30% GenAI Projects to Be Abandoned After PoC by 2025 — Gartner

Gartner predicts that by the end of 2025, at least 30% of GenAI projects will be abandoned after proof of concept. The causes cited were poor data quality, inadequate risk controls, escalating costs, or unclear business value.

Speaking at a Gartner summit, Rita Sallam, Distinguished VP Analyst at Gartner, said, “After last year's hype, executives are impatient to see returns on GenAI investments, yet organizations are struggling to prove and realize value. As the scope of initiatives widens, the financial burden of developing and deploying GenAI models is increasingly felt.”

According to Gartner, the massive challenge organizations face is justifying investing in GenAI to enhance productivity because it can be hard to directly translate into financial gains. While organizations leverage GenAI to transform business models and create opportunities, the deployment approaches bear a mounting cost, ranging from $5 million to $20 million.

“Unfortunately, there is no one size fits all with GenAI, and costs aren’t as predictable as with other technologies,” said Sallam.

The research hints that GenAI demands a higher tolerance for indirect future financial investment criteria versus immediate return on investment.

Exploring the business value of GenAI at the Summit, analysts shared that early adopters across industries and business processes have seen productivity improvements. Based on a Gartner survey conducted between September and November 2023, respondents reported a 15.8% revenue increase, 15.2% cost savings, and 22.6% productivity improvement.

“This data serves as a valuable reference point for assessing the business value derived from GenAI business model innovation,” said Sallam. “But it’s important to acknowledge the challenges in estimating that value, as benefits are very company-, use-case-, role-, and workforce-specific. Often, the impact may not be immediately evident and may materialize over time. However, this delay doesn’t diminish the potential benefits.”

Further, Gartner confirms that organizations can establish the direct ROI and future value impact by analyzing the business value and the total costs of GenAI business model innovation.