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ROI from AI: The importance of strong foundations

Practises for unlocking the benefits and true value of AI

How to get a positive ROI from AI initiatives? Implement key practises across data management, tracking results and security, privacy and ethics.

ELITE athletes know that in order to perform on the field, they first have to put in the prep work—proper nutrition and sleep, building strength and endurance in the gym. As more and more companies adopt AI technologies, they are quickly learning this same lesson: To get a big return from AI, they must first put in the preparation. As the adage goes, “Failing to prepare is preparing to fail.”

The research firm ESI ThoughtLab recently published a benchmarking study (cosponsored by Deloitte) exploring how companies are approaching their AI implementations, what value they are seeking and what they are achieving.1

Today, companies are generally seeing a positive ROI from their AI implementations. The survey found that top areas for returns include customer service and experience (74 per cent), IT operations and infrastructure (69 per cent) and planning and decision-making (66 per cent). Although this is good to see, a number of companies aren’t yet realising an ROI.

There is a big difference between these over- and underperformers. Like elite athletes, overperformers set the right foundation and preparation for success (see figure). The survey found that those companies achieving high ROI for their AI projects (over 5%) had largely or fully implemented key practises across data management, tracking results and security, privacy and ethics.

Experience and maturity also play a big role in realising value. The ROI for AI projects varies greatly, based on how much experience an organisation has. Leaders showed an average of a 4.3% ROI for their projects, compared to only 0.2% for beginning companies. Payback periods also varied, with leaders reporting a typical payback period of 1.2 years and beginners at 1.6 years.

The survey uncovered that today, companies are gaining value from their AI implementations across five main areas—higher productivity, increased customer satisfaction and retention, improved employee engagement, improved profitability, and new products and services. Over the next three years, leaders see these top five areas remaining the same. However, the percentage of those that expect value from new AI-powered products and services more than doubles, from 19 per cent to 42 per cent.

This shows a growth from efficiency-focussed benefits to strategic ones as well. In Deloitte’s own recent State of AI in the Enterprise report, we advocated that businesses should move beyond efficiency and use AI technologies to differentiate themselves.2 This shift can’t happen unless companies can achieve and prove business value.

Implications for executives

Setting the right AI foundation is the surest way companies can achieve true strategic value and successfully realise strong ROI from AI implementations. If you are in for a penny, you need to be in for a pound.

Scaling is critical. Quickly bring successful experiments to the wider organisation to justify the large investments needed for AI. Leverage cloud platforms when possible to accelerate efforts.

Can’t manage what you can’t measure. Calculating the ROI for AI implementation still is more art than science. Fully account for costs, and quantify strategic and nonfinancial benefits.

In it to win it. AI leaders understand that it is worth the long-term investment in the right data practices, technologies and tools, talent and business processes.

Technology, Media & Telecommunications

Deloitte’s Technology, Media & Telecommunications (TMT) industry practice brings together one of the world’s largest group of specialists respected for helping shape many of the world’s most recognised TMT brands—and helping those brands thrive in a digital world.​

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Cover image by: Viktor Koen

  1. ESI ThoughtLab, “Driving ROI through AI,” September 18, 2020. The survey looked at 1,200 companies across 12 industries and 15 countries in March and April 2020.

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  2. Beena Ammanath, David Jarvis, and Susanne Hupfer, Thriving in the era of pervasive AI: Deloitte’s State of AI in the Enterprise, 3rd Edition, Deloitte Insights, July 14, 2020.

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