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AI Hype vs. Reality: Spending Lags Behind Talk
25 Feb
Summary
- Firms invest less than 10% of operating expenses on technology.
- Majority of IT budgets maintain legacy systems, limiting innovation.
- Most expect gradual AI integration, not immediate cost reduction.
Artificial Intelligence (AI) is a frequent topic of discussion, but this talk has not yet translated into substantial spending increases, as investments are not yet supported by evidence of significantly higher revenues. Companies appear to be adopting a cautious and realistic approach to AI adoption.
Survey results indicate that approximately 70% of firms allocate less than 10% of their operating expenses to technology. For a notable three-in-ten respondents, this figure ranges between 10% and 20%. In the EMEA region specifically, 67% of IT budgets are consumed by maintaining existing technology, leaving limited financial capacity for innovation projects.
New investments are primarily directed towards cloud computing and data analytics, areas perceived as proven and compliant with regulations. A significant portion of budgets is dedicated to maintaining legacy systems, posing integration challenges for new software and creating cost inefficiencies. This situation suggests a near-term outlook of limited change in technology spending.
Looking ahead, just over half of respondents (54%) anticipate technology spending to rise by less than 5% in the coming year. Only 4% plan increases exceeding 10%, with none of these projections originating from Europe. When asked about the motivations for technology spending, upgrading business operations and optimizing costs emerged as the top responses.
Regarding the financial impact of AI, most respondents hold modest expectations. Approximately three-quarters believe AI will gradually integrate into existing processes without a major shift in spending. A surprisingly low 5% anticipate that AI will materially reduce expenses within the next three to five years.
Given the challenging operating environment, the emphasis is likely to remain on cost reduction, as achieving revenue growth is proving difficult. The focus is on maximizing value for money. These figures reflect practical operational realities rather than ideological resistance to change. Key questions remain about funding for AI initiatives and the safety of such investments in highly regulated sectors.
