'We’re seeing a clear divide': Many business leaders admit they only have a 'limited understanding' of AI budgets

Productivity and cost savings are actually dropping – new data shows a massive gap in visibility leading to poor ROI

'We’re seeing a clear divide': Many business leaders admit they only have a 'limited understanding' of AI budgets.

Businesses are shifting focus to AI ROI. Productivity and AI-induced cost reductions are actually dropping. Most businesses plan to continue spending on AI regardless. Only 35% have full visibility into costs, reporting lower ROI.

Despite ongoing deployment, many organizations are apparently still struggling to achieve ROI from AI, with new KPMG data revealing growing accountability, governance and workforce pressures. The report found productivity gains actually fell from 42% to 35%, with decision making speed also dropping from 41% to 36%. Even costs were challenged, with cost reductions slightly falling from 31% to 29%.

But planned AI spending data indicates a near-identical value compared with the quarter before, implying companies could be investing blindly without detailed strategies spelling out where they would get the most returns.

AI ROI is still a challenge, years later

Backing that optimism, four in five (79%) say AI would remain a top investment priority even if a recession occurred, with a similar number (78%) confident they can future-proof their AI strategies accordingly. Costs are clearly being scrutinized, though, with 22% now factoring in lower-cost AI models (compared with 15% previously). Nearly half (49%) have even delayed, paused or shrunk their AI strategies over cost concerns.

"AI is now as much a financial management priority as it is a technology one," Global Head of Advisory Rob Fisher summarized.

Clearly, model capabilities are no longer driving AI investments as companies start to look more closely at how much they're paying for services and the promised returns. And with only one in three (35%) having full visibility into AI operating costs currently, much work needs to be done here.

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The report even argues that those with full AI cost visibility are 5x more likely to report ROI.

"We’re seeing a clear divide between organizations with leadership accountability at the top and those without," Global Head of AI and Digital Innovation Steve Chase commented.

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With several years’ experience freelancing in tech and automotive circles, Craig’s specific interests lie in technology that is designed to better our lives, including AI and ML, productivity aids, and smart fitness. He is also passionate about cars and the decarbonisation of personal transportation. As an avid bargain-hunter, you can be sure that any deal Craig finds is top value!

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