Chiefs Seek Return on AI Investing --- Period for mere experimenting with t he technology is ending, leaders say

"Business technology leaders are winding down two years of fast-paced artificial intelligence experiments inside their companies and putting their AI dollars toward proven projects focused on return on investment.

"When generative AI came along, there was a certain amount of discretionary funding that we could look at to go experiment and test out some of the technology," said Jonny LeRoy, chief technology officer of industrial supplier W.W. Grainger. "But really to scale beyond some of those experiments, we're seeing the need to actually make a better business case."

While technology leaders previously had the blessing of corporate leadership to freely experiment with AI, "the window for experimenting is mostly behind us now," Erik Brynjolfsson, co-founder of research and software company Workhelix, said Monday at The Wall Street Journal's CIO Network Summit in New York.

"This is a year where you have to be expecting business results," Brynjolfsson said, adding that the technology is mature enough to deliver them. "This is a time when you should be getting benefits, and hope that your competitors are just playing around and experimenting."

The problem is that roughly 70% of business customers' generative AI projects are still stuck in pilot or testing phase, Philip Rathle, CTO of graph database software company Neo4j, said. Generative AI models are good at summarizing text, for instance, but less capable of more sophisticated tasks, he added.

Naveen Rao, vice president of generative AI at cloud data firm Databricks, said some 90% of generative AI experiments aren't making it beyond the lab. "Accuracy and reliability is a big problem," he said.

To get over the experimentation hump, businesses need to ensure there is widespread access to corporate data so that technology builders can use it to implement AI, said Jim Siders, chief information officer of data analytics company Palantir. "That's how you get to the workable prototype that you know is fit for purpose, that you know will move the needle on the business," he said.

One way to tell if the needle has moved: AI-based tools must be able to prove their worth in less than 12 months, said Nicholas Parrotta, chief digital and information officer and president of digital transformation solutions at Harman. That can be measured by either higher employee productivity or revenue generation, he said.

Another option is breaking down AI initiatives into smaller chunks that are more easily proven out, instead of approaching them as a "big, monolithic" beast, Rao said. That means getting to the point that AI projects can be treated as computer code that simply needs maintenance, he added.

For other CIOs, the technology's limitations, and pressure from the business, are forcing them to take a pause and figure out where generative AI can actually produce better employee productivity or sales.

"We're taking a little bit of time to work out what we think the savings or the benefits are, what are the next best places to go," Grainger's LeRoy said.

But that doesn't mean his enthusiasm about AI has diminished. "I'm quite happy that it's not a magic wand," LeRoy said. "We understand that it really is a useful, powerful tool, but it fits into the broader ecosystem."" [1]

1. Chiefs Seek Return on AI Investing --- Period for mere experimenting with t he technology is ending, leaders say. Lin, Belle.  Wall Street Journal, Eastern edition; New York, N.Y.. 10 Oct 2024: B.5.