Companies won’t see big returns from AI in the coming years, but many projects will simply be abandoned
New research from Gartner claims that about a third (30%) of generative AI projects will be abandoned by 2025.
The company predicted that such projects would be abandoned after the proof-of-concept phase due to challenges such as poor data quality, inadequate risk management, rising costs and unclear business value.
Gartner research also shows that it can take a long time for companies to see tangible results from their AI investments, which can lead to declining interest in projects.
GenAI projects are being stopped too early
Distinguished VP Analyst Rita Sallam highlighted the growing impatience among executives: “After last year’s hype, executives are impatient to see a return on GenAI investments, but organizations are struggling to prove and realize value. As the scope of initiatives grows, the financial burden of developing and deploying GenAI models is increasingly being felt.”
One of the biggest hurdles organizations face is justifying the significant investment in GenAI for productivity gains, which can be difficult to translate into financial benefits.
Furthermore, GenAI implementations typically come with high costs, ranging from $5 million to $20 million. Sallam commented on the variability between organizations, citing different objectives and industries: “There is no one size fits all with GenAI, and costs are not as predictable as other technologies.”
Despite significant challenges, early adopters are already reporting significant benefits. According to data collected by Gartner between September and November 2023, respondents reported an average 15.8% increase in revenue, 15.2% cost savings and 22.6% improvement in productivity.
However, the researchers say real productivity gains are still a long way off, with “everyday AI” still around two years away. Moreover, initial concerns that AI could replace human workers seem less likely.
