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Here’s something worth paying attention to. According to consulting firm EY, businesses are still not seeing substantial revenue gains or cost reductions from using AI.
“I haven‘t met any clients that say I wanna slow down my spend on AI. But I have seen a bunch of clients say, ‘I don’t know where my ROI is today,’” said EY executive Dan Diaso in a conversation with Jessica Lessin during The Information’s AI Agenda Live Summit.
That’s a striking statement, echoing a complaint from businesses about AI that goes back a year or two. And it highlights why so many software and AI companies are offering discounts and freebies to persuade businesses to use AI tools.
What’s made businesses conscious of the returns they’re seeing from AI is usage-based pricing, which Anthropic and other providers began to adopt more widely over the past year. That pricing approach has translated to much higher bills. Companies began to both use the tools more carefully and use open source models more, as we’ve reported.
Even so, Diaso said that spending on AI now is still “based on enthusiasm as opposed to that evidence.” He said only one in 10 of EY’s clients can “actually show where the ROI is happening” in their income statements.
He added that “everybody without a doubt would say that AI is significantly increasing the [organization's] productivity.” But from a CFO’s point of view, “productivity needs to translate into one of two things…Are we making more revenue? Or are we taking costs out of the organization?”
Some companies, such as Block and Cloudflare, have cited AI as a reason to do major layoffs. Block executive Owen Jennings said that as a result of AI investment, the company’s gross profit has seen a “meaningful acceleration” because it’s able to deliver products to customers without the same level of spending on employing humans. Echoing comments from Snowflake’s CIO about his own company’s layoffs, Jennings suggested Block used the staff cuts as a “forcing function” to get employees to be more productive using AI tools.
“I don't think you can actually get the change without such a massive forcing function,” Jennings told my colleague Amir Efrati on stage. (This kind of rhetoric from corporate America is likely part of the reason why AI seems to be widely disliked by US voters and workers.)
Chris Taylor, the CEO of Ode with Anthropic, a joint venture Anthropic formed with Blackstone and other Wall Street firms to help businesses adopt its AI, supported the idea that ROI takes a while to prove.
He said on stage that Ode’s clients are just beginning to see returns in their spending on AI, because he said income statements are a lagging indicator of those returns. “It takes a long time for [an AI project] to make its way into production, for it to have the impact, and then for that impact to show up over some period of time in P&L level metrics,” Taylor told my colleague Cory Weinberg at the summit.
Why Atlassian Isn’t Afraid of Competing With OpenAI and Anthropic
While some software firms have put up toll gates around their customers’ data, Atlassian has taken the opposite approach. Atlassian, which sells software that lets developers and other teams collaborate on work, in February launched a feature that lets customers use external AI chatbots and coding agents from OpenAI, Anthropic and other providers to access data stored on Atlassian such as work records and transcripts.
Tamar Yehoshua, chief product and AI officer at Atlassian, said there was some debate internally about whether to launch the feature. But it turned out to be the right call, as it has increased customers’ usage of Atlassian’s products, she said onstage at The Information’s AI Agenda Live Summit.
What underlined Yehoshua’s confidence in launching the feature was skepticism that the big AI labs would eat traditional software firms’ lunch, despite widespread concerns elsewhere in the industry.
“There‘s a tendency with technology shifts to believe that the people providing the foundation are just gonna go up the stack because they have nowhere else to go, and that they will take over everything,” Yehoshua said on stage. “And it’s just never happened...and I have a lot of conviction [that it] just isn't gonna happen.”
Yehoshua, who previously spent more than eight years as an executive at Google, noted that people used to worry that Google would build on its search market dominance to take over the entire consumer application market, which didn’t come to pass, she said.
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