New research from Infosys Knowledge Institute suggests US Companies are ramping up investments in generative AI (GenAI) and realising returns. European companies are also investing in generative AI (GenAI). However, they are taking a more cautious path than their North America counterparts. The Infosys Knowledge Institute (IKI) forecasts European companies will increase GenAI investments by 115% in $2.8 billion next year. IKI estimates that companies in Canada and the US have invested $3.3 billion in generative AI initiatives. It forecasts this to jump 67% to $5.6 billion in 2024. The Infosys Knowledge Institute (IKI) is the research arm of Infosys.
Europe’s more cautious spending is largely due to concerns around ethics and bias driven by the more regulated European market. However, European companies remain optimistic about generative AI’s impact on their business. Consequently, they are much more confident in their ability to train and recruit talent, as well as manage and control generative AI systems.
For the Generative AI Radar 2023 – Europe report, the organisation surveyed 1,000 respondents from companies across 11 Western European countries. This included Belgium, Denmark, Finland, France, Germany, Iceland, Luxemburg, Netherlands, Norway, Sweden and the UK. The research, which is also supported by interviews with business leaders and AI practitioners, highlights the following insights.
France and Germany lead spending and adoption
- France expects to double spending on GenAI, to nearly $730 million. Germany is expected to spend almost $610 million in the next 12 months.
- In both countries, nearly 50% of companies have either implemented GenAI or implemented and created business value from it. This is compared with roughly 40% in UK, Benelux, and Nordics.
- The UK is expected to move past Benelux into third place in the next 12 months. Spending is expected to more than double to nearly $510 million.
- Nordic companies are expected to increase spending at the highest rate in the next 12 months. Growing spend to by more than 2.5x their current level, to more than $470 million.
European companies are deploying GenAI
- Despite high levels of experimentation and implementation with GenAI, only 6% of European companies generate business value with their GenAI use cases. France, Germany and the UK lead the region, with about 10% of companies reporting value delivered by GenAI projects.
Ethics, bias and regulatory concerns
- European companies are more focused on ethics and bias, and confident about managing and controlling GenAI than North American companies.
- European companies identified ethics and bias as the second biggest challenge, after data privacy and security. North American companies are less concerned with ethics and bias. It was the fourth biggest challenge behind issues such as data privacy, unusable data and a lack of skills.
- European companies also have more board directors involved in GenAI policies, reflecting their concerns around regulations. In Europe, boards of directors set regulations and policies for more than 30% of companies and are primary sponsors nearly 20% of the time.
- More than 70% of European respondents are confident in GenAI management abilities.
Balakrishna D. R. (Bali), Executive Vice President, Global Head of AI and Industry Verticals, Infosys, said “Generative AI is driving phenomenal transformation across industries, and investment is happening at a rapid pace. Against the backdrop of an ever-evolving regulatory landscape, organisations must embed responsible AI techniques to improve data quality and management. It also effectively manages ethics and bias risks. Our research has shown that for European businesses to derive business value, they must develop and evolve an AI-first operating model that prioritises business transformation and skills development and enables them to maximise human potential.”
The US Generative AI picture
IKI’S Generative AI Radar 2023 – North America surveyed over 1,000 respondents from companies across the US and Canada. The survey was supported by interviews with business leaders and AI practitioners, the report highlights the following insights.
- Generative AI is not constrained by traditional innovation barriers. Large enterprises adopt GenAI and generate revenue faster; 73% of firms with $10+ billion in revenue have implemented GenAI solutions. This is compared to less than 38% of smaller companies. C-suite buy-in is not an obstacle; more than 95% of senior executives support GenAI investment.
- Companies expect GenAI to deliver operational performance improvement, not only content creation. Only 13% identify content creation and creativity as GenAI’s most impactful areas. 42% expect GenAI to improve user experience and personalisation.
- Data challenges and lack of skills are the biggest obstacles to adoption. More than half of respondents identify data privacy, security, and usability as primary challenges. Nearly 20% see lack of skills, knowledge, or resources as the largest adoption obstacles.
- Heavily regulated industries have been quickest to adopt GenAI. Financial services, healthcare, and life sciences lead adoption of this new technology, bucking the stereotype of the slow-moving, regulated industries
Unlike previous innovations such as blockchain or metaverse, consumer versions of generative AI are widely available and accessible. The technology is already in the hands of consumers, on their smart TVs, mobiles and other devices. Generative AI has made headlines news and forced governments to investigate it’s impact on all aspects of society. Concerns have been raised, particularly on business and employment. However, the onwards march of generative AI continues.
Enterprise Times: What this means for business.
There were some interesting nuggets in this research from Infosys in both the US and European studies. The research found larger companies are more likely to adopt generative AI and claim business value than smaller, nimbler enterprises. This contradicts the traditional trend that smaller, more nimble organisations adopt new technology faster. This is due to either their inability to pivot quickly or larger organisations tendency to adopt a wait-and-see approach to most technologies.
This is not the case with generative AI. Large organisations seem to outpace smaller ones to extract value due to low entry barriers. Data may also be a factor here, Generative AI needs data to be effective, and the larger the organisation, the larger the data lake. In addition to the opportunity costs to engage with generative AI. IKI’s research shows that businesses in the US and Canada in particular, are excited about generative AI. As a result, they are committing significant investment because they see it as a driver of growth. While in Europe, ethics, bias and regulatory concerns is slowing European adoption of the technology.
Both the North American and European reports are extensive and provide useful information on the general direction of generative AI. However, the technology is so wide-ranging and covers every sector and profession that it will be difficult providing a comprehensive encyclopedia of the technology.
Additionally, the technology is still at the early stage of the hype curve. However, as with any technology at the early stage of the hype curve, there is risk of unfocused investment and skipped foundational steps. Inevitably there will be lessons to be learned, quickly, about the true value and application of generative AI in enterprise landscapes in the next year.