Are CEOs Capitalising on Emerging AI Technologies?

Recent studies and insights from leading consultancies reveal a mixed picture of AI adoption and value creation among businesses worldwide. While many CEOs are embracing AI strategies, challenges remain in fully integrating these technologies across organisations and realising their full potential.

According to business management consultant Arthur D. Little's 2024 CEO Insights study published in July this year, AI usage has accelerated dramatically since 2023. 

An overwhelming 96% of executives claimed to have implemented an AI strategy within at least one department of their organisation, with 47% having a strategic view toward AI.

However, the study also revealed that only 13% of companies have adopted a comprehensive company-wide AI strategy. 

This suggests that many organisations are still in the process of understanding AI's impact and integrating it across their operations.

Leading the charge

Regional differences were apparent, with 75% of companies in Asia reporting a company-wide strategy or strategic view.

Financial services firms and organisations with revenues exceeding US$10 billion led the charge, with 79% and 67% respectively having comprehensive AI strategies in place.

Another survey from analyst partner HFS and AI solution provider Genpact carried out earlier this year looked specifically at the adoption of generative AI (GenAI) - artificial intelligence which uses trained algorithms to learn patterns from large data sets and create new content. 

The survey revealed that nearly all of the companies surveyed had not adopted a comprehensive GenAI strategy . 

Having surveyed 550 senior executives from organisations with revenues of US$1bn or above across 12 countries and eight industries, HFS and Genpact found that only 5% of enterprises have achieved mature GenAI initiatives, showing there is still room for growth in this area.

Increased efficiency

The primary focus for many CEOs implementing AI strategies is to enhance core functions by increasing efficiency and effectiveness. 

Arthur D. Little found automation was a key driver, with efficiency being the leading use case in four out of seven sectors surveyed.

Some industries are pushing beyond efficiency gains. Telecommunications, travel and transportation, and manufacturing sectors are focusing on using AI to create new business models. 

However, the manufacturing sector lags behind others in overall AI use, scoring an average of less than 50% for AI implementation across various performance vectors, according to Arthur D. Little’s research.

One unnamed CEO in the healthcare sector emphasised their approach: "Our target is to use technology to improve operational effectiveness while cutting expenses." 

A telecommunications CEO highlighted more advanced applications: “To predict market movements, we are using AI and machine learning, which we are using more and more for scenario analysis and predictive modelling.”

Negative impacts on employees

Meanwhile, HFS and Genpact’s survey highlights concerns about overemphasising productivity at the expense of broader business goals.

While 74% of executives anticipate GenAI driving productivity gains, 52% of respondents caution against overemphasising productivity, citing potential negative impacts on employee experience.

GenAI as a revenue driver

While AI adoption is on the rise, translating this into tangible business value remains a challenge for many organisations. McKinsey's survey found that only a small subset of respondents (46 out of 876) reported that a meaningful share of their organisations' earnings before interest and taxes (EBIT) can be attributed to their deployment of GenAI.

These high performers, which attributed more than 10% of their EBIT to GenAI, are using the technology in an average of three business functions, compared to two for other organisations. They are most likely to use GenAI in marketing and sales.

HFS and Genpact found that 61% of the enterprises they surveyed, all of which have revenues exceeding US$10 billion, allocated up to 10% of tech budgets to GenAI, recognising its importance in value creation.

Some 51% of executives were found to reallocate funds, mainly from IT infrastructure and software development, while 50% put dedicated funds towards GenAI, with 42% planning to reinvest anticipated efficiency gains.

Among the industries that HFS and Genpact surveyed, health care, hi tech and retail were most inclined to redirect existing funds toward GenAI investments. 

In contrast, the banking and capital markets and the insurance sectors typically allocated additional dedicated budgets to GenAI initiatives, signalling a strong focus to leveraging GenAI. 

Comparatively, the life sciences sector was found to execute a dual strategy, counting on forecasted GenAI-driven savings for funding, and also remaining open to external funding and partnerships.

"As companies step into generative AI's uncharted waters, the journey holds huge promise, but it is not without its perils," said Sreekanth Menon, Global Lead for AI, Genpact. 

"The challenge for most enterprises is they remain anchored in proofs of concept that can be impressive, but rarely reach operational scale. Having access to insights that can chart a course toward GenAI's full benefits — beyond productivity alone — is invaluable.”