The State of AI: Navigating the Present and Promise of Generative AI (ICONIQ)

Summary

• 89% of CXOs in the June 2024 survey rated adoption of Generative AI tools in their company as a 4 or 5 in importance.p.2
• The study summarizes a June 2024 survey of 215 executives at enterprises with $500M+ annual revenue.p.6
• Current spend on gen AI within enterprises is only ~10% of total software procurement spend, indicating early adoption.p.7
• 88% of companies analyzed have an approved budget for AI investments, but most AI dollars come from existing budgets rather than net new dollars.p.8
• On average, companies allocated 10-15% of their software procurement budget towards GenAI.p.8
• ~70% of enterprises are augmenting their generative AI models via finetuning or retrieval augmented generation (RAG).p.8

Key insights

1. Well-entrenched software vendors will force AI native startups to focus on specialized use cases or underserved business functions.p.7
2. Large model vendors and big tech will make it difficult for newer startups building private general-purpose foundation models.p.7
3. Enterprises are expected to increasingly rely on a mixture of smaller and domain-specific models.p.7
4. Barriers to adoption include lack of in-house expertise, quality and accuracy, data security and privacy, infrastructure readiness and unproven ROI.p.8
5. Technology firms prefer to build GenAI products, whereas financial services and healthcare companies prefer to buy from existing providers.p.8
6. Decision makers for GenAI purchases appear to be predominantly CTOs.p.8