AI ROI only takes a year or so, Microsoft reports.
Corporate financial officers who wonder how long it takes for company-wise artificial intelligence investments to reap dividends now have foundational data to consider.
That after Microsoft released a new study this week showing unique insights into how AI is “being used to drive economic impact for organizations.”
The study shines a light on how companies may expect AI initiatives to pay off – and the answer may come sooner than CFOs may think.
That answer comes from the actual AI investments, “from generating new revenue streams to delivering differentiated customer experiences to modernizing internal processes,” Microsoft reports, noting it tracked over 2,100 global companies in creating the report.
First, let’s go to the data. According to Microsoft:
• 71% of respondents say their companies are already using AI.
• 92% of AI deployments are taking 12 months or less.
• Organizations are realizing a return on their AI investments within 14 months.
• For every $1 a company invests in AI, it is realizing an average return of $3.5X.
• 52% report that a lack of skilled workers is their biggest barrier to implementing and scaling AI.
Overall, Microsoft found that AI offers “demonstrable business value” to companies, particularly in key areas like employee experience, customer engagement, and internal business processes, and how all of the above “can help bend the curve on innovation”.
What AI technologies companies are using matters, too. For instance, Generative AI’s value gets exponentially greater, the report notes.
“IDC is projecting that generative AI will add nearly $10 trillion to global GDP over the next 10 years,” says Ritu Jyoti, group vice president of AI and Automation for IDC, which partnered with Microsoft on the study. ”Calculating the value of new investments in GenAI requires building the business case by simulating potential cost and responsible value realization.”
Twin Takes on AI Profits
Companies that do the best with AI returns are embracing two strategies to realize investment gains.
Reshape business processes: Companies have pockets of valuable information scattered throughout their organization that can be difficult for employees to locate and use holistically, the study states.
“By finding and making connections across this information, AI can surface integrated insights that help to predict and accelerate workloads,” says Alysa Taylor, corporate vice president, Azure and Industry at Microsoft. “This is particularly evident in cybersecurity, where employees are using AI insights to identify bad actors more quickly and better protect both employees and intellectual property.”
Bend the curve on innovation: Companies can also leverage AI to stay ahead of changing business dynamics, and to exceed customer expectations, Taylor notes.
“By not having to modernize every underlying system to achieve these results, and by putting AI directly in the hands of developers with GitHub Copilot, organizations can operate with agility and accelerate innovation,” Taylor adds. “Teams can leverage AI to help scale production and speed to market while being able to focus on higher-value activities.”
That’s good news to corporate finance officers who are leaning into AI implementations, but aren’t sure how and when it will all pay off.
The answer is in – it’s likely sooner than companies may have expected.
Brian O’Connell, a former Wall Street bond trader and best-selling author, is a prominent figure in the finance industry. With a substantial background as an ex-Wall Street trader, he has authored two best-selling books: ‘The 401k Millionaire’ and ‘CNBC’s Creating Wealth’, demonstrating his profound knowledge of finance and investing.
Brian is also a finance and business writer for esteemed national platforms and publications, including CNN, TheStreet.com, CBS News, The Wall Street Journal, U.S. News & World Report, Forbes, and Fox News.
