Business leaders are struggling to convert the hype over Generative AI (GenAI) into reality, according to a new report by Boston Consulting Group (BCG), which found that two thirds (66%) of executives ambivalent or dissatisfied with their organisation’s progress on AI and GenAI to date. They cited three main reasons – a lack of talent and skills (62%), an unclear AI and GenAI roadmap and investment priorities (47%), and absence of strategy regarding responsible AI and GenAI (42%).
► 90% prefer to wait for AI to be proven and experiment in the meantime
► Most leaders are ambivalent or dissatisfied with progress
► Big investors most likely to see cost savings this year
► 71% of executives plan to increase tech’ investments in 2024
‘This is the year to turn GenAI’s promise into tangible business success,’ said Christoph Schweizer, BCG’s CEO. ‘Almost every CEO, myself included, has experienced a steep learning curve with GenAI. When technology is changing so quickly, it can be tempting to wait and see where things land. But with GenAI, the early winners are experimenting, learning, and building at scale.’
Seventy-one percent of executives surveyed say they plan to increase tech’ investments in 2024
The report, titled BCG AI Radar: From Potential to Profit with GenAI, is based on a survey of 1,406 C-level executives in 50 markets and 14 industries. Seventy-one percent of executives surveyed say they plan to increase tech’ investments in 2024—an 11-point jump from 2023—and even more (85%) plan to increase their spending on AI and GenAI. Fifty-four percent of leaders already expect AI to provide cost savings this year, primarily through productivity gains in operations, customer service, and IT.
‘Generative AI is radically reshaping businesses. Leading companies on the GenAI front are planning to realise up to $1 billion in productivity gains, and they are already looking at ways to reinvest into new business models and growth,’ said Sylvain Duranton, global leader of BCG X and a coauthor of the research. ‘This is a second chance for companies who missed the first AI wave.’
Not the time to wait and see
Although a small percentage of companies are already reaping the rewards of AI and GenAI, others are either playing catch-up or standing on the sidelines, said BCG. More than 60% of executives surveyed say their firms are still waiting to see how AI-specific regulations develop, and just 6% of companies have trained more than 25% of their people on GenAI tools so far.
Organisations that plan to invest more than $50 million in AI and GenAI this year are 1.3 times more likely to see cost savings in 2024
According to the report, ‘winning’ companies acknowledge GenAI’s permanence and recognise its potential for both enhanced productivity and top line growth. It outlines several characteristics that set the winners apart from observers, including:
- Winners invest for productivity and top-line growth. Organisations that plan to invest more than $50 million in AI and GenAI this year are 1.3 times more likely to see cost savings in 2024—and 1.5 times more likely to achieve more than 10% in cost savings.
- Winners are systematically upskilling. Twenty-one percent of organisations spending upward of $50 million on AI and GenAI this year have already trained more than a quarter of their people.
- Winners are vigilant about GenAI cost of use. Cost of use, which has serious long-term implications, is not commanding the attention it should. Only 19% of those surveyed consider cost the top concern when choosing an AI and GenAI solution.
- Winners build intentional relationships. Only 3% of executives consider preexisting partnerships a priority when looking for AI solutions.
- Winners implement responsible AI (RAI) principles. Of the companies surveyed that are investing more than $50 million in AI in 2024, 27% put the CEO in charge of their RAI strategy (versus 14% overall).
‘To unlock GenAI’s full potential, executives should deploy it to improve efficiency of everyday tasks, reshape critical functions, and invent new business models,’ said Schweizer. ‘Doing so can increase productivity by up to 20%, enhance efficiency and effectiveness by up to 50%, boost revenue, and create long-term competitive advantage.’
