Gartner: 97% of Firms Can't Cut Costs on AI Productivity Alone
Three-quarters of board members expect a productivity and savings return on their company's AI spending. New Gartner research says nearly every organization, 97%, cannot cut expenses through productivity measures alone.
"Thirty-eight percent of companies are over budget on AI and 85% report they are planning to spend even more next year," said CV Viverito, senior director analyst in Gartner's HR practice. "Ultimately, organizations will not generate cost savings from AI at this point."
The report comes as many companies grapple with the gap between AI promises and outcomes. Other recent reports found that about 95% of corporate earnings call discussions on AI productivity focused on future gains, which suggests executives were optimistic but had not yet seen results.
Leaders disagree on where AI helps
Gartner also found that 78% of leaders are not aligned on how AI helps in their workplace. Arj Bagga, a vice president analyst in the HR practice, said that without a shared view of where AI matters most, companies lack a clear way to position the workforce or capture value from the investment.
Many leaders see AI as a catalyst for working differently, Bagga said, but their approach is anchored in how work already gets done today. To imagine new possibilities, he said, leaders must actively discover how work will get done in the future. They should start by considering the possibilities and then refine them for reality.
The report tells HR teams to work with leadership so that AI strategies bring value. HR leaders also need to reduce the organizational risk of adopting the technology. The report says HR should "prepare for the employee implications of concentrating AI asymmetrically".
Time saved is not time well used
A recent Gartner survey of more than 1,800 employees found that just 21% of the time AI saves is redirected into more innovative work. The report says employees need upskilling to produce better AI-enabled work.
Viverito said creating capacity is not the struggle, since that is already happening as organizations redesign work. The difficulty is making that capacity usable and pointing it at what is valuable. Viverito called the greater opportunity using AI for things that were not possible before, such as moving employee time into new capabilities, outcomes and sources of growth.
Meanwhile, only 9% of CEOs in a recent study said AI agents had been transformational at their companies, and 43% reported "moderate impacts with targeted use cases". Still, 84% call AI a top investment priority over the next three years.
Source: HR Dive