'We're seeing a clear divide': many business leaders admit they have only a 'limited understanding' of AI budgets

AI-Induced Productivity and Cost Reductions Are Actually Falling
Most companies plan to continue spending on AI regardless
Only 35% have full cost visibility, resulting in a lower return on investment (ROI).

Despite ongoing implementation, many organizations are apparently still struggling to achieve return on investment (ROI) from AI, and new data from KPMG reveals growing accountability, governance 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 planned AI spending data indicates a nearly identical value compared to the previous quarter, implying that companies could be investing blindly without detailed strategies indicating where they would get the greatest return.

AI ROI remains a challenge, years later

Backing that optimism, four in five (79%) say AI would remain an investment priority even if a recession were to hit, and a similar number (78%) are confident they will be able to future-proof their AI strategies accordingly.

However, costs are clearly being scrutinized: 22% are now considering lower-cost AI models (up from 15% previously). Nearly half (49%) have even delayed, paused or scaled back their AI strategies over cost concerns.

“AI is now both a financial and technology management priority,” summarized global head of advisory Rob Fisher.

Clearly, model capabilities are no longer driving AI investments 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%) currently having full visibility into AI operational costs, there is still a lot of work to be done.

The report even maintains that those with full visibility into AI costs are 5x more likely to achieve a return on investment (ROI). “We are seeing a clear divide between organizations with leadership responsibility at the top and those without,” said global head of AI and digital innovation Steve Chase.

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