According to new data from Ernst & Young LLP (EY US), business leaders are already seeing returns on their AI investments and plan to become even more optimistic. The first Ernst and Young AI Pulse Survey has revealed that among the 95% of senior leaders who report their organizations are currently investing in AI, the number of companies investing $10 million or more in the technology is expected to nearly double next year to 30%, up from the current 16%.

However, despite the anticipated surge in investment, the survey also revealed that many leaders are neglecting the foundational functions necessary for AI to succeed.

In the course of the survey, 500 U.S. senior leaders across industries were asked about their AI technology investments, impacts, and challenges. According to the responses, organizations investing in AI are witnessing tangible impact across business functions, including about three-quarters who are experiencing positive ROI on:

• Operational efficiencies (77%)

• Employee productivity (74%)

• Customer satisfaction (72%)

“The world in which we do business has been forever altered by the emergence of generative AI,” said Dan Diasio, EY Global Artificial Intelligence Consulting Leader. “Nearly all companies are investing in AI, but we’re seeing a divergence between companies experimenting in small ways and those making larger investments, with the leaders who continue prioritizing investments in AI increasingly ahead of the pack and experiencing positive returns.”

Allocation of more than 5% of the budget for AI investments has led to better ROI

The survey compared the return on investments based on the organizations that commit 5% or more of their total budgets to AI investment versus those that spend less than 5%. The differences in returns across dimensions include employee productivity (76% vs. 62%, respectively), cybersecurity (74% vs. 58%), product innovation (71% vs. 55%), and creating competitive advantages (73% vs. 47%).

The report states that the positive impact is building an AI investment boom cycle. 51% of senior leaders at organizations investing in AI have admitted that three years ago the organizational spend on AI investment was below 5%.

On the contrary, today, 88% of the same leaders spend 5% or more of their budgets on AI. This number is expected to increase further, as 50% of the senior leaders have expressed the desire to dedicate 25% or more of their total budgets towards AI investment in the coming year.

“Business leaders are beginning to shape their future by raising strategic AI investments,” said Traci Gusher, EY Americas AI, Data, and Automation Leader. “But the survey uncovered significant risks on the path to enterprise-wide AI adoption, including data infrastructure, ethical frameworks, and talent acquisition. These are key to fully maximizing AI’s abilities and will allow organizations to differentiate themselves in the marketplace.”

The need to focus on data infrastructure, responsible AI ase, talent attraction, and retention

The survey addresses the pertinent question of having the right foundation to maximize AI’s potential. This includes the underlying infrastructure, governance framework, and developing the talent to utilize the technology.

When the senior leaders were asked about steps taken at an organizational level to solidify the foundation, some leaders shared the following:

Only 36% of senior leaders reported that they are investing in data infrastructure (i.e., quality, accessibility, and governance of data) fully and at scale. This shows AI is missing crucial information that it requires to produce more accurate results.

Further, while senior leaders acknowledged the importance of ethical AI use, 54% of the leaders of organizations that invest in AI confirmed that the organization’s focus on ensuring ethical AI operation will increase over the next year. 34% of the leaders said that their organizations are building an AI governance framework, and 32% of them affirmed that organizations are addressing bias in AI models.

Highlighting talent attraction and retention, 83% of senior leaders affirmed attracting talent with AI knowledge as a priority, while 37% said that their organizations are upskilling employees on AI. This highlights an opportunity for leaders to develop AI capabilities within their organizations, especially considering the current difficulties in the AI talent market, as per the survey.

“AI is clearly moving out of the hype phase and firmly toward being a viable means of productivity for organizations,” added Gusher. “As we move into the next phase of full-scale AI integration, leaders will need to develop a holistic strategy that completely reimagines the entire enterprise system to create an AI-centric business that best harnesses the transformative power of the technology.