L.E.K. Consulting Digital/AI Survey Reports Widespread Deployment and Measurable Business Impact
BOSTON, MA (October 12, 2023) – Generative AI programs like ChatGPT 4 and Bard get the hype – and seem like the wave of the future. But older, “traditional” AI that doesn’t write or draw pictures but instead analyzes data, automates tasks and optimizes workflow is already here – widely deployed in many organizations and having a measurable impact on performance.
However, an AI “imagination gap” may be keeping many companies from investing in AI – whether generative or traditional – aggressively enough to keep pace in a rapidly maturing landscape, while companies that are more aggressive in their AI and technology investments may be better positioned to take the lead. Savvy executives may want to consider accelerating their digital and AI investments.
Those are among the key findings of the 2023 L.E.K. Consulting Digital/AI Survey. The survey of 1,000 U.S. executives across multiple industries shows that conventional artificial intelligence systems have been at work in business settings for years. The impact extends beyond top-of-mind functions like marketing to include a wide range of operational tasks.
AI is in wide use and boosts KPI results
The survey found that the executives are optimistic about AI and are using it widely. More than half (57%) expect it to have a high impact on their industry and their business processes. And 56% report they are already using it in functions including engineering, product development, pricing optimization, process automation, back-office enablement and supply-chain visibility. Fifty-six percent report their companies are investing heavily in AI and the survey shows that the pace of AI investment is accelerating.
Many also report that their past AI investments have led to improvements in specific KPIs. Nearly a quarter (23.3%) report that AI-driven performance exceeded the KPI target on customer acquisition cost. Also outperforming targets thanks to AI were lifetime customer value (13.6%) and customer count (10.7%).
“Generative AI has captured attention and helped spotlight the broad potential of AI for executive decision-makers,” said Chuck Reynolds, Managing Director and Partner in L.E.K. Consulting’s Digital practice. “It may also serve to drive more AI investment. But at the same time, there is the risk that generative AI hype will overshadow other forms of AI that are already deployed and creating value.”
An AI “imagination gap” may threaten progress
Not all organizations are benefiting as significantly from AI. Survey results reflect an AI “imagination gap” between companies that report they have been successful with enterprise digital transformation versus those that report they have been more conservative and/or less successful. Seventy-five percent of executives who consider their past digital investments a success expect that AI will have a high impact on their industry and 74% expect it will have a high impact on their business processes. By contrast, only 30% of executives who do not consider their digital investments a success expect a high industry impact, and only 25% expect a high impact on their business processes.
“There is the possibility that an ‘AI imagination gap’ will set more aggressive, more optimistic companies apart from the mainstream and will help determine AI winners and losers,” said L.E.K. Consulting Digital practice Managing Director and Partner Darren Perry.
Other key findings
The survey also found that:
Some executives expect AI to replace jobs, but more do not, believing instead that its primary impact will be to enhance productivity. A significant number of executives – 39% – expect AI to replace at least some jobs. But substantially more – 61% - expect that AI will enhance productivity but will not reduce headcount.
AI's impact extends well beyond marketing and customer service. Hype about generative AI has focused, not surprisingly, on marketing and personalization. But overall, AI deployment (beyond generative AI) is much more widespread — executives report it has been deployed across a range of functions including supply chain visibility (65%), planning, procurement and execution (64%) and enterprise-wide process automation in non-manufacturing settings (64%).
There will not be an AI “wild west.” More than half – 57% - of the executives report their companies have established restrictions on generative AI backed by formal guidelines. And 28% described the restrictions as significant. The optimistic, aggressive technology investors are four times more likely to report they are establishing significant restrictions. “Those that that see more potential in generative AI and are moving faster are still doing so in a calculated way, with governance and structure,” Reynolds said.
Financial services, healthcare, and technology/media/telecom are farthest along the adoption curve – but industries are gaining ground. AI adoption levels vary widely by industry. Healthcare and financial services are clear leaders, deploying AI across a wide variety of functions. The technology, media and telecommunications industry uses AI across the most strategies. Adoption lags in the consumer and industrials sectors – but planning and exploration ae well underway.
“Over time, generative AI will play a dramatically larger role,” Perry said. “But business leaders and investors should not lose sight of the potential for traditional AI investments and deployments to pay off in the near term. The key to success is to ensure that those efforts align with strategy, are fit for purpose, and provide meaningful business impact.”
About the L.E.K. Consulting Digital/AI Survey
We surveyed 1,000 c-suite and senior executives from across industries in the United States, with 32% drawn from the ranks of CEO or C-suite and the remainder from other senior roles, including leadership of functions and business units, and board members. Respondents were drawn from across sectors including Consumer, Industrials, Healthcare, Technology, Media, and Technology (TMT), Financial Services, and other industries. Neary 20% were from companies with revenues of $5 billion a year or more and represented a wide spectrum of value chain participants (e.g., services, retail, manufacturing) across business-to-business, business-to-consumer, and business-to-business-to-consumer business models.
About L.E.K. Consulting
We’re L.E.K. Consulting, a global strategy consultancy working with business leaders to seize competitive advantage and amplify growth. Our insights are catalysts that reshape the trajectory of our clients’ businesses, uncovering opportunities and empowering them to master their moments of truth. Since 1983, our worldwide practice — spanning the Americas, Asia-Pacific and Europe — has guided leaders across all industries, from global corporations to emerging entrepreneurial businesses and private equity investors. Looking for more? Visit www.lek.com.