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Original article
ICONIQ Growth | 2024 State of AI Report
ICONIQ Analytics + Insights - State of AI Sep24.pdf
Key Takeaway
- For Entrepreneurs: Generative AI is not just a trend but a revolution that can reshape business landscapes, particularly in enhancing productivity and driving innovation. Entrepreneurs should focus on specialized use cases and underserved business functions to demonstrate value and quick paths to ROI.
- For Investors: The current spend on generative AI within enterprises is only about 10% of the total software procurement spend, indicating significant potential for growth and acceleration in the coming years.
Summary
The 2024 State of AI Report by ICONIQ Growth highlights the transformative power of generative AI in enterprises. The report, based on a survey of 215 executives at enterprises with $500M+ annual revenue, reveals that 89% of CXOs rate the adoption of generative AI tools as highly important. It discusses the current state and future potential of generative AI, including adoption challenges, ROI expectations, and use cases across various functions.
Insights
- Adoption and Budgets: 88% of companies have an approved budget for AI investments, with most funds coming from existing budgets rather than new allocations.
- Decision Makers: CTOs are the primary decision makers for generative AI-related decisions, followed by Heads of AI and CEOs.
- Vendor Preferences: Enterprises prefer to source generative AI products from existing vendors and tech incumbents rather than new AI-native vendors.
- Build vs Buy: Technology firms tend to build generative AI products, while financial services and healthcare companies prefer to buy from existing providers.
- Infrastructure and Applications: Enterprises spend equally on models/infrastructure and applications, with technology firms allocating more to infrastructure.
- Barriers to Adoption: Key barriers include lack of in-house expertise, data security/privacy concerns, and unproven ROI.
- Upskilling: Hiring data scientists, machine learning engineers, and data engineers is crucial for AI adoption.
- Use Cases: Generative AI has shown significant adoption in product enhancements, IT, customer service, and software code development, with HR and legal functions lagging due to data/security concerns.
- ROI Expectations: Executives expect ROI from generative AI in the 5-20% range, with productivity gains and cost savings easier to quantify than revenue impact.
Implications