Companies aim to boost AI investments in the next 3 years

While the use of gen AI tools is spreading rapidly, the McKinsey Global Survey 2023 data doesn’t show that these newer tools are propelling organisations’ overall AI adoption. They continue to see returns in the business areas in which they are using AI, and they plan to increase investment in the years ahead. A majority of respondents reported that AI-related revenue increased within each business function using AI and reduced costs.

Cost reductions

In 2022, organisations witnessed significant cost reductions as a result of their adoption of AI capabilities across various functions. Specifically, in the field of Human Resources, approximately 26% of respondents reported cost decreases of 20 per cent or more, while 41 per cent experienced reductions in the 10-19 per cent range.

In Manufacturing, a substantial 40 per cent of respondents saw cost reductions exceeding 20 per cent, with an additional 55 per cent reporting decreases in the 10-19 per cent range. For Supply Chain Management, 24 per cent of respondents witnessed cost reductions of 20 per cent or more, while 33 per cent reported reductions in the 10-19 per cent range. On average across all functions surveyed, 42 per cent of respondents enjoyed cost reductions of 20 per cent or more, while 24 per cent experienced decreases in the 10-19 per cent range. These findings highlight the tangible benefits that organisations reaped from their AI adoption initiatives in 2022.

Revenue increase

In 2022, organisations experienced revenue increases due to their adoption of AI technologies across different functions. In the realm of Human Resources, nine per cent of respondents reported revenue growth exceeding 10 per cent, while 34 per cent observed increases in the 6-10% range. Additionally, 17 per cent witnessed revenue gains of five per cent or less, making up a total of 60 per cent of respondents who saw positive impacts on revenue.

In the Manufacturing sector, 16 per cent of respondents reported revenue growth exceeding 10 per cent, with 34 per cent experiencing increases in the six-10 per cent range, totaling 66% of respondents benefiting from AI adoption in terms of revenue growth.

For Marketing and Sales, eight per cent of respondents reported revenue increases greater than 10 per cent, while 19 per cent observed growth in the six-10 per cent range, and 38% saw gains of five per cent or less.

In the realm of R&D/Product and/or Service Development, 12 per cent of respondents experienced revenue growth exceeding 10 per cent, with 25 per cent observing increases in the six-10 per cent range. Additionally, 24 per cent reported revenue gains of five per cent or less.

In Risk management, 13 per cent of respondents reported revenue growth greater than 10 per cent, while 16 per cent observed increases in the six-10 per cent range, with 35 per cent experiencing gains of five per cent or less.

Service Operations saw 10 per cent of respondents with revenue increases exceeding 10 per cent, 14 per cent observing growth in the six-10 per cent range, and 33 per cent reporting gains of five per cent or less.

In Strategy and Corporate Finance, 10 per cent of respondents reported revenue growth exceeding 10 per cent, with 16 per cent experiencing increases in the six-10 per cent range, and 32 per cent observing gains of five per cent or less.

The survey is a good reminder that there’s a lot of value out there in the broader AI world. While reported overall AI adoption remains steady at around 55 per cent, more than two-thirds of respondents say their companies plan on increasing their investments in AI. One way to interpret this is that ‘the rich are getting richer’ when it comes to extracting value from AI. We’ll be interested in seeing whether the great interest in generative AI opens the door to higher overall adoption of AI going forward.