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AI is progressing rapidly in their development. But many businesses don’t see the point!
Businesses Reduce AI Investments Amid Concerns
Businesses are becoming increasingly cautious about investing in AI tools due to rising costs, data security, and safety concerns, as revealed in Lucidworks’ 2024 Generative AI Global Benchmark Study. The study, conducted between April and May 2024, surveyed leaders from 1,000 companies across North America, EMEA, and the APAC region. It found that 63% of global companies plan to increase AI spending in the next year, a sharp decline from 93% in 2023. In particular, only 49% of Chinese business leaders intend to boost AI investment, down from a unanimous 100% last year.
Financial Benefits Remain Elusive
Despite the initial excitement surrounding AI, many companies have not yet seen significant financial benefits from their AI projects. The study indicates that 42% of businesses have not realised meaningful gains from their generative AI initiatives, with only 25% of planned investments completed. High costs, which have increased 14 times since last year, and concerns about the accuracy of AI responses have contributed to the slowdown in AI adoption. The majority of organisations using generative AI rely on commercial large language models (LLMs), but there is a growing shift towards open-source models due to anticipated performance improvements and cost considerations.
Importance of Governance and Risk Management
Successful AI initiatives often involve strong governance and cost reduction strategies. Qualitative applications, such as generating FAQs and providing HR support, have been the most successful, accounting for about a quarter of implementations. In contrast, quantitative projects, such as optimising search results and supporting financial closures, have seen less success. Effective AI governance, which includes standardising models and managing access, is critical for managing risks and ensuring compliance with regulations like the EU AI Act. This focus on governance underscores the importance of balancing innovation with responsible AI use.
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