12th November 2024, Sydney, Australia – Following a survey of 96 Australian Chief Financial Officers (CFOs) representing organisations responsible for over 21% of Australia’s GDP, local technology research and advisory organisation, ADAPT, has today released the results of its 2024 CFO Edge survey.

Mr. Shane Hill, Principal Analyst at ADAPT, says the survey results prove that, despite the attention being enjoyed by AI-enabled solutions, much work needs to be done to realise the promised gains of the technology:

“Setting aside the hype, it’s now clear we just aren’t generating meaningful value from AI, which isn’t surprising given our lack of investment in the fundamentals needed to make the technology successful. Turning the endless discussion about AI – in everything and everywhere – into actual value is proving a real challenge, as expectations for value are far in advance of reality in these initial stages. The companies actually ready to harness this tech are still few and far between1, but that hasn’t stopped a fear-of-missing-out gripping CFOs, who are allocating their entire innovation budget, previously dedicated to many smaller initiatives, towards the implementation of AI.”

 

Vast majority of organisations struggling to see AI-enabled value

When asked about their ability to generate value through artificial intelligence, a full 77% of CFO respondents deemed their organisations as “ineffective”, while just four per cent of respondents were confident enough to consider their organisation “very effective”. No CFO surveyed described their organisation as extremely effective at generating value from AI. Those in the middle ground, neither effective nor ineffective, made up the remaining 19% of organisations.

Shane Hill says the answer to AI-based value generation goes beyond maturing the data stack, towards enhancing organisational focus on people:

“In order to bring about real success that can be shown on the balance sheet, companies need to improve the way they collect and manage their data, while giving their workforce reasons to trust the technology at their disposal. Moreover, empowering curious people to change how value is created is a critical factor in delivering new types of value with AI, not just doing old things in different ways. Adopting AI without proper oversight of this data and organisational support means most will be placing the cart before the horse.”

 

AI consumes lion’s share of innovation budget, yet to deliver value

When asked how they expect macroeconomic trends to impact their budget allocations over the next 12 months, Australian CFOs indicated a five per cent decrease in their intended research & development spend, and a seven per cent increase in their Artificial Intelligence budget allocation, suggesting almost all organisational R&D spend is being directed towards AI initiatives. Additionally, the survey results indicate that the vast majority of AI use cases remain in their infancy, with CFOs preferring to undergo a number of smaller pilot programs before going “all-in” on the technology, affecting the ability of organisations to realise sustainable value from the technology. 44% of CFOs considered their organisations effective at performing one of more relatively small pilots to learn about AI, while CFO focus was also directed towards building teams to look for AI-based opportunities2, and improving data quality for use in AI projects3.

“A lack of good data is causing analysis paralysis at the executive level around this technology,” says Hill. He suggests that this may point to more fundamental issues modelling key scenarios. “Organisations aren’t sure which opportunities to chase, which ultimately ends up with the only innovation Australian companies bet on is AI.

This is problematic as simpler, less risky forms of innovation are being neglected for a technology we haven’t yet built the infrastructure to use safely. There’s a risk of existing issues just being made worse, faster, by AI, so CFOs need to seriously take a look at how it’s being scaled across their organisation, as they face the risk of falling foul of incoming regulations around the technology, should things go wrong.”

Media Contact media@adapt.com.au