Why 30% of Gen AI Projects Could Be Abandoned by 2025
In one of the first big blips identified in the race to adopt Gen AI, a recent study by Gartner’s shows that 30% of all such projects will be abandoned by the end of 2025.
This comes amid an industry fervour to adopt the technology and transform their operations with its use.
But the report reveals many won’t even get beyond a proof of concept, citing issues such as poor data quality, inadequate risk controls, escalating costs, and unclear business value.
Enthusiastic adoption
The study comes at a time when Gen AI adoption is currently ranking as one of the top priorities of businesses across sectors.
A Capgemini study released the same month showed increasing investment in Gen AI is now the majority position.
Yet like with digital transformations, implementation across an organisation may be hard to achieve.
"Unfortunately, there is no one size fits all with Gen AI, and costs aren't as predictable as other technologies," Rita Sallam, Distinguished VP Analyst at Gartner said. “The financial burden of developing and deploying Gen AI models is becoming increasingly apparent, with costs ranging from US$5m to US$20m.”
Yet 74% of organisations in the Capgemini study reported that Gen AI is helping drive revenue and innovation.
This difficulty in implementing has seen the growth of Gen AI partnerships becoming commonplace. For instance, Microsoft, IBM, and Google have been inking agreements with companies across industries to help them develop their staff and internal AI procedures.
But that leaves out smaller businesses, who may go it alone in implementing it into their operations. This is where the failures could occur.
A 2024 SAS study revealed that only 9% of leaders are extremely familiar with their organisation's adoption of Gen AI.
With no guidance from companies with previous experience in digital transformation, these issues Gartner mentioned - poor data quality, inadequate risk controls, escalating costs, and unclear business value - could lead to abandonment.
As the study states, 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.
Building the success case
The rapid adoption of Gen AI is driven by its potential to transform various aspects of business operations.
A previous Gartner survey reported average improvements of 15.8% in revenue, 15.2% in cost savings, and 22.6% in productivity among early adopters.
These figures demonstrate the tangible benefits that organisations are experiencing from Gen AI implementation, justifying the increased investment and adoption rates.
Yet what this Gartner study shows is that Gen AI, instead of aiding digital transformation, is adding to the complexity of it.
"If the business outcomes meet or exceed expectations, it presents an opportunity to expand investments by scaling Gen AI innovation and usage across a broader user base, or implementing it in additional business divisions,” said Rita. “However, if they fall short, it may be necessary to explore alternative innovation scenarios."
With Gen AI only recently exploded onto the scene, the coming years will likely see a period of adjustment as businesses refine their approaches, balance costs with benefits, and adapt to evolving regulatory landscapes.
Those who successfully harness the power of Gen AI projects stand to gain significant competitive advantages in an increasingly AI-driven world, and those who don’t stand to have better understanding from those that have.
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