative power of the technology.”
EY US commissioned a third party to conduct the 2024 EY AI Pulse Survey. The online survey was conducted among n=500 US-employed decision-makers (SVP+) in the health; life sciences; energy; technology, media and telecommunications (TMT); government and public sector; consumer products and retail; advanced manufacturing and mobility (AMM); financial services; private equity; and real estate, hospitality and construction (RHC) industries (i.e., n=50 per industry). The survey was fielded from April 29, 2024 through May 6, 2024. The margin of error for the total sample is +/- 4 percentage points.
