The Boston Consulting Group (BCG), today released its second edition of their AI Radar report, which draws on a survey of 1,800 C-level executives from 21 markets globally.
The findings show that despite all the hype over artificial intelligence, only one in four companies have been successful in delivering real value I their AI investments.
And there has been significant increase in investment with a 30% growth in corporate AI investment between 2023 and 2024, and CEO’s are projecting another 60% increase between 2024 and 2027.
One company out of three in the sample is planning to invest at least $25 million in AI year on year in the years to come.
The majority are however still experimenting or even worse stuck and unable to translate experiments into meaningful business impact.
AI Focus in Corporate Organisations now Pervasive
At the virtual launch today (15 Jan), BCG’s CEO, Christoph Schweizer, related that, he speaks with hundreds of CEOs and other C-suite executives around the world every year, and that during the course of 2024, “there was hardly any conversation where AI, and in particular generative AI, did not come up as a topic of interest”.
As confirmation of this focus, 75% of the executives that were surveyed in the study, indicated that AI is a top three strategic priority for their company.
With this key focus by CEOs and C-suite executives, it is relevant to see that they are also experiencing the realities of what it means to adopt the technology and bring it to productive use.
Top Concerns for AI implementation:
The number one is;
Where to play to unlock value. How broad versus deep should you go?
The study found that that winning companies are those that go deep on fewer use cases, on fewer functions, compared to those that have multiple AI projects and initiatives being undertaken simultaneously. Focus clearly pays off in AI developments.
The second concern raised is;
How to set up the transformation for success. If you want to get a decent return on value it must be well managed with proper attention paid to track progress and impact of the development.
Third is what is the impact on the workforce?
Obviously, a crucial and also an emotional topic. The companies that truly succeed in adopting and scaling AI and getting to impact are those that are the boldest, the most systematic, the most innovative, the most committed to upskilling their talent.
The reality, however, is that many companies are still pretty slow in doing that. An obviously question is to determine what extent will AI make workforce obsolete? 7% of the executives in the survey anticipate headcount reductions anytime soon.
The fourth question is how to move forward in terms of technology innovations.
The AI world is currently full of discussions around Agentic AI and AI agents. BCG is convinced that AI agents are one important next step in AI technology, and that leading companies are very open to using them.
Number five is the question of how to navigate the regulatory and risk environment;
Companies are seeking to come to terms with how to address the energy consumption challenges. For example, the European Union has now put into place the EU AI Act. Other countries in the world have followed suit and most companies now need to navigate that scenario. There is concern about what this means and how do companies set up their processes, policies, and governance to navigate this?
This is also extended to the question of cyber risk and also considering what additional carbon footprint their use of AI might produce going forward and how they can mitigate that.
What Differentiates AI Leaders?
Leaders, according to the study are the ones that materialise impact, and spend a good part of their investment, on reshaping and inventing new processes, and new products, rather than simply focusing on day-to-day processes and productivity. BCG painted an analogy of this approach with reference to the introduction of electricity in the late 19th century. Some factories, used electricity to add a lighting on the shop floor. The result of this was adding several hours of labour each day. That is meaningful productivity.
In comparison, other companies, used electricity to invent machines that completely reinvent the shop floor. There, the impact was much bigger. That’s what separates leaders.
The same principal is as valid today with AI developments where simply addressing productivity simplistically loose the opportunity to completely revolutionise their industry.
AI Leaders are shown by the research to focus intensely on three to four high priority use cases or in other companies six use cases which are also showing twice as much ROI as companies focussing on many cases.
The BCG study indicates that more than 60% of companies today are not tracking any financial impact from their AI transformation. And that is one of the biggest call to actions for the corporate world to start paying attention to.
The other big area for improvement is the critical issue around staff development and training, with on 29% of companies surveyed indicating that they have trained more than 25% of the workforce in AI and Gen AI tools
Other key findings of the survey are:
- 93% of the executives feel that they do not expect a decrease in headcount due to AI adoption anytime soon.
- 76% recognise their AI cybersecurity measures need improvement, and it’s a real risk and a real threat.
- 67% consider autonomous agents as part of their AI transformation in its early days.
- 31% plan to spend 25 million US dollars or more on their AI and Gen AI activities in 2025