Digging Out From The AI Money Pit

Show me the money, AI

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Yes, artificial intelligence is a huge business.

Worldwide spending on AI is forecast to total $2.59 trillion this year, a 47% increase year-over-year, according to recent estimates from Gartner. Much of it has been by vendors and hyperscalers, but enterprises are gearing up their budgets for AI as well. Gartner expects AI spending to increase 35% by next year, reaching an astounding $3.5 trillion.

The question becomes: is it, or will it soon be, delivering at least $3 trillion in value? So far, all this AI investment is not meeting its promise, at least at this time, a recent survey of 951 companies out of Bain and Company suggests.

Nearly 40% of companies that measured AI cost savings landed below 10% savings, despite their initial targets of gains of at least 11% to 20%, the consultancy finds in its research. Still, yet 90% are ramping up their budgets again, this time to build and deploy agents “that will operate with even greater autonomy, complexity, and consequence.”

It’s an annual ritual to see boards expand their automation budgets, the study’s authors, Michael Heric, Purna Doddapaneni, and Antoine Debarre, all with Bain, point out. “Every year, CEOs sign off on the next wave—robotic process automation, then machine learning, then generative AI, now agents. And every year, the savings fall short.”

This falling short isn’t enough to trigger alarms, they add. The gap is “not enough to kill the programs, but consistently, quietly, and by a margin that should be making executives uncomfortable.”

But hey, it’s AI, right? “The technology worked. The value didn’t arrive,” they write.

What’s at issue? Heric and his co-authors point out the following roadblocks to AI value:

AI automation isn’t autonomous – human workforces are still required. “Only 7% of companies are running fully autonomous agents in production today.”
Companies are making circular bets on automation. “When asked how they plan to…

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