IT struggles to prove AI ROI; CEOs must own strategy to drive real business value
New Forrester reports argue that without clear strategic vision anchored by executive leadership, companies will fail to justify rising AI costs or capture durable competitive advantages.
IT departments are increasingly tasked with justifying soaring expenses for artificial intelligence as token usage and credit costs climb. While IT foots the bill, it is ultimately CIOs who must explain the return on investment (ROI) to their boards. These questions from information technology start more client engagements than any other topic discussed by Forrester analysts.
The root of these challenges is often a missing strategy rather than technical limitations. Without knowing why an organization is investing in AI, where it should be applied, and how to measure the resulting value, IT is left trying to prove the ROI of workforce enablement. It becomes difficult to demonstrate that helping employees write emails or produce presentations actually translates to bottom-line results. This lack of measurable ROI often becomes a scapegoat for poor strategy, forcing companies into hard choices about priorities.
To address these issues, Forrester has released two new reports based on nine months of collaboration and interviews with over 40 leaders at 25 organizations.
- Your Enterprise AI Strategy outlines the necessary components for a successful plan.
- Introducing The Forrester AI Value Matrix: A Framework For Measuring What Matters provides a framework for defining the right value.
Your AI Strategy Must Answer Why, Where, When, And How
The new enterprise AI strategy report introduces a three-part model designed to align technology with business goals:
- The vision sets why and where you win with AI. A valid vision involves specific outcomes rather than generic actions like handing every employee a copilot. For example, CITGO’s CEO helped craft a strategy spelling out expected outcomes in plain business language: reduce cost per barrel, raise production output, and improve safety, each with a KPI target for the board to hold him accountable. The vision also defines where the company will not play.
- An action plan commits to big bets, timing, scaling, and funding. Effective planning moves firms from hundreds of scattered use cases to a handful of focused investment portfolios, similar to how PepsiCo consolidated into "four or five big bets."
- Principles and policies set how the organization behaves. These are often skipped because they force executives to decide who gives something up so others can gain. They determine who pays for the change and what people can expect regarding their jobs and skills.
Only The CEO Can Hold An AI Strategy Together
CEO ownership is the critical factor that binds the three parts of the strategy together. At Bank of New York, CEO Robin Vince drove a vision that transformed the bank from using a common AI platform to deploying "digital employees" or AI agents. Analysts found that when the CEO owns the strategy, the company makes the necessary hard decisions about which investments move the business substantially and what gets deprioritized to fund them.
With the chief executive in charge, a CIO has the incentive to prioritize data and AI readiness for other leaders' growth ambitions. Furthermore, a chief AI officer no longer spends their day refereeing five executives who do not report to them and disagree on what the business is after.
A Strategy Is Only As Bold As The Value It Targets
The Forrester AI Value Matrix provides a framework that maps where AI value lands on the P&L against how that value is delivered through productivity, engagement, or transformation. This creates a three-by-three grid of nine distinct value types:
- Productivity represents easy, quick wins.
- Engagement involves changing how customers interact with the company; it takes longer but lasts longer.
- Transformational value is slow and difficult to achieve but offers the biggest payoff and is the most durable.
AI strategy and value management must work in tandem. Without a target value that is large enough and durable enough, firms rarely find the resources to execute bold strategies capable of handling upcoming disruption. Forrester notes this dynamic in their AI Disruption Model.
Once organizations understand why and where AI needs to show up, along with the scale of value required, they can implement an AI value management plan. This allows them to track changes in business outcomes that create real, lasting advantage.
