AI might help companies make savings of more than 10%–if they invest over $50 million, a BCG report finds

Many CEOs and CFOs are planning to spend more on AI this year, but for most companies there’s a lag in moving the needle from hype to progress. 

New research by Boston Consulting Group takes a look at this dynamic: Some 71% of executives surveyed said they plan to increase tech investments in 2024, compared with 60% who said the same last year. And 85% are planning to increase spending on AI and generative AI, although most of those firms are adopting a less aggressive approach that could leave them trailing rivals.

“The gap between those that deploy AI and GenAI at scale and those that are falling behind is widening dramatically,” Vlad Lukic, global leader of BCG’s tech and digital advantage practice, told me. “So opting for a ‘wait and see’ approach or experimenting in small ways—like 90% of the executives we surveyed are—will make catching up to those with the right data and AI at scale devilishly hard.”

BCG’s analysis found that companies that plan to invest more than $50 million this year are 1.3 times more likely to see cost savings in 2024—and 1.5 times more likely to achieve more than 10% in cost savings. Researchers examined the AI and generative AI commitments made by organizations in terms of investments, along with the anticipated savings, Lukic explained. 

Courtesy of BCG

“These are results and plans that are baked into their budgets, which is as real as it gets,” he added, “especially when you take into account that these are mainly publicly traded companies with clear and consistent fiscal discipline.”

BCGs findings are based on a survey of 1,406 C-suite executives such as CEOs, CFOs, and CIOs, along with board chairs and presidents. The sample represents 50 countries across North and South America, Europe, the Middle East, Asia, and Africa, and includes 14 industries. The majority of firms generate between $1 billion and $5 billion in revenue.

‘Directly correlated with CEO and leadership engagement’

Another key BCG finding is that more than half (66%) of executives are dissatisfied with their company’s progress on AI and generative AI. What’s holding them back? Lack of talent is the top obstacle, followed by an unclear roadmap and the absence of strategy. Just 6% of companies surveyed said they have managed to train more than 25% of their people on GenAI tools.

But C-suite leaders committing their budgets to AI sends a “critical signal” to the organization to get the ball rolling, said Lukic, who added that some of the longer-term benefits of doing so, in addition to tech upgrades, include improved hiring and upskilling.

“Success in this space,” Lukic added, “is directly correlated with CEO and leadership engagement, both of which are involved with setting the ambition, rhythm, and follow-through.”

Sheryl Estrada
sheryl.estrada@fortune.com

Leaderboard

Mallorie Burak was named CFO at Energous Corporation (Nasdaq: WATT), an RF-based wireless power network solutions provider, effective Jan. 15. Susan Kim van-Dongen, the company’s prior interim CFO, stepped down. Before joining Energous, Burak served as president and CFO of Knightscope, Inc., and CFO of ThinFilm Electronics ASA. 

Eric Bouchard was named CFO at Axiom, a provider of tech-enabled legal, contracts, and compliance solutions. Bouchard was previously CFO of Nestlé Health Sciences for more than four years. His executive appointment at Axiom follows the appointments of Ashlin Quirk as general counsel, Katrina Benjamin as chief product officer, and Andy Burtis as chief marketing officer last year.

Big deal

Nasdaq has released its 2024 Global Financial Crime Report, a new research initiative. The report provides a view into the scope and impact of financial crime, and the scale of coordination needed to address it. One of the key findings of the report is that Business Email Compromise (BEC) is an "extremely lucrative" form of fraud in which fraudsters typically direct their attacks against a business and aim to intercept and redirect transfers of funds, according to the report. Globally, fraud losses in 2023 due to BEC is estimated at $6.7 billion—$3.4 billion in the Americas, $2 billion in EMEA, and $1.3 billion in Asia-Pacific. 

Going deeper

As part of the series on getting a “Fresh Start” this new year, a new episode of Wharton’s Ripple Effect podcast focuses on time management hacks and setting boundaries for yourself in an era where the traditional workday is being redefined.

Overheard

"As the world has done with previous technological breakthroughs, we need to navigate societal complexities around how AI will cause the labor market and jobs to evolve. If we get it right, AI offers an avenue for assisting people, powering our economies, and expanding shared prosperity."

—James Manyika, Google’s SVP of research, technology and society, wrote in a new Fortune opinion piece.