Are Organizations Investing in AI Achieving Positive ROI?

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After more than a year of hype around generative AI’s potential, business leaders report that they are already seeing a return on their artificial intelligence (AI) investments and plan to increasingly become more bullish, according to new data from Ernst & Young.

Among the 95% of senior leaders 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%, up from 16% currently investing at that level.

However, despite the forecasted investment boom, the survey also found that many leaders ignore the foundational functions AI needs to thrive.

As senior leaders across industries 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%)
• Employee productivity (74%)
• Customer satisfaction (72%)

“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. “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

Senior leaders whose organizations are investing in AI and whose current budgets for AI investments are 5% or more of their total budgets saw higher rates of positive return across dimensions surveyed when compared with those who spend less than 5%, including in employee productivity (76% vs. 62%, respectively), cybersecurity (74% vs. 58%), product innovation (71% vs. 55%) and creating competitive advantages (73% vs. 47%).

The positive impact of AI is in setting up an investment boom cycle. Among senior leaders at organizations that invest in AI, about half (51%) admit that three years ago, their organizations spent less than 5% of their total budgets on AI investments. Today, 88% of those same leaders spend 5% or more of their total budgets on AI, with the number set to grow even higher as half (50%) of senior leaders said they will dedicate 25% 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. “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 maximizing AI’s abilities and will allow organizations to differentiate themselves in the marketplace.”

Strong Infrastructure Foundation

While its ability to revolutionize the workplace is without question, AI is only as good as the underlying infrastructure, its governance framework, 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% of senior leaders say that they’re investing fully and at scale in data infrastructure (i.e., quality, accessibility, and governance of data), 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 about half (54%) of senior leaders investing in AI said that organizational focus on ensuring AI operates ethically will increase over the next year. Only about a third said their organizations are building an AI governance framework fully and at scale (34%) or are addressing bias in AI models fully and at scale (32%).

Talent attraction and retention: 83% of senior leaders prioritize attracting workers who are knowledgeable of AI, yet only 37% of senior leaders said that their organizations are training/upskilling employees on AI fully and at scale. Given the challenging state of the AI talent market, this exposes a gap for leaders to capitalize on by developing AI capabilities internally.

“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.”