AI value elusive for corporate leaders

Enterprises are investing heavily in AI, with 83% of CEOs increasing their AI investment, according to the report. However, 59% of AI initiatives never reach production, and 71% of CIOs struggle to prioritize AI use cases that deliver measurable outcomes.

The challenge lies in measuring the value of AI investments. Mohan Sankararaman, executive vice president and CIO of First Horizon, emphasizes that every AI use case should have a clear purpose and ensure that purpose has a return on investment (ROI).

Measuring AI ROI is difficult because AI is often treated like ordinary software. Ashwin Rangan explains that AI should be understood as a general-purpose technology, similar to electricity.

Rangan notes that measuring AI’s impact on a business is hard to implement. Leaders often use available but inappropriate metrics, such as tokens used or employees using AI. These metrics do not provide insight into the quality of work being produced.

Ara Kharazian, lead economist at Ramp, notes that the pull toward incorrect measures is strong because the useful ones are hard to implement. To deliver ROI for AI deployments, CIOs must work closely with CFOs and other members of the C-suite to determine the right metrics for measuring business outcomes.

Yogesh Joshi, senior vice president of global AI platforms at TransUnion, recommends identifying the business workflow, understanding the people, processes, and artifacts involved, and establishing baseline performance metrics before selecting an AI tool.

As AI token costs continue to climb, IT leaders who can demonstrate the value of their AI investments will keep earning the investment.

They will face scrutiny if they can only report what they spent.

Experts emphasize that measurement work should start before any AI is switched on. Executives need to identify the business workflow, understand the people, processes, and artifacts involved, and establish baseline performance metrics.

At First Horizon, the technology leader and business owner accountable for the function always align on the yardstick before the work begins, using concrete measures like time to book a loan or customer experience scores.

Rangan notes that measuring AI’s impact on a business is hard to implement and most organizations still report only deployment statistics.

The CIO-CFO relationship is strategic, with the CIO enabling AI usability, security, and governance, while the CFO evaluates whether AI is affecting the economics of the business.

Hemant Kapadia, CFO at Anaplan, notes that measuring AI’s value means treating it less like a software purchase and more like a capital-allocation decision, asking whether it delivered business outcomes like changing cost structures or an organization’s competitive position.

As boards and c-suite executives increasingly demand evidence that AI is delivering ROI, the pressure is on IT leaders to demonstrate the value of their AI investments.

By starting small and aligning AI with business outcomes, organizations can unlock the true potential of their AI investments.