30% of GenAI enterprise projects will be abandoned by 2025
Gartner predicts that nearly a third of generative AI projects will not make it past the proof-of-concept stage.
It seems like every company is finding a way to leverage generative AI (GenAI) to increase productivity in some way, but consulting firm Gartner predicts that 30 percent of those projects will be abandoned by the end of 2025.
The problem, according to Rita Sallam, distinguished vice president analyst at Gartner, is a combination of the costs incurred by GenAI projects and the lack of adequate risk controls.
“After last year’s hype, executives are eager to see the returns on investments in GenAI, but organizations are struggling to demonstrate and realize value,” Sallam said at the Gartner Data & Analytics Summit in Sydney this week.
“As the scope of initiatives expands, the financial burden of developing and deploying GenAI models is increasingly being felt.”
Gartner research shows that companies are investing between $5 million and $20 million in GenAI projects to create new business models and opportunities, but many are not finding any immediate material benefit from integrating the technology into their processes.
“Unfortunately, there is no one-size-fits-all solution for GenAI and the costs are not as predictable as other technologies,” Sallam said.
“What you spend, the use cases you invest in, and the deployment approaches you take determine costs. Whether you are a market disruptor and want to infuse AI everywhere, or have a more conservative focus on productivity gains or scaling existing processes, each has different levels of cost, risk, variability and strategic impact. .
That said, early adopters are finding benefits. A 2023 Gartner survey found that 15.8 percent of companies had experienced revenue growth, while 15.2 percent had achieved business cost savings. Additionally, 22.6 percent reported an increase in productivity.
“This data serves as a valuable benchmark for evaluating the business value derived from GenAI business model innovation,” Sallam said.
“But it is important to recognize the challenges in estimating that value, as the benefits are very specific to the business, use case, function and workforce. Often, the impact may not be immediately evident and materialize over time. However, this delay does not diminish the potential benefits.”
“If business results meet or exceed expectations, it presents an opportunity to expand investments by scaling innovation and use of GenAI across a broader user base or deploying it to additional business divisions.
“However, if they are not sufficient, it may be necessary to explore alternative innovation scenarios. “These insights help organizations strategically allocate resources and determine the most effective path forward.”
