AI adoption projects are ‘investment roulette’ as fear of missing out drives flawed decisions

Ardoq, a SaaS company dedicated to helping enterprises successfully navigate digital transformation, has published new research revealing the trial-and-error state of emerging technology adoption. The ‘Emerging Technology Adoption 2024’ report finds that barely half (53%) of research projects deliver measurable benefits and impacts. 61% of CIOs say their investments are often driven by the fear of missing out. Furthermore, nearly four in five CIOs (79%) argue they have to take risks on emerging technologies or they will ‘go the way of the dinosaurs’.

The tension of balancing risk versus reward is present in all emerging technology research projects, but most prominently around Artificial Intelligence (AI). Key findings of the report include:

• 91% of CIOs say that if successful, emerging technology research can put them at the forefront of their market – but 99% say the success rate tends to be much lower than for established technologies.

• Two-thirds of CIOs (66%) believe competitors will ‘eat them for lunch’ if they don’t move quickly on AI.

• Yet the majority (65%) feel that AI is the most high-risk technology they've ever invested in, and there is a ‘moral pressure’ on them to get it right (81%).

• 82% of IT leaders say it’s easy to ‘AI wash’ products by implementing new capabilities, without necessarily creating any tangible business benefits.

“In today’s fast-paced digital era, those that can adopt new technologies quickly and fuse them into the fabric of their business can unlock huge rewards,” commented Erik Bakstad, CEO and co-founder, Ardoq, “We have seen this time and again, but it is not since the internet emerged that a technology has promised such potential as that posed by AI today. However, investing in emerging technologies like AI is not for the faint of heart. Organizations must be prepared to navigate the risks, or could find their technology investments falling short of expectations.”

The research found that the average enterprise spends $43.4 million annually on emerging technology projects. Yet, despite these huge sums, 69% of CIOs say predicting the ROI on such investments is little more than a ‘finger in the air’ exercise. Other notable findings include:

• Only 32% of organizations look for a tangible ROI from an emerging technology adoption project within the first 12 months.

• Just over a quarter (26%) of CIOs expect to see an ROI within five to ten years.

• Nearly two-thirds (64%) of CIOs say they’ve been burned in the past by investing in technologies that failed to deliver and made the business more cautious about future investments.

Lack of EA leaving organizations blind to the impact of change

For most organizations, advancing their enterprise architecture (EA) is key to unlocking the full potential of emerging technology projects. One-third (33%) of CIOs say their EA currently relies on time-consuming processes that leave them blind to the impact of change. Other key findings include:

• 89% of CIOs say it is difficult to maintain full visibility and control of risk across the IT portfolio and anticipate the impact of evolving regulations in emerging technology adoption projects. This underscores the need for a more agile and transparent approach to EA.

• 71% of organizations rely on manually mapping – or do not map at all – to determine the impact of a new technology on existing processes and capabilities, and the potential benefits it will deliver. This presents a critical area for improvement, where automated and more sophisticated mapping tools can drive efficiency and effectiveness.

• 68% of CIOs say if they didn’t constantly alter course, it’s unlikely any of their emerging technology adoption projects would succeed.

“To reap the rewards of emerging technology investment, organizations must be prepared to take a leap of faith,” continued Bakstad. “Change is not just inevitable, it's the lifeblood of progress. Organizations must therefore assume they will be uprooted and position themselves to be able to pivot, to stay on the path. By harnessing data to inform decision-making at every turn, organizations can navigate the complexities of emerging technology adoption with confidence. This requires a change in the perception of EA from an IT capability, to a critical business discipline that helps ensure the integrity of enterprise solutions.”