In artificial intelligence projects, the return on investment is difficult to calculate in advance due to the many hidden costs. However, while not all AI projects need to have a direct impact on profits, something needs to justify the investment. Here are some pointers for a predictable and measurable ROI in an AI project.
The ‘ artificial intelligence promises to transform things, but also brings significant investment. It is therefore not surprising that companies need to see the ROI of investing in AI right away .
From chatbots and inventory planning to logistics, organizations of all types and industries are increasingly relying on artificial intelligence to increase the capabilities of strategic applications. Managers who do not know how to budget and justify the value of investments in artificial intelligence, however, risk not obtaining the support of the c-level.
This is why it is important that development teams dedicated to artificial intelligence products, tools or functionalities produce data that makes it possible to calculate the ROI of the investments in AI and justify the value of the project.
Index of topics
How to estimate the ROI of AI projects
To begin with, artificial intelligence projects are different from traditional software projects. For the latter, the necessary resources are generally fixed and the achievable results can be measured with some ease. In artificial intelligence projects, however, this rarely happens. For those who manage an AI project it might be useful to ask themselves some questions:
- What is the problem to solve ? Better to focus on one problem at a time and make sure that the real problem is in the crosshairs, to then be able to demonstrate how the proposed project will improve that precise weakness. “Start small, think big, repeat often”. This mantra helps you work on small AI projects that can have an immediate impact on ROI , while working towards the bigger goal.
- Will the intervention give the company a competitive advantage ? The time and resources invested in an AI project must translate into a competitive advantage, otherwise it will just be a waste of time, capital and resources that could have been better spent elsewhere. Of course, on a case-by-case basis, we need to be sure that there is a way to measure the competitive advantage of the AI project .
- What is the effect on costs? An application of artificial intelligence could save the company time and resources , but if the project costs twice as much in human capital and computing power, it may not produce the desired ROI. Make sure you always have the whole picture under control and be able to demonstrate the savings or other cost benefits that the project offers.
- What speed to value ? This question has become a catchphrase, but the truth is that AI projects should deliver value quickly , especially when taking an agile approach . You need to be proactive about your goals and make sure the desired features are available in a timely manner.
The hidden costs in AI projects to consider when calculating the ROI
Anyone who has worked with AI knows that there can be hidden costs as well as pitfalls in AI projects. Costs of various kinds that must be budgeted to avoid delays. Here, by way of example, are some aspects that project managers must be aware of in order to evaluate the return on investment of an artificial intelligence project.
Availability of the ‘right’ data
Having a large amount of data doesn’t mean everything will run smoothly. One of the biggest difficulties in an AI project is the lack of useful data in the training phase, and obtaining it from third parties can be expensive. This is why many projects fail. You need to be clear about what data you need and how to access it
