A new report has found that 8 % of U. K. and and 7 % of U. S. decision-makers plan to spend over$ 25 million ( £19.5 million ) on AI initiatives this year. This comes after numerous owners expressed concerns about the potential return on investment and the technology’s features.
According to the 2024 State of AI report from technology consultancy Searce, a quarter of decision-makers said their organisations were set to spend between$ 11 million ( £8.5 million ) and$ 25 million ( £19.5 million ) on AI in 2024.
The top reason for making these investments was to drive new business growth, as cited by 31 % of U. K. and 35 % of U. S. respondents, and this seems to be coming to fruition from their perspective.
Over 90 % of U. K. decision-makers surveyed view their AI initiatives as” successful” and nearly a third plan to boost their AI spending by up to 50 %. Another 8 % predicted that investments would increase by at least 100 %.
The findings were based on a survey of 300 C-suite and senior technology executives at businesses that generated at least$ 500 million in revenue in June and July of this year.
According to the report, 70 % of company decision-makers have already put together at least three conceptual AI use cases as a result of their assets. These include equipment for customer service, internal research, material creation, marketing and sales, programming, data study, and get.
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However, while 51 % of respondents deem their investments “very successful”, just 42 % said they were” somewhat successful”.
” The gap between greatly and fairly successful efforts suggests a age difference in AI implementation”, the study’s authors wrote.
Organizations can focus on developing talent, data quality, and powerful evaluation metrics to improve their AI capabilities and achieve higher investment returns.
Paul Pallath, VP of applied AI at Searce, said in the statement”, With AI, organizations often focus on short-term, low-hanging fruit, which results in significant technology and process debt that becomes expensive to maintain as the organization grows.”
The authors continued,” To certainly make ROI, organizations need to shift from indiscriminately investing in these initiatives and hoping for the best, and rather adopt an outcome-centric method supported by proper management, tangible frameworks, and shift management processes.”
Business leaders in the UK are concerned about the lack of AI skills needed to back up their investments.
Respondents were questioned about the main issues that preoccupied AI implementation. For U. K. decision-makers, this was the lack of qualified talent, cited by 19 %.
The level of” skills-shortage vacancies, “where a job cannot be filled due to a lack of skills, qualifications, or experience among applicants, is very high in the information and communications sector in the U. K. The figure climbed from an already high 25 % in 2017 to 43 % in 2022, the last year for which data is available.
A recent report also found that the U. K. is the 25th most technically competent country in Europe, sitting also behind other modern officials in the region like Germany, France, and Spain.
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The U.K. government has made a number of significant investments over the past year or so to address the nation’s online skills shortage. More than$ 200 million was announced in November 2023 to help colleges and universities expand their education options, including in the digital economy.
Science Secretary Michelle Donelan unveiled a fourth item worth more than £1.1 billion to support 4, 000 architecture and natural sciences diplomas this March.
Microsoft has even made significant investments to close the modern skills gap in the United Kingdom. The software giant announced a “multimillion pound investment” in December 2023 to train more than one million people in AI knowledge.
US business officials are concerned about the security and privacy of their AI information.
The biggest challenge for AI implementation was unique for U. S. decision-makers, according to the Searce investigation, as 20 % of responders said it was data privacy and security. This is linked to fear about safeguarding sensitive data, ever-changing rules, and maintaining customer trust.
” This mistrust may stem from high-profile problems or overpriced objectives not being met, leading to prudence in AI opportunities,” the authors wrote. Such high-profile failures may include DPD’s chatbot swearing at customers, Microsoft’s trolling Twitter bot, and Google’s Bard ( now Gemini ) model answering a question wrong as it was unveiled, wiping$ 100 billion off Alphabet’s shares.
Additionally, there is tangible proof that AI abilities are overestimated. A recent Stanford study found that AI is still not as good as humans at the complex tasks of advanced-level mathematical problem solving, visual commonsense reasoning, and planning.
A 2022 report from Deloitte saw the percentage of organisations in the AI” underachiever” category — high deployment/low outcomes — rise from 17 % to 22 % in a year, suggesting outcomes are lagging.
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Businesses should be concerned about AI ROI, and investors are.
Julian Mulhare, EMEA managing director at Searce, said in the report’s press release”, As global investments in AI continue to rise, as our research has found, it is crucial for businesses to focus not just on spending, but on the tangible returns these investments can deliver.”
Investors have highlighted this point by highlighting their concerns about when, or if, the significant funding given to tech companies developing AI models will pay off.
Jim Covello, a Goldman Sachs stock analyst, wrote in a June report“, Despite its expensive price tag, the technology is nowhere near where it needs to be in order to be useful … Over-building things the world does n’t have use for, or is not ready for, typically ends badly.”
David Cahn, a partner at Sequoia Capital, claimed in a blog post that the AI sector would need to generate a staggering$ 600 billion annually to cover its hardware expenditures.
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According to S&, P Global, combined capital spending for Microsoft, Alphabet, and Meta has increased 60 % year-over-year as a result of AI investments. Alphabet alone spent$ 13 billion in the second quarter, 91 % more than Q2 2023, putting pressure on profit margins.
However, Meta CEO Mark Zuckerberg stated during the Second Quarter 2024 Results Conference Call that he anticipates it will take “years” before the business will begin to make money off of its AI products. Less-than-reassuring comments like this from Zuckerberg played a part in shares in the” Magnificent Seven” U. S. tech companies — NVIDIA, Meta, Alphabet, Microsoft, Amazon, Tesla, and Apple — losing a combined$ 1.3 trillion over five days in early August.
Additionally, consumers do not necessarily share this optimism, despite business leaders ‘ excitement over the prospect of increased internal efficiency as a result of AI. According to a recent study from Washington State University, the use of the term “intellectual intelligence” in the product description actually lowers purchase intent.
This is largely due to the perceived risk of losing control and privacy as well as a lack of confidence in AI’s capabilities. Businesses, therefore, should be aware of the ROI of applying AI to their products as well as internal deployment.
