A new CSIRO report says the possibilities of AI are “unprecedented” but the industry is plagued by companies using it for the wrong projects. Photo: Nutthaseth Vanchaichana.
Hundreds of billions of dollars are spent on AI annually, yet up to 80 per cent of projects fail to meet their goals according to a new AI “playbook” released by the CSIRO.
The Evaluating and prioritising artificial intelligence projects: A guide for better decision making and investment outcomes report aims to help businesses inform investment decisions when integrating AI into projects.
According to the report, there is a simple reason why so many projects are failing.
“While various factors contribute to this high failure rate, a primary driver is the initial decision-making process – specifically, choosing the wrong AI projects in the first place,” the report said.
Lead author and strategic foresight expert Dr Stefan Hajkowicz says many organisations are investing in the wrong projects, with up to 80 per cent of AI projects failing.
For a suitable project the investment opportunity of AI is “unprecedented” but not every project is suitable.
The CSIRO’s guide has compiled a nine-category checklist to help businesses assess whether a project is truly a good fit for AI.
Businesses are advised to ask themselves a range of questions, from complex analysis of strategic alignment to simple questions like: is appropriate data available and accessible?
“The frameworks outlined in this guide – from financial appraisals and cost-effectiveness analysis to stakeholder consultation and portfolio management – provide proven methodologies for making these crucial decisions,” the report said.
Despite the high failure rate, investment in AI continues to grow and is predicted to reach more than $980 billion annually in the next three years.
Canberra-based AI company Trellis Data has seen this rush to AI first-hand.
CEO Michael Gately said: “Too often deploying AI is the objective, but the objective should always be to realise benefits, those benefits should be the driving force behind the use of AI.
“Where organisations don’t have the deep tech expertise in AI, partnering with the right AI experts becomes a key enabler in achieving success.”
It’s a point the CSIRO highlighted in its report, that success in AI rollout required integrating people, processes and existing technologies.
Mr Gately encouraged businesses not to be discouraged by the apparent high costs and failure rates associated with AI. He said when it’s used correctly, there’s no substitute for it.
“The right combination of AI can be a powerful tool to create efficiencies and save time. AI has to be truly integrated into the way a business functions to realise complete benefits,” he said.
“This includes understanding how the AI operates, the ability for the AI to explain its decisions, as well as the security of the customer’s data.”
The report said businesses that mastered implementing AI would have a significant edge over competitors in the future.
CSIRO Executive Director Professor Elanor Huntington said to navigate this transition, all businesses needed was proper evaluation.
“With the right evaluation frameworks in place, we can reduce the number of failed projects and direct investment where it will have the most impact,” she said.
