Businesses still ready to invest in Gen AI, with risk management a top priority

It's a case of jumping in or losing to your competitors if you don't, for organizations that are choosing to move ahead and invest in generative artificial intelligence (Gen AI), despite the potential risks. 

For 87% of C-suite executives in Singapore, AI technology remains one of the top three business priorities, according to a study released by Salesforce. Conducted by YouGov in July 2024, the survey polled 221 C-level respondents in organizations with at least 250 employees. 

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Asked about key drivers behind their Gen AI adoption, 43% said they wanted to be perceived to be on the cutting edge of technology adoption, while 42% cited the need to remain competitive. Another 42% hoped to tap the AI tool to deliver innovative customer and employee experiences. 

Some 48% said their organization has a clear and defined Gen AI strategy, while 47% said they have begun working on one for their business. Just 5% have been discussing such initiatives internally, but have yet to work out a strategy, while almost 1% have not discussed or explored Gen AI internally. 

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Across the Asia-Pacific region, where 1,243 respondents were surveyed, the Salesforce study found that 83% viewed Gen AI as one of their top three business priorities. While, 54% said their organization had a clearly defined strategy, while 40% had started working on one.  

However, 93% of C-level executives in the region believed there were still barriers to adoption in their respective organizations, with 37% pointing to accessibility and inclusivity as the top impediments. Another 31% cited a lack of skills-building or training opportunities, while 30% highlighted incomplete customer or company data to train AI models. 

Some 30% cited Gen AI's inaccurate outputs as a barrier and 30% pointed to the cost of implementing such tools. In Singapore, 31% also noted a lack of governance as a barrier. 

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Asked who was responsible for ensuring their organization's Gen AI is successfully integrated and enabled, 37% across Asia-Pacific named their CEO. The survey revealed that 25% pointed to the CIO or CTO and 19% cited department heads. 

According to a Gartner report, these executives have a heavy load on their shoulders as research posits at least 30% of Gen AI projects will be dropped after the proof-of-concept phase by the end of 2025. The research firm said companies were struggling to realize value from their Gen AI initiatives and the financial burden of deploying these AI models is increasingly felt. 

Despite the challenges, some organizations in Singapore believe such investments will bear fruit in the long term, according to a KPMG survey released this week. 

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Some 78% of respondents expressed confidence Gen AI investments would yield returns over the next one to three years, revealed the study, which surveyed 225 senior business leaders in companies generating at least $1 billion in revenue. Returns on investment (ROI) which is defined here by various factors such as revenue growth, profitability, cost savings, efficiency, and employee engagement. 

Among the respondents, 71% said they are tapping Gen AI data in decision-making, while 52% pointed to competitive positioning, and 47% said Gen AI is opening new revenue opportunities. 

Some 83% anticipate their Gen AI investments to grow over the next three years, with 24% highlighting plans to deeply integrate the technology into their business processes and strategy.

The study further found that 61% hope to expand the application scope of current Gen AI initiatives, while 55% plan to introduce the technology into new business functions. Another 55% plan to invest in upskilling employees. 

"Gen AI is not a fad," said Carl Carande, vice chair of advisory at KPMG. "It's a game-changer, and business executives expect to see the payoff in the next three years as they scale its use in their organization to gain a competitive edge and grow their business."

"They believe a combination of investment in AI technology and talent will pay off in terms of better performance, improved quality, and enhanced customer experience and loyalty," said Carande.

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Some 8% of respondents said a dedicated chief AI officer position has been appointed to lead their efforts, while 37% plan to do likewise. 

Risk management and mitigation, though, is critical, with 56% citing this issue as a highly significant focus. Another 79% pointed to cybersecurity as a key area of focus for current Gen AI risk mitigation efforts, while 66% highlighted data quality. 

Respondents also noted the need for "ethical AI frameworks" and "stringent data privacy measures" in managing Gen AI risks, the KMPG study found.

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In addition, these organizations are monitoring the AI regulatory environment, with 63% anticipating more stringent data privacy requirements in the future. In response, 60% are actively reviewing and updating their data management practices, whereas 54% expect AI regulation to add further costs for their organization.

"With the growing adoption of Gen AI, prioritizing risk management and governance, with a focus on cybersecurity and data privacy, is crucial for innovation and retaining stakeholder trust," said Emily Frolick, KPMG's trusted imperative leader. "Ensuring the safe deployment of Gen AI and weaving it into governance structures allows organizations to guarantee their Gen AI initiatives are efficient, effective, and adhere to ethical and regulatory guidelines."