Why Billions in AI Investment Can Be a Pitfall for Some Companies

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U.S. companies have spent upwards of $40 billion on AI investments, and 95 percent have seen zero monetary return, according to one study.

The artificial intelligence (AI) gold rush has reached American businesses, but despite billions being spent, many companies aren’t seeing a return on their investment in the emerging technology.

The United States is the world’s leading investor in AI technologies. Tech giants such as Amazon, Google, Meta, and Microsoft have led the way in private sector investment and announced more than $100 billion in additional AI expenditures this year.

An analysis from CMS developer Storyblok noted that eCommerce businesses are spending, on average, nearly $400,000 on AI solutions for enhanced customer service experiences. However, only 32 percent reported even a “slight improvement” in operations resulting from their AI investment.

Massachusetts Institute of Technology (MIT) published research showing that despite U.S. companies spending upwards of $40 billion on AI investments, 95 percent have seen zero monetary return.

The study found that only 5 percent of integrated AI pilot programs are producing millions of dollars worth of value. Businesses stuck in the start-up phase of integration suffer what AI developer and vice president of Vapor IO, Kamil Mansuri, called “magic wand” thinking.

“Companies stuck in pilot hell usually have three issues: unclear success metrics, trying to solve everything at once, and treating AI as the goal instead of the solution,” Mansuri told The Epoch Times.

Mansuri said the MIT study findings didn’t surprise him because, in his experience, companies tend to treat AI like a magic wand instead of a tool for specific problems. Mansuri said the best way to avoid this pitfall is to steer clear of what he called “vague AI transformation.”

“At Vapor IO, we saw real ROI [return on investment] because we targeted concrete use cases like infrastructure optimization and automated failover systems,” Mansuri said.

“The difference is focus …. We cut cloud spend from $1.5 [million] to $800,000 by using AI for resource optimization because we knew exactly what problem we were solving.”

Mansuri believes the key to monetary return on AI investments comes from starting small and choosing an area with a measurable impact.

“The companies seeing results pick one specific pain point, prove value there, then expand,” he said.

By Autumn Spredemann

Read Full Article on TheEpochTimes.com

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