AI has quickly become a significant investment for most enterprises. In a new report, Omdia has found substantial budgets are being spent on AI in 2023, and that AI budgets will increase in 2024.
"42% of our surveyed companies have 2023 AI budgets of US$1 million or more, 23% have budgets of US$2 million or more and 9% have budgets of US$5 million or more," said Mark Beccue, Principal Analyst, Omdia, "The spending trend is consistent regardless of company revenue, region, or vertical. There are logical differences - enterprises with smaller revenues spend less than those with larger revenues, and verticals with more mature AI use cases spend more than others."
Omdia fielded a survey of 369 enterprises in February 2023 as interest in generative AI exploded. Budgets for 2023 were likely set before the generative AI movement.
Growing AI spending has significant implications:
AI cannibalizes other priorities. AI budgets are likely cannibalizing budgets that were previously dedicated to other IT and operations initiatives.
AI lifecycles' accelerated learning curve will test leadership patience. There will be increased pressure for organizations to quickly become competent and show results.
Then there is the pressure on organizational culture. Increasing AI budgets typically means leadership expects material results within a defined timeframe. AI initiatives blossom within organizations that have a good process for innovation; these organizations tend to transcend organizational silos to address greater good themes for initiatives. Organizations with parochial cultures will struggle to produce results.
There will be increased urgency for KPI measurement. With formalized AI budgets, organizations must develop and report on specific AI KPIs.
AI-ready organizations will see accelerated development. Substantial AI budgets will reflect the importance of tuning the overall organization. Investments will be made to build more formalized organizational structures for managing the people and processes that support operationalized AI.
It is clear that AI will reshape how many organizations operate, and the allocation of funds toward AI adoption will be one of the deciding factors of organizations' success.
