According to a new study from McKinsey, generative AI will become mainstream by 2024 as businesses rapidly adopt the technology and begin to realize significant benefits. The global management consulting firm's survey of more than 1,300 participants revealed that 65% of respondent organizations are now using generative AI on a regular basis, nearly double the rate from just 10 months ago.
The study found that companies that have adopted generative AI are seeing significant cost savings and revenue increases in return, with human resources being the most common department to experience a 20% or greater decrease in costs, and supply chain and inventory management being the most likely department to report a 5% or greater increase in revenue.
“Organizations are already reaping significant benefits from generative AI,” the McKinsey report states. “The technology's potential is without question.”
Overall AI adoption rates also jumped to 72% from around 50% over the past six years, driven by growing interest in generative AI capabilities such as natural language processing.
Three-quarters of respondents expect generative AI to bring significant or disruptive change to their industries in the future, which is driving enthusiasm for adoption. Organizations are investing heavily, with nearly as many companies spending 5% or more of their digital budget on generative AI as those spending it on traditional machine learning.
While most are still in the experimental stage, a subset of respondents classified as “Generative AI High Performers” have demonstrated what's possible with this technology: These 46 organizations attribute more than 10% of their EBIT to generative AI adoption.
High-performing companies are far more likely to use generative AI across more functions, rely less on off-the-shelf models, and follow best practices around risk mitigation, data management, and scaling processes.
These are pioneers who are realizing competitive advantage by customizing models and developing robust operational capabilities around generative AI.
As generative AI adoption grows, respondents are increasingly aware of risks such as inaccurate output, intellectual property infringement, and cybersecurity threats. 44% of companies using the technology experienced at least one negative impact.
“Responsible practices like risk management and delivery monitoring must be prioritized from day one,” the report warned. Currently, only 18% of respondents have a company-wide council to oversee responsible AI.
The survey found that best-in-class companies are more likely to incorporate legal review, bias testing, and risk management practices into their generative AI development cycle.
McKinsey predicts that going forward, much of the value creation will require mass customization of generative AI models based on unique data, rather than one-size-fits-all, off-the-shelf solutions.
“Enterprises of the future will need a harmonious combination of off-the-shelf, open source and foundational models fine-tuned to their specific needs,” the report adds.
