Most surveyed chief operating officers (COOs) from firms generating at least $1 billion in annual revenue report that they are expanding their use of generative artificial intelligence (GenAI) for more complex, high-impact tasks. For example, we measured a 79% increase in COOs using the technology to generate feedback on the production process. This expansion also includes a tripling of the share of COOs using GenAI to run a cybersecurity system.
Source: PYMNTS Intelligence
COOs Find the Key for a Positive ROI on GenAI: Customization, October 2024
N = 60: Complete COO respondents, fielded August 6 – August 15
The average COO predicts that GenAI will be fully integrated into their companies by 2030. But is that fast enough? On average, COOs are expecting to see very positive ROI from using the technology by the end of the decade. However, data also shows that rising concerns include limited ROI in the short term and organizational issues.
Overall, the share of COOs reporting very positive ROI from GenAI has increased from 17% to 22% in just three short months. This sixth edition of PYMNTS Intelligence’s “The 2024 C(AI)O Project” details the latest in this changing ecosystem, zooming in on a key factor: how building software to support custom GenAI uses can change the game.
This series offers a monthly recap of the players and innovators using AI to revolutionize how they manage key parts of their businesses. This edition examines COOs’ evolving perceptions of GenAI and draws on insights from 60 COOs from U.S. firms that generated at least $1 billion in revenue last year, conducted from Aug. 6 to Aug. 15.
Key Findings
More and more, COOs are relying on GenAI for high-impact tasks, such as generating feedback on production processes.
COOs recognize that GenAI can handle more complex tasks. Among COOs, 57% used GenAI to monitor and generate feedback on the production process in August. This sizably exceeds the 32% measured in May when we last asked COOs about their GenAI use.
In just a few short months, another high-impact task that gained prominence among COOs using GenAI is cybersecurity. In August, 55% of COOs used the technology to operate an automated cybersecurity system. This represents a more than threefold increase relative to the 17% we measured in May.
The data suggests that COOs are gaining confidence in using the technology to manage more complex production processes. At the same time, most COOs’ GenAI use focuses on medium-impact tasks, such as creating data visualizations and reports or running automated workflow management systems. In these three short months, the share of COOs’ organizations using the technology for data visualizations rose from 53% to 67%. COOs’ organizations continue to leverage GenAI for these (and other) medium-impact purposes.
COOs recognize that GenAI capabilities can play an important role in many high-impact operations, including optimizing logistics and inventory, managing production, human resources management and resource allocation. As of August, COOs have become twice as likely in the past three months to view GenAI as important for increasingly complex tasks, such as human resources management. The share of COOs recognizing the technology’s importance for human resources management has increased by 114%. The share of COOs saying the technology is important for inventory management accelerated by 118%. Similarly, the share of executives considering GenAI important for resource allocation nearly doubled, rising to 92%.
COOs’ companies that built software to support custom GenAI use cases are more likely to report high ROI than those that used existing GenAI models only.
COOs are generally optimistic about the ROI generated from GenAI — some more than others. More than 1 in 5 COOs are experiencing very positive ROI from using GenAI tools in their organizations. Overall, among the firms analyzed, the rate of very positive ROI experienced by COOs increased from 17% to 22% from May to August. The data suggests that, in a short time, COOs have gained confidence in understanding the capabilities of the technology for the future of their businesses.
Critically, it may not just be the GenAI tools that matter, but how they are tailored. Companies that built software to support custom use cases of GenAI are twice as likely to report very positive ROI. Among these COOs’ companies, 46% have seen very positive ROI from the technology.
For comparison, COOs from organizations that only used the baseline capabilities of large language models (LLMs) were less likely to report success. Among this group, 22% reported very positive ROI from GenAI.
While the very positive ROI rate is lower for those simply using the capabilities of LLMs, 77% still experience somewhat positive ROI.
COOs expect very positive ROI from GenAI by 2030, predicting that GenAI will be fully integrated into their organizations soon after.
COOs may face implementation hiccups, but by this decade’s end, they uniformly expect positive ROI from GenAI. Responses from August show that the average time COOs expect very positive ROI from the technology is 5.6 years. Overall, the expectations of COOs have improved from May to August, considering the time for GenAI to be fully integrated into their organizations. In May, COOs expected, on average, to take 7.8 years to fully implement the technology. By August, it was just seven years on average. Companies with very positive ROI for GenAI have the rosiest expectations in this regard.
COOs are also dealing with the ripple effects of implementing GenAI. From May to August, the share of COOs noting implementation concerns increased from 33% to 48%. Another main drawback they experienced was organizational issues, with the share noting them increasing to from 20% to 42% in the same time.
Other rising concerns include dealing with vendors and limited ROI in the short term. In May, 25% of COOs noted limited ROI as a drawback. Now it is a concern for 53% of COOs. Overall, data suggests that COOs may be feeling more pressure to show a clear ROI from GenAI implementation.
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Methodology
“COOs Find the Key for a Positive ROI on GenAI: Customization” is based on a survey of U.S. COOs conducted from Aug. 6 to Aug. 15. The report explores the impact and perceptions of GenAI implementation for COOs. Our sample included interviews with 60 COOs from U.S. firms that generated at least $1 billion in revenue last year.
