Source URL: https://www.theregister.com/2025/01/22/business_value_genai_elusive/
Source: The Register
Title: Business value from GenAI remains elusive despite IT spending boom
Feedly Summary: The nascent tech enters Hype Cycle’s downward slope, says Gartner
Tech analysts have forecast 9.8 percent year-over-year growth in worldwide IT spending in 2025, reaching $5.61 trillion and driven by continuing AI investments, despite “moonshot” projects seeing a high failure rate.…
AI Summary and Description: Yes
Summary: The text discusses the projected growth in global IT spending, driven largely by investments in AI, while also expressing skepticism about the effectiveness and practicality of generative AI initiatives in businesses. It reflects a growing caution among CIOs as they reassess the transformative potential of AI technologies.
Detailed Description:
The analysis highlights several key insights regarding the future of IT spending and AI technology investments, particularly in the context of generative AI. The following points exemplify the major themes from the text:
– **Projected IT Spending Growth**:
– Analysts expect a 9.8% year-over-year increase in global IT spending, reaching $5.61 trillion by 2025, primarily propelled by ongoing investments in AI technologies.
– Gartner projects that overall IT spending growth will accelerate from 7.7% in 2024, indicating robust economic expansion and heightened interest in AI applications.
– **Data Center Systems Expenditure**:
– Spending on datacenter systems is forecasted to rise by 23.2% in 2025, amounting to nearly $406 billion despite a slowdown compared to the previous year’s growth.
– There has been significant investment in servers, which grew by 68% in 2023, setting a trajectory that anticipates a tripling of server-related spending from 2022 to 2028.
– **Investment in AI-Optimized Servers**:
– Spending on servers specifically optimized for AI is expected to double that of traditional servers, reaching $202 billion by 2025.
– **Challenges with Generative AI**:
– Despite a push for experimental deployments of generative AI during 2024, companies are now questioning the tangible benefits of these initiatives. There is a notable shift in expectations regarding the transformative potential of AI.
– The “moonshot projects,” identified as ambitious generative AI initiatives, have faced high failure rates, causing skepticism among Chief Information Officers (CIOs) about the effective transformation through AI.
– **Gartner’s Hype Cycle**:
– Gartner’s analysis indicates that generative AI is perceived to be on a downward slope on the Hype Cycle, wherein expectations are being recalibrated downwards. Organizations are struggling to extract value from generative AI due to improper implementation strategies and a lack of focus on practical use cases.
– **Common Pitfalls Identified**:
– Many user organizations have initiated projects without clear, actionable use cases and have experienced difficulties when integrating generative AI into existing workflows.
– There is a realization that costs associated with implementation may not align with perceived value and a lack of human resources for maintenance is becoming a complicating factor.
The insights provided in this text underscore the evolving landscape of IT investments and the cautious approach that organizations may need to adopt concerning generative AI implementations. For professionals in the domains of security, compliance, and infrastructure management, understanding these trends is crucial for aligning investments with realistic expectations and ensuring effective integration of new technologies into existing organizational frameworks.