When it comes to AI ROI, IT decision-makers not convinced

Proof of concept projects stuck in pilot phase as investors get itchy feet

Many business leaders remain unconvinced that AI is worth the expense despite continued hype from an industry that has bet billions on developing the tech and desperately needs to recoup that spending.

Research commissioned by Lenovo which polled nearly 3,000 biz execs and senior IT decision makers, confirmed that quantifying AI's return on investment continues to be one of the greatest barriers to its adoption.

This highlights a disconnect between the ever expanding amounts of cash that companies including Microsoft, Google and others are sinking into AI and pervasive doubts among decision-makers about the technology's value, with 37 percent saying they have reservations about signing purchase agreements.

The report, titled "It's Time for AI-nomics," draws its findings from an IDC survey of 2,920 execs and IT decision-makers globally, covering a range of industries from the largest right down to smaller organizations with around 250 employees.

Lenovo claims that most AI use cases have met business expectations, but proving the return on these investments remains challenging, with financial risk and uncertainty cited by those surveyed.

Early successes - we're told - have been in the fields of IT operations, software development, and marketing, with 26 percent of adopters saying that AI projects implemented by their organization surpassed expectations, while another 68 percent say expectations were met.

However, the report also reveals that only 5 percent of respondents have actually adopted AI across the enterprise, with another 25 percent running pilot projects and a further 21 percent describing themselves as still in the early stages.

Nearly half of respondents have yet to adopt AI at all, with 36 percent indicating they plan to start using it within the next 12 months, while a further 13 percent are still at the stage of considering or evaluating it but have no plans yet.

The report also highlights a high number of POCs (proof-of-concept projects) with a poor rate of conversion to production, indicating "a low level of organizational readiness in terms of data, processes, and IT infrastructure."

Yet Lenovo claims that spending on AI initiatives is projected to "nearly triple" over the next 12 months, with significant investments in data science, business intelligence, as well as IT consulting and services.

The IT leaders surveyed expect AI to account for nearly 20 percent of tech budgets in 2025, which seems a lot for technology many are not really sure about. This is being driven by accelerated adoption of generative AI use cases, Lenovo says, compared with interpretive AI and predictive AI systems.

Interpretive AI, which aims to provide explanations for decisions made, is being deployed more in industries such as healthcare, finance, and legal, while predictive AI is finding a home in markets including IT operations.

The continued high investment required for AI is worrying many shareholders, as The Register has previously highlighted. A survey last year indicated that the number of AI projects making it through POC to production had actually fallen, while the percentage that have shown significant ROI has also slipped.

Last month, a report from Gartner indicated there was a growing disillusionment among corporates about AI, with distinguished VP analyst John-David Lovelock saying: "Our expectations for what generative AI can and will do are starting to come down."

This is despite the big push on AI coming from vendors, with Microsoft saying last month that it will invest $80 billion this year in infrastructure to train and deploy AI models, while Meta wants to sink upwards of $60 billion on more AI resources, and the backers of the Stargate Project claim to be ready to spend as much as $500 billion over the next four years.

All that investment is going to have to be recouped from somewhere, and that somewhere is customers, even if, like Microsoft, the vendors have to spend time with customers "showing them and then helping them realize the value." ®