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Millions of dollars are being thrown at Generative AI (GenAI) projects across the workforce, but new research suggests that by 2025, three out of every ten of these projects will be abandoned after the proof-of-concept stage.
Gartner published its prediction Monday, where experts suggest that due to “poor data quality, inadequate risk controls, escalating costs or unclear business value,” 30% of GenAI project will be abandoned within a year.
As the financial burden of developing and deploying GenAI models becomes more apparent, with costs reportedly ranging from $5 million to $20 million, the challenge of converting these investments into tangible financial gains proves challenging — but it’s not impossible.
Gartner reports that one if its survey found respondents reported a 15.8% increase in revenue, 15.2% cost savings and 22.6% productivity improvement on average.
“The data serves as a valuable reference point for assessing the business value derived from GenAI business model innovation,” said Gartner VP Analyst Rita Sallam. However, she also warned about the challenges in estimating GenAI’s value due to its dependence on company-specific factors such as use case, role, and workforce dynamics. She cites that the impact of GenAI investments may only become evident over time.
The report suggests companies must balance innovation with practical, measurable business outcomes.
Organizations should reassess their AI strategies to ensure that their investments are both sustainable and capable of delivering long-term value. Gartner recommends a thorough analysis of the business value and total costs involved in GenAI projects. This comprehensive evaluation can help organizations establish a clearer direct ROI and future value impact, facilitating more informed investment decisions. Such strategic insight is essential for companies planning to transform their business models and create new opportunities through generative AI.
