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ZDNET Highlights
- Most business leaders struggle to prove the value of AI projects.
- Success comes from storytelling, especially across the board.
- Focus on business results and carefully track your progress.
Evidence shows that many business leaders struggle to prove that investments in generic AI deliver measurable returns.
According to this, more than 97% of organizations find it difficult to demonstrate the business value of General AI A survey of 600 data leaders By Wakefield Research from technology specialist Informatica.
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However, measuring AI ROI is not a difficult challenge. ZDNET attended a panel session and spoke with digital leaders at the recent Informatica World Tour event in London to discover five ways to measure the value of AI projects.
1. Know when to start and when to stop
Gro Kamfjord, head of data at paint maker Jotun, said his exploration into AI shows that business leaders need to have enough information to know when a project should be stopped or moved forward.
To fuel growth in its regional offices, the company modernized its data infrastructure in the cloud through partnerships with Informatica and Snowflake. A new centralized data hub enables faster development, meaning teams can streamline their AI preparations.
“What we’ve seen in this project is that it’s possible to create a ballpark figure of what you’re trying to achieve or at least pinpoint the business value that will come from a project,” he said.
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Kamfjord told ZDNET that business leaders who start their AI exploration with something simple and small can either scale up that initiative or shut down it altogether when the time is right.
“I’m not sure putting a number on the project is the most important thing,” he said. “And more importantly, if you see that the project will not make any payments you will have enough information to stop the project.”
2. Win hearts and minds
Nick Millman, senior managing director of the global data and AI team at Accenture, said it is hard to assess the end-to-end value of AI projects, and emerging technologies require investments in a data foundation that will not provide short-term ROI.
“I have never met a CFO who accepts the ROI calculations you put in front of you,” he said.
“Your success comes from winning the hearts and minds of the organization in which AI is the right thing to invest in.”
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Millman encouraged digital leaders to take a three-pronged approach. First, measure ROI in terms the business recognizes.
“I’ve seen many different approaches, ranging from mega spreadsheets that are tracking every single element to vaguely measuring growth in revenue. I don’t think there’s a right or wrong answer. But be practical in terms of what works in your organization.”
Second, involve the business: “Many times the data organization says, ‘Here’s all the value we’ve produced.’ But you really need to fully align business stakeholders with that value. Otherwise, the project does not retain credibility.”
Third, ask the finance function for help: “You get someone who is accustomed to building the business case and ROI, and then, by implication, the CFO has a more vested interest in the investment case for your project if someone on their team helped build it.”
3. Promote two-way discussion
Boris van der Saag, EVP of data foundation at finance firm Rabobank, said organizations should be patient in terms of ROI if they are going to invest in fundamentals.
“You need to focus on the things you can ultimately get out of it as a profit,” he said, suggesting that business leaders should focus on storytelling elements that emphasize the long-term goals of the investment.
“This is important in terms of interactions with the boardroom, because senior management is, by definition, less patient.”
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In terms of his business, Van der Saag reports to the CFO. The close working relationship between finance and data helps ensure that ROI is not just a one-way conversation, but a two-way discussion that enables new opportunities.
“Our CFO is asking our teams, ‘What can I do? How can I change my behavior? How can I change my team’s behavior to enable some of the opportunities that exist in the data?'” he said.
“If you get the storytelling right and you take people on that journey, you’ll see the conversation change, and it becomes much more of a two-way conversation rather than just selling individual use cases.”
4. Connect the dots for bigger goals
Farheen Khan, UKI’s head of data and AI at AWS, is another business leader who encourages digital leaders to communicate the value of AI through storytelling.
“If you are communicating the results of your project, you need to move away from the traditional thinking of what is the ROI of your use case, from a mathematical perspective, and focus on what the impact is from an outcomes perspective.”
“Deliver those results in the language of the business stakeholder you’re talking to. For example, a CMO will be interested in how an AI-powered personalization use case will help reduce customer lifecycle churn.”
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Khan also encouraged digital leaders to connect their AI use cases to the business transformation being led by the CEO.
“If the business wants to expand into new markets, explain how each of your use cases will contribute to the outcome,” she said.
“It’s all about weaving this compelling story into your narrative that you can take back and adapt for the stakeholder you’re talking to.”
5. Track the moving parts of a project
Kenny Scott, data governance consultant at energy specialist EDF Power Solutions, said effective AI ROI measurement depends on a strong bond between the different parties involved in the project, whether it’s the IT team, business stakeholders, or vendor partners.
“You always have to ask questions about projects,” he said, suggesting that smart digital leaders will make sure everyone is keenly aware of their roles and responsibilities. “People can have a tendency to be alone and do things on their own.”
Scott has helped his organization build a modern data infrastructure, which he refers to as the engine room, consisting of Informatica as the foundation, Snowflake as the core, and Power BI as the cockpit through which users transform information into insights.
He told ZDNET that successful value delivery is about setting goals and managing expectations. Outline the costs, expected returns and adhere to deadlines.
“You have to be aware of the moving parts that are there and make sure they are understood and controlled so that the project doesn’t run away.”
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