BCG reveals 74% of companies face challenges in unlocking AI value

Boston Consulting Group (BCG), a global management consulting firm, has released new research revealing that after years of investing in artificial intelligence (AI), CEOs are increasingly focused on achieving tangible returns from these technologies.

However, realising AI’s full potential remains challenging. The report indicates that only 26% of companies have developed the necessary capabilities to move beyond pilot programmes and generate significant value.

Titled Where’s the Value in AI?, the report is based on a comprehensive survey of 1,000 CxOs and senior executives from over 20 sectors across 59 countries, assessing AI maturity in 30 key enterprise capabilities.

Only 4% of companies have established advanced AI capabilities across their operations and consistently produce substantial value.

In contrast, an additional 22% have implemented AI strategies and are beginning to see gains, categorising them as leaders in the field.

Conversely, 74% of companies have yet to demonstrate tangible value from their AI initiatives. “AI leaders are raising the bar with more ambitious goals,” noted Nicolas de Bellefonds, BCG Senior Partner, Managing Director, and co-author of the report. “They target meaningful outcomes on cost and topline and prioritise core function transformation over diffuse productivity gains.”

According to BCG, AI leaders significantly outperform their peers. Over the past three years, they have achieved 1.5 times higher revenue growth, 1.6 times greater shareholder returns, and 1.4 times higher returns on invested capital.

They also excel in areas such as patent filings and employee satisfaction. The report identifies six characteristics that differentiate AI leaders.

Leaders obtain 62% of AI value from essential business processes, giving them a competitive advantage. They invest significantly in AI and workforce training, projecting 60% higher revenue growth driven by AI and nearly 50% greater cost savings by 2027 compared to their counterparts.

Nearly 45% of leaders incorporate AI into their cost transformation strategies, while over a third prioritise generating revenue through AI initiatives.

Typically, these leaders target fewer but more impactful AI opportunities, expecting more than double the return on investment compared to those who are less advanced. They dedicate 70% of their resources to people and processes, while only 10% is allocated to algorithms.

Additionally, leaders utilise both predictive AI and Generative AI (GenAI), enabling them to swiftly seize new opportunities. Industries such as fintech (49% of leaders), software (46%), and banking (35%) have the highest concentrations of AI leaders, gaining advantages from early digital innovation.

“Contrary to popular belief, the true potential of AI goes well beyond support functions,” added Michael Grebe, a BCG senior partner, managing director, and coauthor of the report.

“In fact, 62% of AI’s value lies in core business functions, enabling leaders to harness both for a significant competitive advantage.”

BCG’s survey shows that companies generate over half of their AI value from core functions such as operations (23%), sales and marketing (20%), and R&D (13%). Support functions contribute 38%, with customer service (12%), IT (7%), and procurement (7%) leading.

Research from BCG indicates significant industry variations in AI value generation, with sales and marketing being key sources of AI value in software (31%), travel and tourism (31%), media (26%), and telecommunications (25%). R&D sees substantial AI impact in biopharma (27%), medtech (19%), and automotive (29%).

Customer service is a notable contributor in insurance (24%) and banking (18%). Personalisation efforts yield significant gains in consumer products and retail (19% and 22%).

BCG’s survey reveals numerous challenges in AI implementation, with around 70% related to people and processes, 20% linked to technology, and only 10% to AI algorithms.

Many companies mistakenly prioritise technical challenges over human factors. An analysis by BCG highlights that success largely hinges on people- and process-related capabilities, including change management, product development, and governance.

Key technology capabilities encompass data quality and management, while AI model quality and performance are the top algorithmic priorities.

“Three-quarters of companies have yet to unlock value from AI,” commented Amanda Luther, a BCG Partner, Managing Director, and co-author of the report.

“Without decisive action, they risk falling significantly behind. This research reaffirms our long-held belief that when companies undertake digital or AI transformations, they need to focus two-thirds of their effort and resources on people-related capabilities, and the other third split between technology and algorithms.”

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