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Gartner: 1 in 3 GenAI Projects Will Be Abandoned

Gartner has shared research that suggests that channel partners have a key strategic role to play in helping enterprises with AI.

Written By: Matthew Sainsbury

Jul 31, 2024

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The enthusiasm behind generative AI (GenAI) among enterprises is massive. However, according to recent Gartner research, close to one in three GenAI projects will be abandoned.

The findings were presented at the Gartner Data & Analytics Summit in Sydney, which also found that for enterprises that can get GenAI projects right, the return on investment (ROI) is significant: Successful AI projects add 15.8% in revenue while also achieving savings of 15.2% and boosting productivity by 22.6%.

“Organizations are struggling to prove and realise value. As the scope of initiatives widens, the financial burden of developing and deploying GenAI models is increasingly felt,” Gartner Distinguished VP Analyst Rita Sallam said at the event.

The reasons that AI projects fail are numerous, with poor data quality, inadequate risk controls, escalating costs, and unclear business value all being cited.

There’s also an element of impatience that is impacting projects, with Gartner research highlighting that GenAI requires a higher tolerance for indirect, future financial investment criteria versus immediate ROI.

Historically, Gartner notes, many CFOs have not been comfortable with investing today for indirect value in the future. This reluctance can skew investment allocation toward tactical versus strategic outcomes.

A massive opportunity for the channel

As previously reported in Channel Insider, enterprises are realising that AI projects are not straightforward and are turning to their channel partners to support them with projects. Unfortunately, 94% of partners are themselves in need of making significant improvements in their internal knowledge of AI first.

According to Luke Ellery, VP analyst at Gartner, channel companies should center their efforts on helping their customers see through the hype and focus on evaluating the cost, risk, and value of a project. That way, they can provide support in helping to build an effective and organized approach to AI.

“They can also help their customers understand the risks relevant to the technology being considered as well as in the regulatory environment,” he said. “Value is key though. Clients often focus on productivity, however, other benefits include: new products, risk reduction, increased asset yield, speed and improved customer service.”

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Matthew Sainsbury

Matthew is a Sydney-based multi-disciplinary journalist that has covered IT for 15 years. . In particular, he covers B2B IT and other channel topics in the APAC region. In addition to Channel Insider, Matthew’s work has been published on ARN, where he previously served as the editor, as well as CRN and AFR. On the side, Matthew is an award-winning arts and entertainment critic and author, and he also participates on the judging panel for the Australian IT Journalism Awards.

Gartner: 1 in 3 GenAI Projects Will Be Abandoned

A massive opportunity for the channel

Matthew Sainsbury

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