Australian CFOs concerned about AI value in investment

A recent survey conducted by ADAPT has uncovered concerns among Australian Chief Financial Officers (CFOs) regarding the return on investment (ROI) of artificial intelligence (AI) in their organisations.

The survey, which involved 96 CFOs from organisations responsible for over 21% of Australia's GDP, highlights that a substantial 77% of respondents consider their organisations "ineffective" at generating value from AI. A mere four per cent of participants described their organisations as "very effective" in leveraging AI, with none claiming to be extremely effective. The remaining 19% categorised their organisations as neither effective nor ineffective in capitalising on AI.

Shane Hill, Principal Analyst at ADAPT, commented on the results, pointing out that despite AI's growing prominence, significant gaps remain in its implementation and value generation. "Setting aside the hype, it's now clear we just aren't generating meaningful value from AI, which isn't surprising given our lack of investment in the fundamentals needed to make the technology successful. Turning the endless discussion about AI - in everything and everywhere - into actual value is proving a real challenge, as expectations for value are far in advance of reality in these initial stages," he stated.

Hill also noted that many CFOs are altering their innovation budgets, prioritising AI initiatives over other projects. "The companies actually ready to harness this tech are still few and far between, but that hasn't stopped a fear-of-missing-out gripping CFOs, who are allocating their entire innovation budget, previously dedicated to many smaller initiatives, towards the implementation of AI."

Furthermore, the survey indicates a shift in budget allocations, with CFOs planning a five per cent decrease in research and development spending and a seven per cent increase in AI investment. These figures suggest a pronounced focus on AI, often at the expense of other forms of innovation.

Addressing the challenges of AI implementation, Hill suggested that beyond improving technical infrastructure, companies need to focus on empowering their workforce and enhancing trust in AI technologies. He emphasised, "In order to bring about real success that can be shown on the balance sheet, companies need to improve the way they collect and manage their data, while giving their workforce reasons to trust the technology at their disposal. Moreover, empowering curious people to change how value is created is a critical factor in delivering new types of value with AI, not just doing old things in different ways."

The survey also reveals that many organisations are still in the early stages of AI adoption, with numerous pilot programs underway to gauge the potential of AI before making larger commitments. 44% of CFOs noted their organisations' effectiveness in conducting small pilot projects to learn about AI, focusing on discovering AI opportunities and improving data quality.

Hill warned of the risks associated with the current focus on AI to the detriment of simpler, less risky innovations, stating, "A lack of good data is causing analysis paralysis at the executive level around this technology... Organisations aren't sure which opportunities to chase, which ultimately ends up with the only innovation Australian companies bet on is AI."

He also highlighted the potential regulatory risks, cautioning, "There's a risk of existing issues just being made worse, faster, by AI, so CFOs need to seriously take a look at how it's being scaled across their organisation, as they face the risk of falling foul of incoming regulations around the technology, should things go wrong."