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GenAI Investments Skyrocket
In 2023, consumer spending on #genAI surpassed a billion dollars, with even greater expectations for enterprise revenue in 2024. Despite initial doubts and limited use cases, enterprise engagement with genAI has grown significantly, with companies nearly tripling their budgets and expanding use cases beyond simple applications.
– Budget Increases: Enterprises are boosting their genAI budgets dramatically, moving from “innovation” budgets to more permanent software lines, with some reporting substantial cost savings, especially in customer service.
– ROI Measurement: Measuring the return on investment (ROI) remains complex, focusing on productivity, revenue, and efficiency gains.
– Technical Talent and Implementation: Scaling genAI requires specialized talent, and many companies rely on external services for model development.
– Model Preferences: Enterprises are moving towards using multiple models, including open-source options, to reduce dependency on single providers and customize solutions to specific needs.
– Applications: Enterprises are building internal applications rather than relying on external vendors, with a focus on applications that enhance internal productivity and manage proprietary data securely.
The overall market for model APIs and fine-tuning is expected to grow significantly, with a projected $5 billion run-rate by the end of 2024. This growth is driven by increased enterprise investment and the strategic deployment of genAI solutions across various industries.
Insights based on research by Andressen & Horowitz ( https://a16z.com/generative-ai-enterprise-2024/)
Board Considerations
For board members of enterprises considering or currently implementing generative AI (genAI), reflecting on these insights can provide strategic guidance and oversight;
1. Strategic Investment in genAI: Boards should consider how genAI aligns with their company’s long-term strategic goals. The rapid increase in budget allocations for genAI underscores its potential to transform business operations and competitiveness. Boards need to evaluate whether their current investment in genAI is sufficient and appropriately aligned with their strategic initiatives. Boards need to ensure the company purpose and investments is aligned with sustainability and climate action, and use the transition to make multi stakeholder positive impact.
2. Risk Management: Implementing genAI involves significant risks, including data security, regulatory compliance, and the potential for technological mishaps (such as AI-generated inaccuracies). Boards should ensure that risk management strategies are in place to mitigate these risks, particularly in industries handling sensitive information like healthcare or finance.
3. Talent Acquisition and Development: The scarcity of specialized technical talent for genAI highlights a critical challenge. Boards should oversee the development of a talent strategy that includes hiring external experts and upskilling existing employees to support their genAI initiatives.
4.Vendor Dependence and Open Source Options: The move towards multi-model and open-source solutions can mitigate risks associated with vendor lock-in and improve customization capabilities. Boards should consider the implications of these trends for their company’s technology strategy, encouraging diversification of their AI model sources.
5. Innovation vs. Operation: Transitioning from using genAI for innovation projects to operational implementations can significantly affect the business. Boards need to monitor this transition to ensure that genAI deployments are enhancing operational efficiency and contributing to the bottom line.
6. Measurement of Outcomes: As enterprises continue to struggle with measuring the ROI of genAI investments, boards should push for the development of clear metrics that can quantify the impact of these technologies in terms of revenue enhancement, cost reduction, and improvement in customer and employee satisfaction.
7. Ethical Considerations: With the deployment of AI, ethical considerations become paramount, especially regarding consumer data use and decision-making processes. Boards should guide the ethical integration of genAI technologies, ensuring they conform to ethical standards and societal expectations.
Board members need to guide their companies through the complexities of adopting and integrating genAI, ensuring that these technologies are used effectively and responsibly to drive business value.
Webinar and Peer Exchange
The webinar “Shaping Tomorrow: AI & Sustainability in Strategic Boardroom Agendas” scheduled for April 30th focuses on the integration of artificial intelligence (AI) into various business aspects to enhance efficiency, market positioning, and sustainability. It features hands-on AI demonstrations and case studies. The session aims to equip board members with actionable insights for leveraging AI in strategic discussions, emphasizing future-oriented approaches and sustainability alignment.
Key discussion points include AI’s impact on industry, operations, and competitive advantage, as well as anticipated investor queries regarding AI and sustainability strategies. Experienced board members Tuomas Syrjänen and Aija Bärlund will share insights followed by peer exchange discussions and feedback.
About Boards Impact Forum and the blogpost
Events arranged by Boards Impact Forum in collaboration with World Economic Forum (Non Profit Board Network, partnering with Board Networks , INSEAD Corporate Governance Centre, Digoshen and Next Agents )
This blogpost is also shared at the blog of of Digoshen, www.digoshen.com.
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