AI investment still at the planning stage through 2024, Gartner says
Imagined impact of GenAI on GDP is over-optimistic, analyst firm says
Gartner thinks the ever-expanding GenAI ecosystem is being hyped with real customer deployments not emerging in earnest until next year.
This prognosis was delivered as the research firm issued the latest worldwide IT spending forecast for 2024, which it highlights year-on-year growth by 6.8 percent to $5 trillion, down from the previous quarter's projection of 8 percent growth.
John-David Lovelock, distinguished VP analyst at Gartner, told The Register that he cut the forecast owing to fluctuations in dollar pricing against other currencies — the majority of supply comes from or through the US — rather than any shift in IT spending trends.
A continued expansion of enterprise spending on software and services is driving growth but consumer spending on devices remains muted, he said. "It's the continuous integration of the upgrade and expansion of the existing systems to finish those projects that are being worked on."
Vendors and consultancies continue to be bullish about the prospects for generative AI in the enterprise. Deloitte, for example, recently said: "Excitement about generative AI remains high, and transformative impacts are expected in the next three years."
However, Lovelock reckons AI is likely to be steadily introduced in products that businesses already use to address problems they are already trying to solve.
"It's likely 2024 is going to be the year of the plan for artificial intelligence, whereas 2023 was the year of the story. In 2025 it will be the year to execute," he said.
As most vendors were looking to introduce AI within products that customers already buy, without a significant price increase, Gartner had calculated the increase in IT spending caused by AI investment might only be 0.005%
As most vendors are looking to introduce AI within products that customers already buy, without a significant price increase, Gartner had calculated the increase in IT spending caused by AI investment might only be 0.005 percent.
Lovelock said vendors were introducing AI to solve problems — such as reducing customer churn or getting better value for marketing — that companies had been trying to solve for 25 years. "Most of the use cases that we see coming forward are, in fact, something that has already been done. We're just saying do it better, faster and cheaper."
Yet many commentators have highlighted the transformational impact of Generative AI. Goldman Sachs, for example, has estimated it could increase global GDP by 7 percent, or around $7 trillion.
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Lovelock said: "I am feeling in some ways very old and jaded… and a little bit of 'Get off my lawn.' Some of the work that has been done on the improvement in GDP globally because of AI is universally terrible. There likely won't be any improvement in GDP growth, certainly not that you could definitively point to as down to AI. In terms of productivity, that doesn't necessarily translate to GDP. If I make another email, another slide, improve quality, drop error rates...none of that is GDP producing," he said.
Gartner sees software leading IT spending growth in 2024: it is set to grow 12.7 percent to $1.03 trillion. IT services are also set for strong growth at 8.7 percent, outstripping spending on communication services for the first time at $1.5 trillion. Devices are set to recover from the fall of 8.7 percent in spending in 2023, and are predicted increase by 4.6 percent in 2024 to reach $732 billion. ®