From hype to reality: Enterprises put focus on business outcomes of AI investments

The return-on-investment (ROI) of Artificial Intelligence (AI) is emerging as one of the biggest concerns for enterprises globally. The conversation intensified recently after reports that Microsoft scaled back access to certain AI coding tools amid rising AI-related costs, even as enterprises continue pouring billions into copilots, chatbots and generative AI integrations.

After nearly two years of aggressive experimentation, companies are now entering a far more demanding phase of the AI cycle, which is ‘proving returns’. The shift is becoming increasingly visible across the consulting and enterprise technology ecosystem, where chief financial officers are no longer willing to approve large AI spends without measurable business outcomes attached to them.

“We’ve reached a point where clients are no longer interested in experimentation alone. They want a proven roadmap to ROI,” said Andy Baldwin, Senior Vice President, Offerings & Growth at IBM Consulting, in an interaction with Business Today.

According to Baldwin, enterprises initially approached AI through proof-of-concept projects, often investing a few million dollars across multiple pilots to identify which use cases delivered value. However, that approach is now giving way to outcome-based AI deployment strategies, particularly in areas such as finance, HR, procurement and software development.

“What we’re increasingly seeing is clients saying: help us reduce the cost of our finance process or improve sales effectiveness — and get paid for delivering that outcome,” Baldwin said.

The transition marks a structural shift for the consulting industry itself.

Traditionally, technology consulting firms operated on input-based models where clients paid for manpower and project execution. AI is now forcing a rethink of that model as enterprises demand shared accountability for productivity gains and efficiency improvements.

Baldwin noted that large enterprises are increasingly pushing consulting and technology partners, including hyperscalers such as Microsoft and AWS, towards contracts tied directly to business outcomes. “That is quite a profound shift because we’re no longer providing people, we’re providing an outcome,” he said.

“The CFOs of many organisations are saying they are not prepared to sanction this level of investment unless they have greater confidence in the ROI they expect to see.”

The pressure to demonstrate AI-led efficiencies is also reshaping revenue models within the IT services industry.
Businesses such as application management and BPO — long considered stable revenue generators for large technology firms — are now being delivered far more efficiently through automation and AI-led workflows. As a result, while AI-driven transformation projects are creating new demand, legacy services are witnessing slower revenue growth as enterprises seek a share of the productivity gains generated through automation.

For enterprises, the AI race is no longer about deploying the latest tools. It is increasingly becoming about proving that the technology can generate tangible business value.