Businesses pivot back to AI adoption after year of slow growth

AI adoption has taken a step back when it comes to enterprise IT spending priority, but it remains a steady investment for enterprises across industries.

With the unknowns created by the pandemic, organizations had to take a step back and reassess their spending priorities. Investment in AI adoption was one casualty of this reshuffling.

"Organizations were all but forced to invest more in communication and collaboration tools, as well as more rapidly adopt cloud technology," said Mike Leone, senior analyst at Enterprise Software Group (ESG). "AI will be a future pillar for most organizations, but we're still early in the adoption cycle."

Still, given the advantage companies can gain from utilizing AI in their operations, Leone expects investment to rebound in the year ahead.

IT spending and the pandemic

In the early days of the pandemic enterprises reprioritized their IT spending to handle the strains created by remote work and broken supply chains. AI adoption was still a piece of IT spending but needed to be pushed down the chain of priorities. Stay-at-home orders forced organizations to try to function with employees and networks no longer housed under one roof. Thus, collaboration and communication tools such as RemoteHQ, Slack and Asana became a priority.

Data security issues and complying with privacy regulations also grew more complicated as more data left enterprises' premises. Employees had to log in from different networks and, in some instances, keep company devices at home. This places company information further from internal networks and creates more places for potential data breaches.

Where does this leave AI adoption?

These concerns pushed artificial intelligence down the priority list in 2020, but Leone said with the worst of the economic troubles behind them, organizations are once again placing AI and machine learning back up the line.

According to ESG's "2021 Technology Spending Intentions Survey," more than 25% of organizations reduced their AI and machine learning spending because of the pandemic. But that change has since been revisited by many companies. A total of 63% of ESG's survey respondents said they plan to increase their spending on AI and machine learning in 2021.

"By the end of 2020, budgets seemed to drift back to pre-COVID plans," Leone said.

Leone said AI adoption has typically been an area of technology that organizations approach carefully. Today, 39% of enterprises surveyed in ESG's report said they have an AI or machine learning project in production. Another 34% said they are running a pilot or proof-of-concept project.

"Today, many organizations elect to take more of a crawl, walk, run approach as they build more in-house AI expertise," Leone said. "They can leverage prebuilt solutions anchored by AutoML to quickly ramp up AI usage."

Currently, AI ranks fourth in spending priorities behind public cloud infrastructure services, cybersecurity and public cloud applications.

Enterprise Strategy Group is a division of TechTarget.

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