It’s safe to say that AI is top of mind for enterprises — assuming it wasn’t before.
According to a recent Accenture survey, 63% of organizations are now prioritizing AI over all other digital technologies. That might sound drastic. But on the other hand, it’s not entirely surprising, what with tech like GPT-4 and ChatGPT dominating the conversation about digital transformation.
Accenture’s stats are similar to McKinsey’s, which show that more than half of companies are investing more than 5% of their digital budgets in AI. Sixty-three percent, meanwhile, say that they expect their investment to increase over the next three years.
The enthusiasm is reflected in the growing financing AI startups have been able to attract. An analysis published by WriterBuddy, an AI content writing platform, found that corporate AI backing has risen consistently in the past decade, to the tune of billions.
WriterBuddy analyzed over 10,000 AI companies and their funding data between 2015 and 2023, drawing on funding tracking databases including Crunchbase, NetBase Quid, S&P Capital IQ and NFX. Investment in the AI sector soared from $12.75 billion in 2015 to $93.5 billion in 2021, marking a 633.33% increase over the six-year period, according to the analysis.
Interestingly, the pandemic seems to have accelerated the growth. Although there was a slight drop in investment volume in 2018, there’s been a recurring boost in volume every year since then, WriterBuddy found.
The rush to automate previously manual, offline and analog processes likely had something to do with the uptick. An IBM survey implies that just over a third of the organizations were influenced by the pandemic to adopt and use AI-driven automation as a means of improving productivity. (The pandemic forced companies to adjust to remote work, which some executives — rightly or wrongly — blamed for an initial decrease in productivity.)
While outside the scope of WriterBuddy’s analysis, an especially big jump in funding arrived with the rise of generative AI, or AI that can generate text, images and more given a few instructions. (Think Bing Chat or DALL-E 2.)
2022 was a record year for investment in generative AI startups, with equity funding topping $2.6 billion across 110 deals, according to CB Insights. A separate report by Tortoise Intelligence found that global financing for AI companies increased by 115% from 2020 to 2022 (from $36 billion to $77.5 billion), marking the largest year-on-year growth in the industry for at least two decades.
Big Tech giants are attempting to stake a claim, certainly. Earlier this month, Salesforce announced a $250 million fund for generative AI investments.
To give an idea of just how strong the pull toward AI continues to be for the enterprise, companies are investing despite saying that they’re not sufficiently prepared to address the risks of the technology.
This month, KPMG released a survey of business executives across multiple sectors for their views of the risks associated with their AI and predictive analytics models. While a whopping 85% said that they expect an increase in their company’s use of AI and predictive models, 27% reported that their employer lacked regulatory oversight over the said predictive models — whether due to a lack of skilled resources, budget constraints or poor-quality tooling.
Relatedly, McKinsey suggests that there hasn’t been “substantial increases” in reported mitigation of any AI-related risks from 2019, when the firm first began capturing that data. “Overall, we have seen little change in organizations reporting recognition and mitigation of AI-related risks since we began asking about them four years ago,” McKinsey analysts wrote in a December 2022 dispatch.
Risks be damned, other metrics suggest that, indeed, it’s full steam ahead on the corporate AI adoption front.
AI adoption has more than doubled, the McKinsey survey revealed, with 50% of companies reporting that they’ve applied AI to at least one business area versus only 20% in 2017. The same report shows that the average number of AI capabilities that organizations use, such as text generation, also doubled, from 1.9 in 2018 to 3.8 in 2022.
If there’s a reason for the accelerated deployment besides the hype, it might be that some companies are finally seeing a return on investment from their AI projects.
In a 2022 poll of senior data and technology executives by NewVantage Partners, 92% of large organizations signaled that they’re achieving returns on their data and AI investments, up markedly from 48% in 2017. And a 2021 McKinsey survey found that the share of companies reporting at least 5% of earnings (EBIT) are attributable to AI increased to 27%, up from 22% in 2020.
It is, it’s safe to say, AI’s time to shine.