NEW YORK, July 15, 2024 — After more than a year of hype about the potential of generative AI, business leaders report that their investments in artificial intelligence (AI) are already paying off and are on track to become even more bullish. Ernst & Young (EY US).
Among the 95% of senior executives who say their organizations are currently investing in AI, the number of companies investing more than $10 million in AI technologies is expected to nearly double to 30% next year, up from the 16% investing at that level today. But despite the predicted investment boom, the survey also found that many executives are ignoring the foundational capabilities needed for AI to thrive.
The new EY AI Pulse Survey is the first in a series asking 500 U.S. senior executives across industries about their investments, impacts and challenges with AI technologies. As leaders look to create sustainable momentum for full-scale AI adoption, the survey finds that senior executives at organizations investing in AI are seeing a measurable impact across business functions, with nearly three-quarters experiencing a positive ROI in terms of:
- Operational efficiency (77%)
- Employee productivity (74%)
- Customer satisfaction (72%)
“The world we do business in has been forever changed by the advent of generative AI,” said Dan DiAsio, EY Global Artificial Intelligence Consulting Leader. “Nearly every company is investing in AI, but we're seeing a disconnect between those experimenting on a smaller scale and those investing at scale. Leaders who continue to prioritize their AI investments are increasingly pulling ahead and reaping positive benefits.”
Investment matters – investing more than 5% of your budget will bring you big returns
Senior executives whose organizations are investing in AI and whose current AI investment budgets make up 5% or more of their total budget reported higher positive returns across the areas surveyed, including employee productivity (76% vs. 62%, respectively), cybersecurity (74% vs. 58%), product innovation (71% vs. 55%) and creating a competitive advantage (73% vs. 47%), compared to those spending less than 5%.
The positive impact of AI has created a boom-and-bust cycle of investment. Nearly half (51%) of senior executives at organizations investing in AI admit that three years ago, their organization spent less than 5% of its total budget on AI. Today, 88% of those same executives are spending more than 5% of their total budget on AI, and this number is set to grow as half (50%) of senior executives say they will allocate more than 25% of their total budget to AI investments next year.
“Business leaders are beginning to shape the future by increasing strategic AI investments,” said Traci Gusher, EY Americas AI, data and automation leader. “However, our survey uncovered significant risks in the AI adoption journey across the enterprise, including data infrastructure, ethical frameworks and talent acquisition, which are key to unlocking AI's full potential and will enable organizations to differentiate in the marketplace.”
Without a strong infrastructure foundation, efforts to realize AI's full potential will fail.
There's no doubt that AI has the power to revolutionize the workplace, but its excellence will depend on the underlying infrastructure, the governance framework within which it operates, and the talent development needed to use it properly. Without a strong foundation for harnessing the power of AI, leaders risk their investments collapsing. Yet few leaders report that their organizations are taking the following steps:
- Data Infrastructure: Only 36% of senior executives say they are investing across the board and at scale in data infrastructure (data quality, accessibility, governance, etc.), meaning AI is missing critical information it needs to produce better, more accurate results.
- Responsible AI: While senior executives recognized the importance of ethical AI use, nearly half (54%) of senior executives at organizations investing in AI said their organization will increase its focus on ensuring AI operates ethically over the next 12 months, and only about a third said their organization has built out an AI governance framework fully and at scale (34%) or addressed bias in AI models fully and at scale (32%).
- Talent Attraction and Retention: While 83% of senior leaders prioritize having an AI-literate workforce, only 37% say their organizations are fully and at scale training or upskilling their employees on AI, highlighting a gap that leaders can leverage by developing AI capabilities in-house, given the tough AI talent market.
“AI has clearly moved beyond the hype stage and firmly into a viable productivity driver for organizations,” added Gusher. “As we move into the next stage of full-scale AI integration, leaders must fully rethink their entire enterprise systems and develop holistic strategies to create AI-centric businesses that take full advantage of the technology's transformative power.”
methodology
EY US commissioned a third party to conduct the 2024 EY AI Pulse Survey. The online survey was conducted among 500 U.S. hiring decision makers (SVP+) (50 per industry) across healthcare, life sciences, energy, technology, media and communications (TMT), government and public sector, consumer goods and retail, advanced manufacturing and mobility (AMM), financial services, private equity, and real estate, hospitality and construction (RHC) industries. The survey was conducted April 29, 2024 to May 6, 2024. The margin of error for the full sample is +/- 4 percentage points.
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Source: EY US
