The second of our 2024 AI Predictions Mini-Series expects enterprises to commit to significant investment in generative AI in 2024 and speculates on the dangers of ignoring the opportunity of AI at the board level.
What we’re expecting in 2024:
– A significant shift in corporate spending habits will occur, with at least 10% of budgets being earmarked for AI initiatives.
– CEOs and business leaders who choose not to invest in AI projects may risk the dangers of AI anyway, lose the talent war, and miss the opportunity for revenue growth and cost-savings.
– This shift reflects the growing recognition of AI as a transformative force across industries.
ChatGPT is now a year old, and its launch and the progress of its private and open-source generative AI competitors cannot be ignored by enterprises and industries.
Despite the concerns surrounding generative AI’s accuracy, data protection, security, and ethical concerns, companies are adopting generative AI at pace to leverage the benefits.
A McKinsey study estimates generative AI’s benefit to productivity could add between $2.6 billion and $4.4 billion in value to the global economy annually. The report also estimates AI could enable labor productivity growth of between 0.1% and 0.6% every year up to 2040.
McKinsey further says that generative AI can be deployed immediately for high impact on business problems, particularly for companies in sales and marketing and customer operations. There is a general feeling that generative AI’s capabilities are good enough to put them to work despite inaccuracies and other weaknesses.
In its Technology, Media, and Telecom Predictions 2024, Deloitte declares that “generative AI gains boardroom momentum” and says that generative AI will move from a “concept buzzing in enterprise circles to a reality reshaping industry.”
This report further predicts that generative AI will become integral to “nearly all” enterprise software offerings in 2024. Enterprise software companies are expected to experience a revenue uplift of $10 billion by the end of 2024 as a result. These software companies are figuring out their pricing, but through them, enterprises in every industry will grow their generative AI deployment.
Gillian Crossan, Global Technology Sector Leader, Deloitte & Touche LLP, says:
“In 2024, the technology sector is set to cross a new threshold with generative AI taking center stage. Once considered a concept, gen AI is now pivoting from the periphery to becoming a bedrock of enterprise innovation.”
Deloitte adds that enterprises are increasingly opting to train generative AI models on their proprietary data to maximize productivity and cost-efficiency but also to mitigate the risks associated with public data sets. It believes that the share of enterprise AI spending on generative AI may grow by 30% in 2024.
Forecasts are certainly mixed for AI spending in 2024. Buy Shares expects global AI spending to surge by 120% and hit $110 billion by 2024. IDC data points to life sciences and retail leading AI spending, with 67% of organizations adopting AI at scale and a further 33% launching AI pilots.
Gartner feels that generative AI impacts will be felt more in 2025 but that overall, worldwide IT spending will grow by 8% in 2024. John-David Lovelock, VP Analyst at Gartner, says:
“Organizations are continuing to invest in AI and automation to increase operational efficiency and bridge IT talent gaps. The hype around GenAI is supporting this trend, as CIOs recognize that today’s AI projects will be instrumental in developing an AI strategy and story before GenAI becomes part of their IT budgets starting in 2025.”
Morgan Stanley predicts that AI will represent 11% of healthcare spending budgets in 2024, up substantially from an allocation of 5.5% in 2022 and fuelled by the arrival of ChatGPT. The bank notes that 94% of healthcare companies already employ some form of AI or ML.
Spiceworks and Aberdeen Strategy & Research surveyed 883 IT professionals. They discovered that 66% of companies are planning to increase their IT budgets in 2024, with 57% of businesses planning to adopt AI within the next two years.
EY, in a report on a CEO survey from July, declared that “no corporate leader can ignore AI in 2023” and that four out of five CEOs have integrated AI, already seeking the promise of a generative AI strategy to accelerate transformation and provide strategic advantage. McKinsey discovered that a third of employees say their companies already use generative AI.
From the Deloitte report, Crossan says that regulatory developments will serve as either obstacles or catalysts for change:
“It’s imperative for industry leaders to navigate these complexities, aligning regulatory compliance with creativity, to fully unlock the transformative power of gen AI.”
There could be two key dangers of not investing in generative AI in 2024:
We’ve all heard the promise of generative AI to provide a competitive and strategic advantage and deliver cost savings across business operations. If leaders adopt a wait-and-see approach, they may miss the opportunity curve and lose out to industry peers.
There’s a secondary aspect here: AI automates monotonous, repetitive tasks for employees, leaving them more time to focus on problem-solving and creativity.
An estimated 77% of employers struggled to fill roles in 2023. The talent shortage persists, and there’s a likelihood the best employees will gravitate toward roles where they can work side-by-side with AI taking up less attractive daily tasks.
Generative AI is certainly not without risk. These risks include hallucinations and incorrect output, privacy and data protection concerns, bias, and ethical concerns, to name a few.
Even if, at the board level, a decision is made not to invest in AI, there’s a chance that employees will still use readily available generative AI tools to help them in their work, potentially incorporating some of these risks into their outputs. The case of the Samsung employees who leaked confidential data to ChatGPT illustrates how this danger can play out. Writing for LegalDrive, Jim Tyson says most workers use AI, usually without company safeguards.
Companies that seek out generative AI solutions that meet productivity aspirations but specifically mitigate AI’s risks to their business, whether off-the-shelf or proprietary, can take an opportunity to regulate the use of AI. Deploying corporate-chosen systems with the proper guidance and training can engage, motivate, and inspire employees and allow firms to leverage the benefits of generative AI.