Due to poor data quality, inadequate risk controls, escalating costs, or unclear business value, Gartner Inc. predicts that at least 30% of generative AI (GenAI) projects will be abandoned after proof of concept by the end of 2025.
Rita Sallam, distinguished VP analyst at Gartner, said, "After last year's hype, executives are impatient to see returns on GenAI investments, yet organisations are struggling to prove and realise value. As the scope of initiatives widens, the financial burden of developing and deploying GenAI models is increasingly felt."
Major challenges
Gartner posits that one of the significant challenges for organisations is justifying the GenAI investment to enhance productivity.
Many organisations are leveraging GenAI to transform their business models and create new business opportunities, which could potentially lead to significant benefits. However, these approaches prove to be costly($5 million to $20 million).
According to Gartner, GenAI requires a higher tolerance for indirect, future financial investment criteria than immediate return on investment (ROI).
Realising business value
Earlier adopters report business improvements across various use cases, job types, and worker skill levels. A Gartner survey reveals that respondents reported an average 15.8% revenue increase, 15.2% cost savings, and 22.6% productivity improvement.
Calculating business impact
Gartner posits that organisations can establish the direct ROI and future value impact by analysing the business value and total costs of GenAI business model innovation. This analysis is crucial for making informed investment decisions about GenAI business model innovation.Â
