There’s now a general consensus that generative AI will fundamentally transform business, and that companies and individuals that don’t get on board will soon be consigned to the dustbin of history.
At the same time, as companies explore this technology more deeply, they will want evidence, real business metrics that show how AI is actually improving business performance and revenue.
You can't (and shouldn't) just trust vendor promises, but it's hard to see a direct correlation between, say, Microsoft Copilot and overall business performance.
So should CIOs just take it on faith? In this week's Clouded Judgement newsletter, investor Jamin Ball suggests that most companies may not have a choice. In his view, companies may have to make very tough buying decisions because they won't know the outcome for some time.
Here's Ball's take:
“The world is evolving right now. AI is a massive platform shift. If you don't adopt or invest in AI, you risk losing market share and becoming slowly obsolete. Your competitors are investing in AI efforts, so you should too. Ultimately, these investments may not immediately translate to improved business outcomes (i.e. increased revenue), but they will certainly translate to improved end-user experiences, and potentially improved 'other' metrics like retention and churn. If your competitors are building great end-user experiences and you aren't, you could be in trouble in the short to medium term,” Ball wrote.
But CIOs want more certainty before blindly diving into any expensive new technology, no matter how transformative it may be. CIOs and their company CFOs must deal with the reality of the situation when it comes to justifying expenses: If we're going to spend a lot of money, when can we reasonably expect a return on our investment?
At the same time, those who liken AI to electricity might believe that this is AI’s electric moment, the moment when factories started switching from steam to electricity in the late 18th century. You can ignore it and keep using steam, but at some point it will be overwhelmed (pun intended).
Perhaps the answer lies with a savvy startup, but more likely, any company of a certain size will turn to the usual suspects — Deloitte, McKinsey, Accenture — and pay big money to find a solution, which, ironically, will only increase costs and time to value.
As the Grateful Dead's Jerry Garcia sang in “The Wheel,” “There's no going back, you can't stand still. If the thunder doesn't strike you, the lightning will.” CIOs looking to move forward must decide whether to move their companies steadily into the future or continue to burn money.