Hello. This is Stanton Jones with what's important in the IT and business services industry this week.
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What You Need to Know
AI use cases are delivering stronger results on metrics not linked to the corporate P&L. Is that a good thing for the industry?
Data Watch
Background
This week we launched our third annual report on the State of Enterprise AI Adoption. I encourage you to download a copy here. In this year’s report, we wanted to measure enterprise AI adoption rates through the lens of use cases. We did that by asking 400 large enterprises to evaluate their three most well-funded AI pilots. One of the key areas we evaluated was use-case performance compared to expectations, across several direct and indirect business metrics.
As my colleague Alex Bakker wrote last week, the use cases in the study show weaker attribution from AI directly to P&L metrics like revenue growth or cost reduction. Instead, we found AI is driving stronger improvement in areas like compliance and risk management (see Data Watch).
But we think the most interesting finding here is how close enterprises are in matching up their expectations for AI to its actual performance. On the whole, the fact that the P&L metrics underperformed isn’t necessarily because they don’t perform well in all cases, it is because enterprises have lower expectations for these metrics in the first place.
What’s Next
We think this finding is actually good news for both enterprises and service providers. First, it shows that enterprises have gotten a lot better over the last 12 months in separating the wheat from the chaff when it comes to AI promises. In the data and on the ground, we’re seeing firms get a much clearer picture on what AI likely can and can’t deliver.
And, secondly, it means that AI – especially mainstream generative AI – is behaving like any other new technology. Generative AI is only three years old. There have been very few technologies in history that have had significant impacts on P&L within 36 months of launch.
More mature expectations for AI is a good thing for enterprises – and for providers – because it means the real work of re-wiring for AI is likely just now getting started.About the author
Stanton Jones
Stanton helps enterprise technology leaders, IT service providers and buy- and sell-side professionals make sense of the global IT services sector. Stanton's weekly briefing - the Index Insider - is read by thousands of industry stakeholders each week.
