Cost Controls Are a “Challenging” Issue For AI-Minded Companies

Deloitte points to high price tags for artificial intelligence up-front costs, and that’s a problem for chief financial officers.

AI Finance Today recently covered a new MIT study showing that too many companies are unprepared to manage artificial intelligence rollouts.

That’s the case, as 60% of survey respondents told MIT Technology Review Insights that generative AI technology “will substantially disrupt their industry over the next five years.” The same report notes that C-suite executives are “unconcerned” over AI disruption risk, with 78% of respondents viewing generative AI as a “competitive opportunity.”

Now, another new study from Deloitte sheds more light on the AI implementation front, and the news isn’t exactly positive.

The report, which tracked the sentiments of 300 senior executives worldwide, noted that 50% of decision-makers cite “challenges with infrastructure” as the biggest threat to internal cost controls. That’s up over 60% from a similar survey in 2023, Deloitte reports.

The main shift in 2024 is balancing the need for new AI initiatives with high upfront implementation costs with expected cost reduction gains from new digital technology investments.

“It’s really the rise of generative AI and AI applications overall that has added to the importance of having your house in order from an IT infrastructure perspective,” Mauricio Garza, a leader in Deloitte’s strategy and analytics practice, said in an interview. “As you’re trying new things within this space, the main barriers come to light.”

According to Deloitte, 79% of respondent companies are “clearly embracing GenAI and machine learning to drive efficiency, innovation, and improve customer and employee experiences.”

The early engagement with AI is the “tip of a larger technology spear.”, Deloitte noted. “To become more scalable, agile, and resilient, many companies are applying AI as a tool either to support corporate transformation strategy or to take the lead in driving it.”

Questions To Answer

To properly balance cost containment with quality AI outcomes, Deloitte advises senior executives to reach a consensus and answer these questions before committing to a formal (and fully funded) AI rollout.

• Is there a clear business case for the margin improvement effort?
• Is a solid tracking and reporting process in place for the business margin improvement effort?
• Is the management team agile in assessing, validating, and adjusting targets reasonably, according to the reality throughout implementation?
• Are you proactively investing in technology improvements to enable data availability, improve reliability, and facilitate decision-making?
• Are change management activities deployed to raise awareness, acceptance, and benefits of initiatives?
• Are leadership roles and budgets distinct for the business margin improvement efforts?

Getting the correct answers to the above questions should help with what Deloitte calls “leadership accountability” when engaging with artificial intelligence deployments. Now, answering adequately means going back to the drawing board and ensuring your AI blueprint is in good working order.

Recent Posts

Leave a Reply

Your email address will not be published. Required fields are marked *