Sluggish AI returns ignored as ‘fear of missing out’ continues driving investment
Poor returns on investment aren’t stopping the sharp increase in AI investment
The UK's AI investment boom is driven by fear of missing out, rather than actual results, according to new research.
Analysis from IDC, commissioned by Expereo, found AI has become one of the most prioritized technology investments globally. Around 70% of organizations are investing heavily in AI tools and solutions, the survey found.
However, they don't seem to be doing much in the way of planning, with one-in-five admitting they are investing aggressively in AI with little evaluation of the likely return on investment (ROI).
Indeed, many are simply investing out of a fear of being left behind by competitors.
This FOMO effect is strongest in APAC, where 37% of organizations admit they are investing aggressively in AI driven by fear of being left behind – nearly double the global average and well ahead of the US at 10% and Europe at 13%.
When asked which technologies their organization will prioritize in terms of effort and/or financial pledges over the next 12 months, 51% of organizations said AI or machine learning (ML).
Crucially, the results aren't always as good as hoped. Just 19% of respondents said their AI adoption projects had exceeded expectations, and only 5% reported that they've significantly exceeded them.
Just over half said the main reason for underperformance was inadequate or poor-quality training data, with 47% citing higher-than-expected costs or a failure to achieve an adequate ROI.
Meanwhile, nearly half (46%) said AI wasn't performing as well as expected.
Infrastructure readiness hampering AI adoption
According to the survey, a key reason behind these poor returns is a network and infrastructure readiness gap. Just over a quarter of organizations whose AI implementations have failed to meet expectations cited inadequate network or connectivity performance as a contributing factor.
Meanwhile, 54% of organizations said they need more flexible and scalable networks to thrive in an AI-driven environment, and 51% need greater resilience and reliability to maximize uptime.
"Every enterprise we speak to is investing in AI, yet the data shows a clear gap opening up between AI ambition and AI outcomes. More often than not, that gap comes down to the network underneath. AI only delivers on its promise when the infrastructure carrying it is built to support it," said Expereo CEO Ben Elms.
"Without resilient, scalable, cloud-optimized networks, even the most well-funded AI programmes will struggle to deliver ROI. Getting the network right is no longer an IT decision; it is one of the most important conversations happening in the boardroom today to help fulfil AI ambition."
Unchecked investment carries huge risks
According to Expero, concerns are also rising over the longer-term risks associated with unchecked AI investment. More than half (54%) of respondents cited emerging security risks as a potential future threat for their organization’s AI use.
Just under four-in-ten, meanwhile, are concerned about losing track of AI-related costs and ROI once the technology is embedded across the business.
This isn't the first survey to reveal the effects of FOMO on AI investment. Just last month, analysis from software firm Orgvue found that 57% of organizations in the US, UK, Canada, and Australia had deployed AI mainly because their competitors had, rather than because they actually had a strategy for it.
Unsurprisingly, 78% also said they'd had AI projects either fail or remain stuck in the pilot stage.
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