Beancounters at Gartner group have delivered a thumbs down to GenAI saying that nearly one in three GenAI projects will be abandoned.
These findings were shared at the Gartner Data & Analytics Summit in Sydney. The research also revealed that for businesses that successfully implement GenAI projects, the return on investment (ROI) is significant: successful AI projects increase revenue by 15.8 per cent, save 15.2 per cent in costs, and boost productivity by 22.6 per cent.
Gartner Distinguished VP Analyst Rita Sallam said organisations were struggling to prove and realise value.
“As the scope of initiatives widens, the financial burden of developing and deploying GenAI models is increasingly felt,” Sallam said.
There are many reasons why AI projects fail, including poor data quality, inadequate risk controls, rising costs, and unclear business value.
Impatience is also affecting projects, with Gartner research highlighting that GenAI requires a higher tolerance for indirect, future financial investment criteria versus immediate ROI.
Gartner said many CFOs were uncomfortable with investing to obtain an indirect value in the future. This reluctance can skew investment allocation towards tactical rather than strategic outcomes.
According to Gartner VP analyst Luke Ellery channel companies should focus on helping their customers see through the hype and evaluate the cost, risk, and value of a project. This way, they can support building an effective and organised approach to AI.
“They can also help their customers understand the risks relevant to the technology being considered as well as in the regulatory environment,” he said.
“Value is key though. Clients often focus on productivity, however, other benefits include: new products, risk reduction, increased asset yield, speed and improved customer service.”
