Only 2 per cent of Canadian companies are seeing a return on their investments in generative artificial intelligence despite widespread adoption by businesses, according to a new survey from KPMG.
KPMG polled 753 executives in Canada and found that 93 per cent said their organizations are using AI in some way, up from 61 per cent a year ago. But only a handful said they are seeing benefits from a technology that is supposed to deliver productivity gains and cost savings.
“That 2 per cent was disappointing and surprising. I would have hoped and expected it to be higher,” said Stephanie Terrill, Canadian managing partner of digital and transformation at KPMG.
While generative AI can be prone to errors (known as hallucinations), the reasons for the low return on investment so far have to do with how Canadian companies are approaching the technology.
Ms. Terrill said that many companies are still experimenting with AI, with the survey finding that slightly less than one-third of respondents had fully integrated the technology into their core operations.
“Deploying AI needs to go beyond using AI to draft e-mails,” she said. “We need to get out of the tinkering and get into the re-engineering and re-architecting of how workloads are processed.”
But doing so is difficult and time-consuming across an entire company. Employees need to be educated about how to integrate AI tools into their work, and companies need to organize their private data in a way that can be useful for AI applications, Ms. Terrill said.
Some companies are also not tracking AI outcomes in a consistent way, or using outdated and irrelevant methodology.
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Even with these challenges, three in 10 respondents to the survey said they expect their AI investments to provide a return within the year.
The finding about lack of returns so far could add fuel to the criticism that generative AI tools – which can be used to write and analyze documents and presentations, handle customer service and employee inquiries, automate rote office tasks and more – are overhyped.
Big U.S. tech companies are spending hundreds of billions of dollars and taking on more debt to build out data centres that support AI development and adoption. Fears that the massive infrastructure investment is creating a bubble are growing.
Evidence of the benefits of generative AI has been somewhat mixed. A report from the Massachusetts Institute of Technology earlier this year garnered lots of media coverage because it found that 95 per cent of organizations are seeing zero return from their AI efforts. That finding has been held up as proof by AI skeptics that the technology is not all it’s cracked up to be.
But other researchers have criticized the study. Ethan Mollick, an associate professor of management at the Wharton School at the University of Pennsylvania, has said it does not allow for general conclusions and is based on a limited number of interviews conducted with “vague methods.”
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Wharton, meanwhile, produced its own report in October based on some 800 interviews showing that nearly three-quarters of respondents are seeing a positive ROI (return on investment) from AI projects, including productivity gains.
A separate KPMG survey found that nearly three-quarters of Canadian CEOs are planning to invest between 10 per cent and 20 per cent of their budgets in AI over the next year. That includes spending to hire tech talent, such as developers, and purchasing new generative-AI tools.
Ms. Terrill also cited Canadian cautiousness as a reason for the low ROI number in the survey. “It’s a much more risk-averse culture, and thinking about the hallucinations when AI doesn’t work,” she said. “What about when it does work?”
Given the productivity challenges facing Canada, Ms. Terrill said that companies should integrate AI into their operations even faster.
Boosting AI adoption in the private and public sectors is a priority for the federal government. AI Minister Evan Solomon announced a task force in September to provide advice on supporting the country’s AI sector, including ways to encourage greater use of these tools.
The task force has since completed its work and the government will announce a new national AI strategy by early next year.