As the title says, this is Part 4. If you are interested, please check out Part 1, Part 2, Part 3.
7. For the first time in the last decade, year-over-year private investment in AI decreased.
Global AI private investment was $91.9 billion in 2022, which represented a 26.7% decrease since 2021. The total number of AI-related funding events as well as the number of newly funded AI companies likewise decreased. Still, during the last decade as a whole, AI investment has significantly increased. In 2022 the amount of private investment in AI was 18 times greater than it was in 2013.
As investors become more savvy about how AI actually works, they will have a better idea on what kind of questions to ask tech founders, to tease out the technicalities, feasibility and competitive sustainability on the purported AI technology. There will be the occasional boost in investment, with "new" AI that comes to the market, for instance Large Generative Models but these will be just minor boosts given the increasing understanding and familiarity of investors, boosted by previous losses in "Artificial Intelligence" companies. This is a trend for all new technology.
However, the drop of 26.7% from previous year, 2021, looks quite large in my opinion, and there is a chance that other factors are in play. My guess is the talent crunch and the growing voice of regulations on Artificial Intelligence (Pt 9 in Key Takeaways). My guess we should see another 2 digit percentage drop in private investment for the year 2023 as compared to 2022 given the technology workers layoffs from the established technology firms. What is your guess? :)
8. While the proportion of companies adopting AI has plateaued, the companies that have adopted AI continue to pull ahead.
The proportion of companies adopting AI in 2022 has more than doubled since 2017, though it has plateaued in recent years between 50% and 60%, according to the results of McKinsey’s annual research survey. Organizations that have adopted AI report realizing meaningful cost decreases and revenue increases.
This should be a warning bell for companies that are still contemplating on whether to adopt Artificial Intelligence or not. I have been stressing that adoption of Artificial Intelligence and gaining value from it is not within a snap of a fingers, but rather there is a learning curve that ALL BUSINESSES have to move along. The earlier you move along, the easier you will get while leaving your slow competitors in the dusts. The time to start gaining value from your digital transformation and digitilization effort is YESTERDAY! (Side note: If you are interested to climb the learning curve faster, PM me at LinkedIn for discussion.)
Companies who are keen to adopt AI into their workflow need to take advantage of the current tech layoffs to look for suitable candidates. To build the momentum, businesses should quickly build up a library of use cases through data literacy programmes. With the data literacy program running, crowdsource for as many use cases as possible. What should you do after? Read this post I've written for reference. :)
If you have read till here, I hope this statement from the Report gives you some assurance to START!
Organizations that have adopted AI report realizing meaningful cost decreases and revenue increases.
All signs right now are saying that the growth in the AI industry has plateaued. At this stage, this is where businesses start to find efficiencies in current processes that has adopted AI to continue gaining value from it. With the lessons accummulated, start adopting AI in other "non-traditional" business functions too.
From the looks of it, AI is going to create a large gap between companies and businesses as well. Companies that are adopting AI are likely to survive in the next decade at least, while companies who are still thinking about it...they may just survive till the next recession hit. And by that time, it will be too late as they struggle to manage the costs of adoption and experimentation that is needed to use AI effectively.
What are your thoughts? :)
If you want to read my thoughts on the 2022 report, here they are.
Part 1, Part 2, Part 3
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