05.24.2022 Executive Data Bytes – Are You Missing the ROI from your AI Initiatives?

Welcome to another edition of Executive Data Bytes! This week, we are discussing the challenges and opportunities of delivering better ROI. 

Focus piece: “ROI from AI: The importance of strong foundations”

Executive Summary

To get a positive ROI from AI initiatives, companies must first implement key practices across data management, tracking results, and security, privacy, and ethics. Companies are gaining value from their AI implementations across five main areas, according to this article by Deloitte. Leaders showed an average of a 4.3% ROI for their projects, compared to only 0.2% for beginning companies.

Key Takeaways

●    Companies adopting AI technologies are learning the same lesson as elite athletes: To get a big return from AI, they must first prepare.

●    The research firm ESI ThoughtLab published a benchmarking study exploring how companies are approaching their AI implementations, what value they are seeking, and what they are achieving. It found that companies achieving high ROI had implemented key practices across data management, tracking results, and security, privacy, and ethics.

●    Leaders expect value from AI implementations in five areas, including higher productivity, increased customer satisfaction and retention, improved employee engagement, improved profitability, and new products and services. This growth is from efficiency-focused benefits to strategic ones.

●    Setting the right AI foundation is the surest way to achieve true strategic value and successfully realize strong ROI from AI implementations. Scaling is critical, and calculating the ROI still is more art than science.

Focus piece: “AI investment to increase but challenges remain around delivering ROI”

Executive Summary

Two-thirds of senior executives across industries believe AI is vitally important for the future of their businesses, however 40% of AI projects are not yet profitable, according to research by ESI ThoughtLab and PricewaterhouseCoopers (PwC). It takes an average of 17 months for a firm to reach break-even with AI, and only one-quarter of AI projects are now in widespread deployment among AI leaders.

This article by Information Age outlines challenges that companies face around delivering ROI.

Key Takeaways

●    Two-thirds of senior executives believe AI is important for the future of their business, but 40% of AI projects are not yet profitable. Companies should act now to develop the skills, platforms, and processes to achieve the full strategic, operational, and financial benefits from AI.

●    Research shows that delivering ROI on AI can be elusive for the uninitiated and slow going even for experienced organizations. It takes 17 months for a firm to reach break-even and months more to generate significant returns.

●    Companies that use AI to improve strategic planning, supply chain management, product development, and distribution and logistics see higher revenue, greater market share, new products, faster time-to-market, and greater shareholder value.

●    Nine out of ten AI leaders are advanced in data management. They also combine different types of data to create multiplier effects.

Focus piece: “4 Ways That You Can Prove ROI From AI”

Executive Summary

Your use of AI is probably succeeding in countless ways, but AI can also fail you and seal down the fate of your business and career. You need to be able to prove that your use of AI is contributing to ROI via expansion and growth. This article by Forbes outlines four ways to ensure your deployment is a success.

“According to VentureBeat, an estimated 87% of data science projects never make it to the production stage, and TechRepublic claims that 56% of global CEOs expect it to take 3-5 years to see any real ROI on their AI investment.”

Key Takeaways

• Domino's Pizza successfully used AI to reduce delivery time and improve accuracy from 75% to 95%.
• A study by McKinsey predicts that up to 33.3% of the 2030 U.S. workforce will need to learn new skills and find new work.
• A survey conducted by the Pistoia Alliance showed that 52% of respondents cited insufficient access to data as one of the biggest barriers to the adoption of AI.

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