Companies struggling to generate meaningful returns from artificial intelligence often share the same problem: too many disconnected pilots and not enough focus on transforming core business processes, according to Neil Dhar, senior vice president and leader of IBM Consulting Americas.
Many organizations are now under pressure to move past AI experiments and toward a sharper focus on measurable outcomes.
The shift is forcing companies to take more disciplined AI steps. It starts with redesigning legacy business processes prior to AI deployment and having strong leadership to ensure real results, Dhar said in an interview.
“Otherwise, you're just doing science experiments, and you're not going to go very far,” he said.
The following is a Q&A between Dhar and CFO Dive’s Alexei Alexis. The exchange has been edited for clarity and brevity.
CFO Dive: How have CFOs’ priorities around AI investment evolved in recent years?
Neil Dhar: If you think about the AI shift we’re seeing, it really came on the main stage just a few years ago. And the initial focus was clearly centered around education, because most people had no idea what it was all about, right?
In the early stages, there was a lot of FOMO — fear of missing out — and companies were doing a lot of silo-oriented proof of concepts that really didn't go anywhere and had marginal return on investment. In many cases, they started racking up decent-sized costs while chasing the AI dream, so to speak.
But I think over the last six to nine months, there's been a lot more focus on return on investment, and the CFO is in the middle of driving that.
CFO Dive: Does AI introduce new ROI challenges for finance chiefs compared with traditional types of corporate investment?
Neil Dhar: I think it's absolutely trackable, but I think you have to have discipline, just like you've had to have discipline in previous transformations. I think the companies that have discipline will be able to capture the value, communicate the value and reinvest the value.
If you look at IBM’s AI journey, for example, we identified workstreams that were critical to the company, where there were opportunities to drive real AI gains. And we made an effort to actually measure those gains, along with customer and employee satisfaction.
CFO Dive: Are some areas easier to measure than others when it comes to AI ROI?
Neil Dhar: I think there are certain things on the productivity side that are relatively straightforward to measure. For example, if it took X amount of time to do something, does AI allow you to do it in less time?
It’s always harder to underwrite growth, underwrite innovation. That's just a fact.
We recently published the results of a CEO survey that had some really interesting data points. Eighty percent of executives expect AI to drive significant revenue by 2030, but only 24% know where it’s going to come from. So, just simply put, revenue's harder.
CFO Dive: Some surveys suggest that many companies still aren’t seeing meaningful ROI from their AI investments. What are the biggest mistakes holding them back?
Neil Dhar: First, I think, it’s because of leaders at the top who are not really oriented in a tech first-mindset; it’s farmed down to someone three levels down, and the executive team is not living it. Secondly, I think it’s because of an approach where you’re jumping into AI projects instead of first ripping your business process flows apart. I think those are the two most common errors.
You have to be willing to look at your processes from end to end and make sure you have strong leadership to actually drive real results. Otherwise, you're just doing science experiments, and you're not going to go very far.
CFO Dive: What role should CFOs in particular play in ensuring that AI investments generate real returns?
Neil Dhar: My view is very simple: The CFO is a steward of the company's assets. For every dollar of capital you spend as CFO, you’d better show a return, right? And, in my opinion, that return should be somewhere in the neighborhood of 2.5x to 3x.
AI is no different. CFOs have to be really focused on making sure that AI journeys yield real, tangible benefits.
The CFO, in many ways, is responsible for setting up the processes to track if you're making any difference. And the CFO is the one that is responsible for making sure that whatever is communicated to the board and investors is backed up by auditable data.
