By the end of 2025, at least 30 per cent of generative AI (GenAI) projects are projected to be abandoned after their proof of concept (PoC) due to challenges such as poor data quality, inadequate risk controls, escalating costs, and unclear business value, according to a recent report by Gartner.
The growth of interest in GenAI, fueled by last year’s hype, has led to growing executive impatience for returns on these investments. However, organisations are finding it difficult to demonstrate and realise tangible benefits, with the financial burden of deploying GenAI models ranging from USD 5 million to USD 20 million.
Rita Sallam, a Distinguished VP Analyst at Gartner, noted that there is no “one size fits all” approach with GenAI, and costs can vary greatly depending on the use cases and deployment strategies chosen. This variability presents a challenge in justifying the substantial investment required for productivity enhancements, which often do not translate directly into immediate financial returns.
“After last year’s hype, executives are impatient to see returns on GenAI investments, yet organizations are struggling to prove and realise value. As the scope of initiatives widen, the financial burden of developing and deploying GenAI models is increasingly felt,” said Sallam.
Historically, CFOs have been hesitant to commit to investments that promise indirect future benefits rather than immediate gains, skewing investment priorities toward more tactical initiatives. Despite these hurdles, a recent Gartner survey of 822 business leaders revealed that early adopters of GenAI are reporting decent improvements in business performance. The survey indicated an average revenue increase of 15.8 per cent, cost savings of 15.2 per cent and a 22.6 per cent boost in productivity. However, these benefits vary by industry, use case and worker skill level, and may not be immediately apparent.
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