Spearhead AI consulting

Gen AI Investment in Enterprises Set for 2x-5x Growth by 2024

Just in 2024, average enterprise spend on Generative AI is expected to grow between 2x to 5x.

A recent study by Andreessen Horowitz reveals more details about the large shift in how businesses build and invest in Gen AI.

It validates what we are seeing with our clients as they adopt Generative AI to implement multiple use cases to drive efficiency, growth and experience.

Here are 7 key takeaways…

1. Skyrocketing Budgets for AI: Enterprises have increased their genAI spend, averaging $7M in 2023, with plans to expand by 2x to 5x in 2024 to accelerate workloads transitioning to production.

2. Where is the money coming from? AI investments are moving from one-time innovation budgets to recurring software budget lines, reflecting a commitment to integrating AI long-term.

3. ROI Measurement: Increased productivity remains the primary ROI indicator, with enterprises exploring more tangible metrics like efficiency and accuracy gains for their AI implementations.

3. The Need for Specialized Talent: Scaling genAI solutions requires specialized technical talent, which many enterprises currently lack in-house.

4. Preference for Open Source Models: There’s a growing inclination towards open source models due to their control, customization, and cost benefits. In 2024, leaders expect a significant shift towards open source, aiming for a 50/50 split between open and closed source models.

5. Multi-Model Approach: Enterprises are avoiding vendor lock-in by using multiple models tailored to specific use cases and performance metrics.

6. Internal Use Cases Over External Ones: Concerns about AI hallucination and public relations risks are prompting enterprises to focus more on internal productivity tools rather than customer-facing applications.

7. Massive Market Growth: The model API and fine-tuning market is projected to grow to over a $5B run-rate by the end of 2024, with enterprise spend contributing significantly.

These insights not only underscore the rapid evolution and adoption of genAI in the enterprise sector but also highlight a strategic top-down mandate to leverage AI’s potential to the fullest.

What are your thoughts on adoption of Gen AI in the enterprise?

#AI #GenerativeAI #EnterpriseTech #DigitalTransformation #EnterpriseAI #OpenSourceAI #BusinessStrategy #AIInvestments #TechTrends

Data: a16zAc

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