‘We see a clear divide’: Many business leaders admit they have only a ‘limited understanding’ of AI budgets

Productivity and AI-induced cost reductions actually decrease
Most companies plan to continue spending on AI regardless
Only 35% have full insight into costs and report lower ROI

Despite ongoing deployment, many organizations are apparently still struggling to achieve ROI from AI, with new KPMG data revealing growing accountability, management and workforce pressures.

The report found that productivity gains actually fell from 42% to 35%, and decision-making speed also fell from 41% to 36%. Even costs were challenged, with cost reductions falling slightly from 31% to 29%.

But data on planned AI spending indicates an almost identical value compared to the previous quarter, suggesting that companies may be investing blindly without detailed strategies that spell out where they would get the biggest returns.

AI ROI is still a challenge, years later

Supporting this optimism, four in five (79%) say AI will remain a top investment priority even if a recession occurs, with a similar number (78%) confident they can future-proof their AI strategies accordingly.

However, costs are clearly being scrutinized, with 22% now considering cheaper AI models (compared to 15% previously). Nearly half (49%) have even delayed, paused or scaled back their AI strategies due to cost concerns.

“AI is now as much a financial management priority as it is a technological one,” Global Head of Advisory Rob Fisher summarized.

Clearly, model capabilities are no longer driving AI investment as companies begin to look more closely at how much they pay for services and the promised returns. And with only one in three (35%) having full insight into AI operating costs at the moment, a lot needs to be done here.

The report even claims that those with full AI cost visibility are 5x more likely to report ROI. “We see a clear divide between organizations with top management responsibilities and those without,” said Global Head of AI and Digital Innovation Steve Chase.

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