Atleast 30% of GenAI projects will be abandoned after PoC: Report
CFOs aren't convinced 🫤
At least 30% of generative AI (GenAI) projects will be abandoned after proof of concept by the end of 2025, due to poor data quality, inadequate risk controls, escalating costs or unclear business value, according to Gartner, Inc.Â
A major challenge for organizations arises in justifying the substantial investment in GenAI for productivity enhancement, which can be difficult to directly translate into financial benefit.
Many organizations are leveraging GenAI to transform their business models and create new business opportunities. However, these deployment approaches come with significant costs, ranging from $5 million to $20 million.
CFOs aren't convinced
Regardless of AI ambition, Gartner research indicates GenAI requires a higher tolerance for indirect, future financial investment criteria versus immediate return on investment (ROI). Historically, many CFOs have not been comfortable with investing today for indirect value in the future.
This reluctance can skew investment allocation to tactical versus strategic outcomes (via).
90% PoC will not move into production
As per another report by Everest Group, most of Gen AI Proof of Concept (POC) pilots – approximately 90% – will not move into production in the near future, and some may never move into production.
Many companies pilot gen AI for use cases in which it is the wrong technology to address the business need. In some cases, the companies found better technologies, already developed or even already in place, that met their needs better than gen AI. In other cases, they found that gen AI is not yet mature enough to execute the tasks robustly in the production environment.
Without deeper confidence about the expected ROI, companies are reluctant to move forward and spend significant amounts of money placing pilots into production. (via).
GenAI, like any other new tech will go through its winter phase and the final outcome will be a mixed bag of reality and AGI.
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