Businesses Are Investing Heavily in GenAI

Companies are investing heavily in generative AI, spending up to USD50 million per year on the technology.

This finding comes from management consulting firm Bain & Company, which has been conducting quarterly surveys to assess GenAI readiness and implementation in businesses. Each survey sampled around 200 organizations.

Moving ahead with GenAI

According to the five partners behind the Bain report, companies are investing about USD5 million annually on average, with around 100 employees dedicating at least some of their time to GenAI. Among large companies, about 20% are investing up to USD50 million per year.

Most companies are moving ahead with GenAI. By early 2024, 87% of surveyed companies said they were already developing, piloting, or deploying GenAI in some capacity. Most of these early deployments are in software code development, customer service, marketing and sales, and product differentiation.

Separately, more than 60% of surveyed companies see GenAI as a top-three priority over the next two years. However, only about a third (35%) have a clearly defined vision for how they will create business value from GenAI.

Interestingly, technology companies - which tend to be at the forefront of GenAI implementation - are learning how difficult GenAI implementation truly is. They now feel less ahead than in previous surveys regarding the readiness of their data, resources, and policies for GenAI. In comparison, companies in other industries reported the same levels of readiness in both surveys.

The next phase

Regardless of the challenges, industries are moving to the next phase of GenAI, shifting from initial excitement and hype to what the report called “more realistic assessments.”

“Concerns about security and conversations around implementation are more deliberate and informed as companies have a better understanding of the challenges based on learnings from their pilot programs,” the authors wrote.

They cited digital transformation as an example, noting that automating a process or porting it to a new technology doesn’t necessarily deliver enough upside to justify the investment. Instead, real value comes from understanding how the new technology changes not just how something gets done but what gets done.

Five use cases are showing early signs of success: Sales and sales operations, software code development, marketing, customer service, and customer onboarding. Conversely, use cases in legal, operations, and HR appear less successful.

Buy or Build

When it comes to the age-old conundrum of whether to buy or build, the report says companies are currently buying third-party solutions when available but are investing in tailoring them for their needs. Businesses are expected to gravitate towards buying as more third-party solutions mature.

Indeed, the percentage of companies buying off-the-shelf applications has already increased slightly as more tools become available. However, outcomes were somewhat mixed, with a small subset of respondents saying that tools need to get better.

“The race to gain a competitive edge has many companies developing their own solutions, but as third-party offers get better and become more sophisticated and specific, we expect to see more decisions to buy rather than build,” the authors concluded.

You can read the full report from Bain here.

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