The Gartner Data & Analytics Summit, held on July 29-30 in Sydney, highlighted critical insights into the business value of Generative AI (GenAI). Analysts from Gartner Inc. revealed that up to 30% of GenAI projects could be abandoned by 2025 due to various challenges. This article explores these challenges and the emerging trends in GenAI.
Key Insights from the Summit
- Abandonment of GenAI Projects
- Gartner predicts that 30% of GenAI projects will be abandoned by 2025.
- Major reasons include poor data quality, inadequate risk controls, high costs, and unclear business value.
- Challenges in Proving ROI
- Executives are growing impatient for returns on GenAI investments.
- The financial burden of developing and deploying GenAI models is increasingly significant.
- Justifying the investment in GenAI for productivity enhancement remains difficult.
- Cost and Investment Concerns
- Deployment costs for GenAI can range from $5 million to $20 million.
- Costs are unpredictable and vary based on use cases and deployment approaches.
- The costs and risks associated with GenAI differ for market disruptors versus those with conservative approaches.
- Investment Criteria and CFO Reluctance
- GenAI requires tolerance for indirect, future financial benefits rather than immediate ROI.
- CFOs often hesitate to invest in projects with delayed value realization, impacting investment allocation.
Realizing Business Value
- Survey Findings
- A recent Gartner survey showed:
- 15.8% average revenue increase.
- 15.2% cost savings.
- 22.6% productivity improvement.
- The survey was conducted between September and November 2023 with 822 business leaders.
- A recent Gartner survey showed:
- Challenges in Value Estimation
- Benefits vary by company, use case, role, and workforce.
- The impact of GenAI may take time to materialize but has significant potential.
The Gartner Data & Analytics Summit provided valuable insights into the complexities of implementing and realizing the business value of Generative AI. While there are substantial costs and challenges, early adopters are seeing notable improvements in revenue, cost savings, and productivity. As organizations navigate the evolving landscape of GenAI, a strategic approach and patience will be key to unlocking its full potential.
