Larger businesses spend, spend, spend on AI

One in three companies across all markets are planning to spend $25m or more on artificial intelligence (AI) in 2025, a study from Boston Consulting Group (BCG) has reported.

The survey shows that larger businesses with revenues greater than $500 are making significant investments in AI, but there are big differences between those able to drive significant value from these initiatives and those merely following the AI trend.

The BCG AI radar, based on a survey of 1,803 senior executives across 19 markets and 12 sectors, reported that AI is a top-three strategic priority for 75% of companies.

However, just a quarter (25%) say they are actually seeing significant value from their AI investment. From a BCG perspective, the way leading businesses are able to achieve AI success involves deploying individual productivity-focused AI initiatives; reshaping critical functions to boost efficiency and effectiveness; and inventing new products and services to build long-term competitive advantage.

The study found that leading firms focus over 80% of their AI investments in reshaping critical functions and inventing new products and services. Those organisations not identified as leaders tend to focus 56% of their AI investments on smaller-scale, productivity-focused initiatives, BCG reported.

It found that AI leaders also set clear goals and track top- and bottom-line impact. In fact, BCG reported that leading companies are able to extract greater value by focusing their AI investments.

However, most companies go broad and dilute efforts across multiple pilots, seeing lower return on investment (ROI) as a result. Almost a third (31%) admit they are not measuring any key performance indicators (KPIs) – whether financial or operational – relating to their AI initiatives, while 60% of companies surveyed are failing to define and monitor any financial KPIs related to AI value creation.

According to BCG, leading companies focus on depth over breadth, prioritising an average of 3.5 use cases, compared with 6.1 use cases for other companies. These companies anticipate generating 2.1 times greater ROI on their AI initiatives than their peers.

“In my discussions with CEOs, it’s clear they are prioritising AI to drive productivity,” said Christoph Schweizer, CEO of BCG. “Our latest survey uncovers a crucial challenge: while 75% of executives rank AI as a top-three strategic priority, only a quarter report meaningful value from their AI initiatives.

“Leading AI adopters have cracked the code on how to achieve impact by focusing on a targeted set of AI initiatives, scaling them rapidly, transforming core processes, upskilling their teams, and systematically measuring operational and financial returns. Many companies have an immense opportunity to close the gap between their ambitions and reality.”

In the UK, of the 182 companies with revenue greater than $500m that took part in the survey, almost two-thirds (65%) expect to spend $25m or more on AI initiatives in 2025.

Given industry estimates of between 3% to 5% of revenue tends to be allocated to IT expenditure, the BCG figures for the UK shows that business leaders plan to spend 5% of their revenue on AI initiatives in 2025. This suggests that AI costs are not necessarily covered by the company’s existing IT budget, which is mainly spent on “keeping-the-lights-on” activities such as cyber security and maintaining existing IT systems.