Nearly half of CIOs (48%) say digital transformation efforts are being deprioritized as a result of an increased spending focus on AI, according to new research.
38% of CIOs surveyed by Lenovo revealed that increased AI investments were leading firms to reallocate spending from key areas of the business, including sustainability efforts.
An average of 41% agreed that “AI exploration and adoption is pulling resources and attention away from other key IT areas”.
The report highlighted a concerning disconnect between the immediate priorities and IT goals of CIOs, and the wider industry push toward investing in AI.
Though 96% of the surveyed CIOs cited an expected increase in AI investments over the next year, just one-in-five expected a correlative increase in overall IT budgets of more than 10%.
CIOs are excited about AI, but it shouldn’t come at a cost to broader IT spending
AI is now a top priority for CIOs, the study found. cited by 51% as one of the areas of IT infrastructure that these executives “feel the most urgent pressure to address” - this puts AI on even footing with cyber security as a CIO concern.
However, despite this focus on the technology, a sizable number of those surveyed don’t expect to see much return on investment (ROI) from AI in the immediate future.
Though 39% claimed to have already witnessed ROI, 19% expect to see it next year, and 23% expect to see it in the next two to three years.
Alarmingly, 5% described ROI as likely in the next six to ten years, and 5% said they were “not sure” when they would ever see a positive ROI.
If AI investments are siphoning money away from digital transformation efforts with little promise of value, then businesses may well be managing their financial priorities ineffectively, Lenovo noted.
Just over half (51%) see AI as leading to back-end cost reductions in areas like supply chain, while far more cited an increase in consumer competitiveness (77%) or enhanced productivity (83%) as AI’s key value drivers over the next two years.
While market competitiveness and employee efficiency are both areas capable of creating value, the lack of immediate cost reduction as a result of AI again draws attention to conflicting organizational pursuits.
Companies aren’t prepared for AI investment
While organizations are turning their attention to AI investment, the Lenovo study also found the underlying infrastructure required to deliver value from the technology is lacking.
“Huge swathes” of firms are not adequately prepared to start scaling AI quickly, the study noted.
Just 24% of the surveyed CIOs cited corporate policy on operational and ethical use as an area prepared to scale AI, and only 22% said that new product lines were “AI ready”.
“AI's success hinges on much more than technology,” Ken Wong, president of the solutions and services group at Lenovo, said.
“It’s important for enterprises to consider how all organizational functions are equipped to navigate the AI landscape – that extends to their security infrastructure, internal and external processes, and their talent base,” he added.
