Gartner Predicts 30% of Generative AI Projects Will Be Abandoned After Proof of Concept By End of 2025
July 29, 2024 | Gartner, Inc.Estimated reading time: 2 minutes
At least 30% of generative AI (GenAI) projects will be abandoned after proof of concept by the end of 2025, due to poor data quality, inadequate risk controls, escalating costs or unclear business value, according to Gartner, Inc.
Speaking at the Gartner Data & Analytics Summit in Sydney this week, Rita Sallam, Distinguished VP Analyst at Gartner said, “After last year's hype, executives are impatient to see returns on GenAI investments, yet organizations are struggling to prove and realize value. As the scope of initiatives widen, the financial burden of developing and deploying GenAI models is increasingly felt.”
A major challenge for organizations arises in justifying the substantial investment in GenAI for productivity enhancement, which can be difficult to directly translate into financial benefit, according to Gartner. Many organizations are leveraging GenAI to transform their business models and create new business opportunities. However, these deployment approaches come with significant costs, ranging from $5 million to $20 million.
“Unfortunately, there is no one size fits all with GenAI, and costs aren’t as predictable as other technologies,” said Sallam. “What you spend, the use cases you invest in and the deployment approaches you take, all determine the costs. Whether you’re a market disruptor and want to infuse AI everywhere, or you have a more conservative focus on productivity gains or extending existing processes, each has different levels of cost, risk, variability and strategic impact.”
Regardless of AI ambition, Gartner research indicates GenAI requires a higher tolerance for indirect, future financial investment criteria versus immediate return on investment (ROI). Historically, many CFOs have not been comfortable with investing today for indirect value in the future. This reluctance can skew investment allocation to tactical versus strategic outcomes.
Realizing Business Value
Earlier adopters across industries and business processes are reporting a range of business improvements that vary by use case, job type and skill level of the worker. According to a recent Gartner survey, respondents reported 15.8% revenue increase, 15.2% cost savings and 22.6% productivity improvement on average. The survey of 822 business leaders was conducted between September and November 2023.
“This data serves as a valuable reference point for assessing the business value derived from GenAI business model innovation,” said Sallam. “But it’s important to acknowledge the challenges in estimating that value, as benefits are very company, use case, role and workforce specific. Often, the impact may not be immediately evident and may materialize over time. However, this delay doesn’t diminish the potential benefits.”
Calculating Business Impact
By analyzing the business value and the total costs of GenAI business model innovation, organizations can establish the direct ROI and future value impact, according to Gartner. This serves as a crucial tool for making informed investment decisions about GenAI business model innovation.
“If the business outcomes meet or exceed expectations, it presents an opportunity to expand investments by scaling GenAI innovation and usage across a broader user base, or implementing it in additional business divisions,” said Sallam. “However, if they fall short, it may be necessary to explore alternative innovation scenarios. These insights help organizations strategically allocate resources and determine the most effective path forward.”
Suggested Items
Stop Using Spreadsheets—and You Can Quote Me on That
07/03/2025 | Nolan Johnson, SMT007 MagazineMeeting changing business needs and a thriving market sometimes means process efficiencies. Not all those efficiency improvements take place on the shop floor, however. For EMS companies, growth can also mean changing out the business operations software to have one more chance to close a business deal that better aligns with the company’s sweet spot. One of the pressing issues for EMS companies is the great deal of attention on sales and quoting software solutions and how to make them perform better. Chintan Sutaria, the founder and former CEO of CalcuQuote now working on other projects at OpenJar, explains.
It’s Only Common Sense: Selling to Today's Generation of Buyers
06/30/2025 | Dan Beaulieu -- Column: It's Only Common SenseMillennials and Gen Z hold significant purchasing power and influence in industries worldwide. Selling to them requires adapting to their unique preferences, behaviors, and values, and exploring their buying habits, embracing their emphasis on social values, and mastering digital communication. Unlike previous generations, they prioritize experiences, sustainability, and value.
Global Sourcing Spotlight: Evaluating a Supplier’s Capabilities
06/18/2025 | Bob Duke -- Column: Global Sourcing SpotlightGlobal sourcing is essential for companies looking to improve cost efficiency, access innovation, and optimize supply chains. Successfully identifying and collaborating with the right suppliers on a global scale requires rigorous evaluation processes. Businesses must ensure suppliers meet industry standards, are financially stable, and can scale alongside their growth.
Priority Software Appoints Ben Karniel as Chief Revenue Officer to Spearhead Global Growth
06/12/2025 | Priority SoftwarePriority Software, a leading provider of scalable and agile cloud-based business management solutions, proudly announces the appointment of Ben Karniel as its new Chief Revenue Officer (CRO), effective May 1, 2025. This strategic addition to the executive team underscores Priority's commitment to expand its global footprint.
Priority Software Announces the New, Game-Changing aiERP
06/12/2025 | Priority SoftwarePriority Software Ltd., a leading global provider of ERP and business management software announces its revolutionary aiERP, leveraging the power of AI to transform business operations.