GenAI spending frenzy shifts as revenue emerges as top ROI priority
July 11, 2024
Revenue generation has overtaken productivity as C-suite leaders’ primary return-on-investment metric for generative AI spending, KPMG found.
Dive Brief:
A little over half of business leaders responding to a survey by Big Four accounting firm KPMG said they are now looking at revenue generation as a basis for determining the success of artificial intelligence investments.
The study, released Wednesday, found that executives’ return-on-investment metrics for GenAI are rapidly evolving with revenue overtaking productivity as a chief priority.
“GenAI strategies have hit a new inflection point,” KPMG said in an accompanying press release. “As we reach the midpoint of 2024, C-suite and business leaders are no longer just investing in the technology, they are aggressively scaling GenAI to unlock new revenue streams, maximize ROI and cement their competitive advantage.”
Dive Insight:
CFOs and other C-suite executives are scrambling to keep pace with rapid advancements in the area of AI that are expected to boost the U.S. economy in coming years. Generative AI in particular could enable automation of up to 70% of business activities across almost all occupations by 2030, adding trillions of dollars in value to the global economy, according to McKinsey.
The results of a Gartner surveyed announced Tuesday revealed that 62% of CFOs and 58% of CEOs believe that AI will have the most significant impact on their industries in the next three years.
“While AI has enormous potential to transform industries, three years is a short time horizon to do so,” Alexander Bant, chief of research in Gartner’s finance practice, said in a press release. “Senior executives must manage their expectations and be fully aware of the organizational challenges they will face.”
In KPMG’s study, 80% of business leaders said they see GenAI spending as key to gaining a competitive advantage and boosting market share.
“Leaders are beginning to view GenAI investment and adoption as table stakes,” Steve Chase, KPMG’s vice chair of AI & digital innovation, said in the Wednesday release.
As organizations seek to demonstrate tangible financial outcomes from their GenAI investments, revenue generation has emerged as the primary ROI metric, with 52% of respondents selecting it, followed by improved decision making (44%) and productivity (40%), according to the research. This represents a shift from the first quarter of the year, when productivity was selected by 51% of leaders as a GenAI success metric, placing it in the top spot, KPMG said.
In the midst of rapid GenAI investment scaling, the emphasis on hiring tech professionals has more than doubled from 26% to 60% quarter-over-quarter, according to the research. Organizations are also heavily investing in upskilling their existing workforce, with training and capability building initiatives jumping from 35% to 59%, the study found.
“Organizations recognize that people are the linchpin of their GenAI success. But it’s not just about the frontlines,” Chase said in the release. “Leaders are diving into GenAI themselves. This hands-on approach is seen from executive GenAI training to a rising demand for AI skills on corporate boards.”
KPMG conducted a June poll of 100 U.S.-based C-suite and business leaders representing organizations with an annual revenue of $1 billion or more.
[CFO Dive]
