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According to a recent survey conducted by KPMG US, nearly two-thirds (65%) of the 225 US executives surveyed in March 2023 believe that generative AI will have a high or extremely high impact on their organization in the next three to five years, surpassing other emerging technologies.
However, despite these findings, nearly the same number (60%) of respondents said they are still a year or two away from implementing their first generative AI solution, revealing a lack of preparedness among executives for immediate adoption.
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Generative AI has become a buzzword among executives and boards, as the technology has become increasingly accessible. However, organizations are struggling to keep up with its rapid development. The KPMG survey found that less than 50% of respondents believe they have the necessary technology, talent and governance to implement generative AI successfully.
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“Generative AI is moving so fast, it has executives’ heads spinning. Companies can’t keep up with dozens of new generative AI offshoots coming out each month. While they’ve bought into its overall promise, they struggle with taking the first step,” Todd Lohr, US technology consulting leader at KPMG, told VentureBeat. “As a result, they may lack the necessary technical expertise in their workforce to build and deploy generative AI solutions.”
To bridge this gap, executives plan to spend the next 6–12 months understanding how generative AI works, evaluating their internal capabilities and investing in generative AI tools. Lohr said that regulatory and ethical concerns around the use of generative AI is another reason for its slowed adoption in certain industries.
The survey polled 300 global C-suite and senior executives, of which 225 were US-based. The respondents were from businesses with revenue of $1 billion and above.
Generative AI: A competitive differentiator
KPMG US conducted this survey as part of their generative AI research initiative. The report highlighted that generative AI has the potential to be the most disruptive technology seen to date, according to 77% of the executives surveyed. Furthermore, respondents expect the impact to be highest in enterprise-wide areas, such as driving innovation, customer success, tech investment, and sales and marketing.
However, it also revealed that executive prioritization of generative AI varies significantly by sector. While most executives in technology, media, telecommunications (71%), and healthcare and life sciences (67%) feel they have appropriately prioritized generative AI, a smaller percentage of consumer and retail executives (30%) and industrial manufacturing executives (37%) view it as a priority.
The survey also found that organizations struggle to derive value from emerging technologies when they adopt a siloed approach. In fact, 68% of executives responded saying that they have yet to appoint a central team or person to coordinate their response to the rise of generative AI. At present, the IT function is taking the lead.
“Without a leader spearheading generative AI and steering through the hype, companies risk spinning their wheels, duplicating efforts, and having competing strategies. Companies need a generative AI North Star to confidently scale generative AI,” Lohr said.
The technology, media and telecommunications (TMT) industry is leading the way in prioritizing research on generative AI applications, with 60% of respondents considering it a high or extremely high priority over the next 3–6 months. This is the highest percentage across all industries surveyed.
Moreover, respondents from TMT and financial services industries were most likely to report that the recent emphasis on tools such as ChatGPT has significantly impacted their digital and innovation strategies. As a result, these industries are particularly receptive to the benefits of generative AI and actively seeking ways to incorporate it into their operations.
“Generative AI has the potential to be the most disruptive technology we’ve seen to date,” said Steve Chase, US consulting leader at KPMG. “It will fundamentally change business models, providing new opportunities for growth, efficiency and innovation, while surfacing significant risks and challenges.”
According to Chase, for leaders to harness the enormous potential of generative AI, they must set a clear strategy that quickly moves their organization from experimentation into industrialization.
Lohr added, “Given that the technology (generative AI) is relatively new, ROI remains hard to quantify. For a clear business case, companies need to identify specific use cases and prioritize them like a product portfolio.”
Lack of risk management and the fear of negative consequences
Most executives (72%) believe that generative AI is crucial in building and maintaining stakeholder trust, but almost half (45%) say that not having the right risk management tools can negatively impact their organization’s trust. Furthermore, most executives (79%) think that leveraging generative AI provides a competitive advantage in risk management compared to their peers.
Despite the expected impact of generative AI on their organizations and customers, most organizations are still in the early stages of designing and implementing risk and responsible use programs. Only 6% of the 300 surveyed have a dedicated team for evaluating risk and implementing mitigation strategies, while 25% are in the process of implementing such strategies.
In addition, nearly half (47%) are in the initial stages of evaluating risk and mitigation strategies, and 22% haven’t started evaluating them yet. Only 5% have a mature responsible AI governance program, while 49% plan to establish one in the future, and 19% have partially implemented an AI governance program.
Interestingly, 27% said they do not currently see a need or have not yet reached enough scale to merit a responsible AI governance program.
“Beyond understanding the technology’s risks and keeping the data in-house, companies must develop a robust data governance framework that establishes clear policies, security protocols, and standard operating procedures for handling data. This ensures that data is collected, processed, and stored securely and appropriately,” added Lohr.
He said as with any other technology or service, it’s important to do your due diligence when data moves outside the organization.
Executives predict a new era for the workforce that combines human work with generative AI. While many believe it will increase productivity, change how people work and encourage innovation, they are also concerned about potential negative impacts.
Almost 4 in 10 executives (39%) fear decreased social interactions and human connections with coworkers, while 32% worry about increased mental health issues among their workforce due to the stress of job loss and uncertainty.
To address this, companies are taking a hybrid approach to both hiring and capability-building across various industries and functions.
Responsible use for fruitful benefits
Executives recognize that generative AI can revolutionize businesses in various sectors, but many barriers to adoption remain. Major concerns include clear business cases and adequate technology, talent and governance.
To stay ahead of the competition, KPMG recommended that executives prioritize the swift deployment of generative AI while ensuring ethical and responsible use. To successfully do so, KPMG said CEOs and board members must personally invest time in understanding generative AI, and they must demand the same from their teams.
“The key to success with AI is acceptance, adoption and alignment at the leadership level within the institution. This strategy should start with literacy first. Furthermore, companies should think about new operation models, with R&D into generative AI capabilities, potential use cases and limitations,” Lohr explained. “They should get their ‘hands dirty’ and experiment with pilot projects to test the technology and better understand its potential impact.”
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