‘We see a clear divide’: Many business leaders admit they have ‘limited understanding’ of AI budgets

AI-driven productivity and cost reductions are actually declining
Most companies plan to continue investing in AI regardless
Only 35% have full visibility into their costs and report lower ROI.

Despite ongoing deployment, many organizations are apparently still struggling to achieve ROI from AI, with new data from KPMG revealing growing accountability, governance and workforce pressures.

The report found that productivity gains actually fell from 42% to 35%, and decision-making speed also fell from 41% to 36%. Even costs have been questioned, with cost reductions down slightly from 31% to 29%.

But data on planned AI spending shows almost the same value compared to the previous quarter, implying that companies could be investing blindly without detailed strategies detailing where they would get the most return.

AI ROI Remains a Challenge, Years Later

Supporting this optimism, four in five (79%) say AI would remain a top investment priority even in a recession, and a similar number (78%) are confident they can future-proof their AI strategies as a result.

Costs are, however, clearly scrutinized, since 22% of them now integrate less expensive AI models (compared to 15% previously). Nearly half (49%) have even delayed, suspended or reduced their AI strategies for cost reasons.

“AI is now as much a financial management priority as it is a technology one,” summarized Rob Fisher, global head of consulting.

Clearly, model capabilities are no longer driving AI investments as companies begin to look more closely at how much they pay for the services and promised returns. And with only one in three (35%) currently having full visibility into AI operating costs, there is still much to be done in this area.

The report even claims that those with full visibility into AI costs are 5 times more likely to report a return on investment. “We see a clear divide between organizations with leadership responsibility at the top and those without it,” commented Steve Chase, global head of AI and digital innovation.

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