DIGITAL

&

TRENDSArtificialintelligence(AI)adoption,risks,andchallengesCHAPTER

01Overview:AImarketMarketsizeandrevenuecomparisonforartificialintelligenceworldwidefrom2018to2030(inbillionU.S.dollars)ArtificialIntelligence(AI)marketsize/revenuecomparisons2018-2030IDC(February2021)Tractica(March2020)NextMoveStrategicConsulting(January2023)(October2023)2,0001,8001,6001,4001,2001,0008001,847.41,4151,068.7795.3511.3738.72030659.52029582.9445.9584.8554.3600420.4370.2327.5227.6305.9400281.4241.8207.970.9414324.38126108.420095.494.4151.2734.87202110.114.69201922.5902018202020222023202420252026202720283Description:Themarketforartificialintelligence(AI)isexpectedtoshowsignificantgrowthinthecomingdecade,accordingtoavarietyofsources.Accordingtodata,theAImarketsizeisprojectedtorisefrom241.8billionU.S.dollarsin2023toalmost740billionU.S.dollarsin2030,accountingforacompoundannualgrowthrateof17.3%.Meanwhile,accordingto?

NextMoveStrategyConsulting,itsvalueofapproximately208billionU.S.dollarsin2023isexpectedtogrowninefoldby2030,[...]ReadmoreNote(s):Worldwide;2018-2023Source(s):IDC;NextMoveStrategyConsulting;TracticaNumberofartificialintelligence(AI)toolusersgloballyfrom2020to2030(inmillions)AItoolusernumbersworldwidefrom2020-2030800700600500400729.11673.83605.94529.77451.82378.8314.38300254.782023201.382001000154.262021115.912020202220242025202620272028202920304Description:PeopleusingAItoolsgloballywentpast250millionin2023,morethandoublingfromthe2020number.ThisgrowthinAItoolusersisexpectedtocontinue,pushingpast700millionbytheendofthedecade.ReadmoreNote(s):Worldwide;August2023Source(s):MostpopularAIusecaseswithinenterprisesworldwidein2023MostpopularAIusecaseswithinenterprisesglobally2023Shareofrespondents0%10%20%30%40%38%50%60%ComputervisionCustomerengagement(CRM,chatbots,callcenters,customeraffinity)Predictivemaintenance51%47%43%Naturallanguageprocessing(NLP)Recommendersystems34%Intelligentsearch31%Documentprocessing28%26%SalesandmarketinganalyticsFacialrecognition23%Imagerecognition18%Speechrecognition13%5Description:ThemostpopularAIusecaseamongenterprisesworldwidein2023wascomputervision.ThissubfieldofAIfocusesonenablingAIprogramstounderstand,identify,andcategorizeimages.WiththehighriseingenerativeAIcontentandcreation,itisunsurprisingthatidentifyingimageshasbecomeafocalpointofAIinitiatives.Speechrecognitionremainedalowfocus,likelyduetothecomplicationsinunderstandingthevastamountoflanguages,dialects,andaccentstobefoundwithin[...]ReadmoreNote(s):Worldwide;OctobertoNovember,2023;1,420respondents;ITprofessionalsacrossmultipleindustriesSource(s):ColemanParkesResearch;Dell;Rackspace;VMwareCHAPTER

02Segment:AdoptionDatagovernancepoliciesandstrategieswithinbusinessesinresponsetoartificialintelligence(AI)worldwidein2023GovernancepoliciesandstrategiesforAIwithinbusinessesworldwide2023Shareofrespondents0%5%10%15%20%25%30%35%40%45%50%PrivacyissuesDatabias46%42%AccountabilityandtransparencyDatacollection38%33%ReliabilityandtrustStorage30%28%Processing24%Distribution19%7Description:MostrespondentshadgovernancepoliciesorstrategiestodealwithissuesofprivacyanddatabiaswhenengagingwithAIintheirorganizationin2023.Thesewereofcriticalimportanceastheyarethemostlikelytogetanorganizationintolegalissuesandliabilities.ReadmoreNote(s):Worldwide;OctobertoNovember,2023;1,420respondentsSource(s):ColemanParkesResearch;Dell;Rackspace;VMwareAreasofbusinessthatwillrequirethemostartificialintelligence(AI)skillsoverthenext12monthsasof2023AreasofbusinessthatwillrequirethemostAIskillsoverthenextyearasof202350%45%44%45%40%35%30%25%20%15%10%5%38%38%38%37%36%36%33%28%0%8Description:GenerativeAIandpromptengineeringaretheareasofbusinessthatwillrequirethemostAIskillsoverthenext12monthsperasurveycarriedoutinthemiddleof2023.Thisfollowsthetrendof2023wheregenerativeAItookofffromitshumblebeginningsasanartgeneratorandhasnowreachedintomajorindustriesliketeachingandlaw.ReadmoreNote(s):Worldwide;JulytoSeptember,2023;650respondents;IT,DevOps,andPlatformEngineeringdecisionmakersSource(s):Nutanix;VansonBourneKeybenefitsglobalorganizationshopetoachievewiththeadoptionofgenerativeartificialintelligence(AI)asof2024ExpectedbenefitsfromGenerativeAIinorganizationsworldwide2024Shareofrespondents0%10%20%30%40%50%60%56%ImproveefficiencyandproductivityReducecosts35%ImproveexistingproductsandservicesEncourageinnovationandgrowth29%29%ShiftworkersfromlowertohighervaluetasksIncreasespeedand/oreaseofdevelopingnewsystems/softwareIncreaserevenue26%26%25%23%Enhancerelationshipswithclients/customersUncovernewideasandinsights19%18%Detectfraudandmanagerisks9Description:Nearly60percentoforganizationsworldwidehopetheireffortstowardstheimplementationofgenerativeartificialintelligencetoresultinimprovedefficiencyandproductivity,makingitthemostexpectedbenefitfromgenerativeAI.Insequence,costreduction,improvementofexistingproductsandservices,andtheencouragementofinnovationandgrowthfollowwithabout35,29and29percentoftherespondentsclaimingtoexpectthem,respectively.

ReadmoreNote(s):Worldwide;October12toDecember5,2023;2835respondents;Firstwaveofquarterlysurveys;directortoC-suite-levelrespondentsSource(s):DeloitteSelf-assessedpreparednessoforganizations'riskandgovernanceworldwidefortheadoptionofgenerativeartificialintelligence(AI)asof2024Preparednessofglobalcompanies'risk&governanceforgenerativeAIadoption2024Veryhighlyprepared7%Notprepared13%Highlyprepared18%Slightlyprepared28%Moderatelyprepared34%10Description:Organizationsworldwidemostlyselfassesstheirrisk&governanceasmoderatelypreparedinrelationtogenerativeAI(GenAI)adoption,accountingforabout34percentoftherespondents.Nearlyalltherespondentsclaimtobeatleastslightlyprepared,withonly13percentofthecompaniesclaimingnottobepreparedatall.ReadmoreNote(s):Worldwide;October12toDecember5,2023;2835respondents;Firstwaveofquarterlysurveys;directortoC-suite-levelrespondentsSource(s):DeloitteBusinessdepartmentsexploringartificialintelligence(AI)usecasesincompaniesin2023AreasofbusinessoperationsthatconcentrateAIusecasesincompanies2023Shareofrespondents5%0%10%15%20%25%30%35%AutomationofITprocessesSecurityandthreatdetectionAImonitoringorgovernance33%26%25%BusinessanalyticsorintelligenceAutomatingprocessing,understanding,andflowofdocumentsAutomatingcustomeroremployeeself-serviceanswersandactionsAutomationofbusinessprocessesAutomationofnetworkprocessesDigitallabor24%24%23%22%22%22%22%22%MarketingandsalesFrauddetectionSearchandknowledgediscoveryHumanresourcesandtalentacquisitionFinancialplanningandanalysis21%19%18%18%Supplychainintelligence11Description:Asof2023,over33percentofITleadersworldwideclaimtoexploreartificialintelligence(AI)usecasesintheirbusinessoperationareaofautomationofITprocesses.Thedepartmentsofsecurityandthreatdetection,andAImonitoringorgovernancefollow,withabout26and25percentoftherespondentsclaimingthemasadoption-drivingareasofoperation.ReadmoreNote(s):Worldwide;November2023;8584respondents;ITProfessionals,inamanagerorhigher-levelroleSource(s):IBMGlobalposturetowardstheuseofgenerativeartificialintelligence(GenAI)in2023WorldwideposturetowardstheuseofgenerativeAI2023ShareofrespondentsIndividualist20%Collectivist0%5%10%15%25%24%30%35%34%40%45%17%VeryfamiliarEverused45%32%UseweeklyormoreVeryexcited36%25%35%12%Notworried18%12Description:Asof2023,countriesconsideredtohavecollectiveculturesrespondedmorepositivelytotheuseofgenerativeartificialintelligence(GenAI).Approximately45percentoftherespondentsfromcollectiveculturesclaimtohavealreadyusedthetechnology,incontrasttoonlyabout34percentofrespondentsfromtheconsideredindividualistcultures.ReadmoreNote(s):Worldwide;July27toAugust22,2023;16795respondents;17countries;Respondents:teens13-17,parentsof6–17,adults18-64;Source(s):MicrosoftCHAPTER

03Segment:RisksExpectedimpactoneconomicinequalityworldwidebythewidespreadimplementationofgenerativeartificialintelligence(AI)asof2024ImpactofgenerativeAIoneconomicinequalityworldwide2024Highlyincreaseeconomicinequality10%Highlydecreaseeconomicinequality3%Decreaseeconomicinequality19%Noimpact27%Increaseeconomicinequality41%14Description:OverhalfoftheorganizationsworldwideexpectthewidespreadimplementationofgenerativeAI(GenAI)toincreaseeconomicinequalityacrosstheglobe.Onlyabout22percentoftherespondentsexpecttheoppositescenario.Approximately27percentoftherespondentsexpectawidespreaduseofGenAInottohaveanyimpactonthissocialaspect.ReadmoreNote(s):Worldwide;October12toDecember5,2023;2835respondents;Firstwaveofquarterlysurveys;directortoC-suite-levelrespondentsSource(s):DeloitteExpectedimpactonthedistributionofeconomicpowerworldwidebythewidespreadimplementationofgenerativeartificialintelligence(AI)asof2024ImpactofgenerativeAIonthedistributionofeconomicpowerworldwide2024Highlycentralizeeconomicpower10%Highlydistributeeconomicpower5%Distributeeconomicpower25%Noimpact18%Centralizeeconomicpower42%15Description:OverhalfoftheorganizationsworldwideexpectthewidespreadimplementationofgenerativeAI(GenAI)tofurthercentralizeeconomicpoweracrosstheglobe.About30percentoftherespondentsexpecttheoppositescenario.Only18percentoftherespondentsexpectawidespreaduseofGenAInottohaveanyimpactonthissocialaspect.ReadmoreNote(s):Worldwide;October12toDecember5,2023;2835respondents;Firstwaveofquarterlysurveys;directortoC-suite-levelrespondentsSource(s):DeloitteCompanies'implementedriskmanagementstrategiesandcontroloftheuseofgenerativeartificialintelligence(GenAI)in2023Organizations'implementedcontroloftheuseofgenerativeAI2023Shareofrespondents0%10%20%30%40%50%60%DatalimitationsToolrestrictions63%61%DataverificationrequirementsGenAInotpermitted36%27%16Description:Asof2023,approximately63percentofthesurveyedcompaniesmentiondatalimitationsasatoolofcontrollingtheuseofgenerativeartificialintelligence(GenAI)intheircompaniestomanagetherisksoftechnologyuse.Toolrestrictionscomeinsecond,withabout61percentoftherespondents.ReadmoreNote(s):NorthAmerica,Asia,Europe,CentralandSouthAmerica;2023;2600respondentsSource(s):CiscoSystemsCompanies'concernsrelatedtotheuseofgenerativeartificialintelligence(GenAI)in2023Organizations'concernsfromtheuseofgenerativeAI2023Shareofrespondents10%

20%0%30%40%50%60%70%69%Couldhurtcompany’slegalrights(IP)InformationcouldbesharedwithpublicorcompetitorsWrongresults68%68%Detrimentalforhumanity63%CouldreplaceotheremployeesCouldreplacemyjob61%58%17Description:Asof2023,companiesusinggenerativeartificialintelligence(GenAI)aremostlyconcernedthatthetechnology'susecouldpossiblyhurtthecompany'slegalrights(IP).Thepossibilityofsharedinformationwiththepublicorcompetitorsandofwrongresultsfollow,withabout68percentoftherespondentsclaimingconcernrelatedtoit.ReadmoreNote(s):NorthAmerica,Asia,Europe,CentralandSouthAmerica;2023;2600respondentsSource(s):CiscoSystemsGlobalconcernsovertheuseofgenerativeartificialintelligence(GenAI)in2023ConcernsovertheuseofgenerativeAIworldwide2023ShareofrespondentsNotveryworried,somewhat10%

20%NeitherworriedorunworriedVery,somewhatworried60%

70%0%30%40%50%80%90%100%GeneratingscamswithAIDeepfakes13%13%18%71%69%69%66%62%60%56%18%17%SexualoronlineabuseAIhallucinations14%14%15%14%20%23%26%DataprivacyAmplifybiasesCreatingrelationshipswithanAI18%26%18Description:Asof2023,mostrespondentsworldwideexpressedtobeeitherveryorsomewhatconcernedaboutseveralpotentialnegativeoutcomesfromtheuseofgenerativeartificialintelligence(GenAI).ThescenariothatmostconcernstherespondentsisthepossibilityofthegenerationofscamswithgenerativeAI,with71percentoftherespondentsbeingveryorsomewhatworriedaboutit.ReadmoreNote(s):Worldwide;July27toAugust22,2023;16795respondents;17countries;Respondents:teens13-17,parentsof6–17,adults18-64;Source(s):MicrosoftInitiativestakentomanageimplementationrisksofgenerativeartificialintelligence(AI)byorganizationsworldwideasof2024RiskmanagementinitiativestowardsgenerativeAIimplementationworldwide2024Shareofrespondents0%5%10%15%20%25%30%35%40%45%50%47%46%MonitoringregulatoryrequirementsandensuringcomplianceEstablishingagovernanceframeworkfortheuseofgenerativeAItools/applicationsConductinginternalauditsandtestingongenerativeAItools/applicationsTrainingpractitionershowtorecognizeandmitigatepotentialrisksEnsuringahumanvalidatesallgenerativeAIcontent42%37%36%34%32%UsingaformalgrouporboardtoadviseongenerativeAI-relatedrisksKeepingaformalinventoryofallgenerativeAIimplementationsUsingoutsidevendorstoconductindependentauditsandtestingSingleexecutiveresponsibleformanaginggenerativeAI-relatedrisks26%21%19Description:OrganizationsworldwideclaimtoimplementatleastoneinitiativetomanagepossiblerisksfromtheimplementationofgenerativeAI(GenAI).Nearlyhalfofthecompanieslistedmonitoringregulatoryrequirementsandensuringcompliance,andestablishingagovernanceframeworkfortheuseofgenerativeAItoolsandapplications.EnsuringahumanvalidatesallGenAIcontentcameinfifth,witharound36percentoftherespondents.ReadmoreNote(s):Worldwide;October12toDecember5,2023;2835respondents;Firstwaveofquarterlysurveys;directortoC-suite-levelrespondentsSource(s):DeloitteEconomic,technological,andregulatoryriskstoenterprisesintheUnitedStatesin2023RisksposedtocompanysurvivalintheU.S.2023ShareofrespondentsModeraterisk10%Seriousrisk20%38%45%0%30%40%50%60%70%80%Morefrequentand/orbroadercyberattacks36%27%UncertainmacroeconomicenvironmentTalentacquisitionandretention45%46%26%23%RecessionMarginpressureaffectingearningsUSregulatoryenvironment40%38%36%37%32%28%27%25%20%GeopoliticaluncertaintyNewtechnologiesmakingcurrentbusinessmodelirrelevantNotmeetingsustainabilitycommitmentsClimatechange19%31%31%19%19%16%PolarizationinfluencingconsumerdecisionsLackofconsumertrustinnewtech-enabledproductsandservices33%20Description:FrequentandbroadcyberattacksconstitutethemostconcerningrisktoenterprisesintheU.S.in2023,withsome74percentofcompanyexecutivesstatingso.Thelastconcernwasinconsumertrust,withlessthan50percentofrespondentsbelievingittobeaconcern.ReadmoreNote(s):UnitedStates;August1stto8th,2023;609respondentsSource(s):PwCCHAPTER

04Segment:ChallengesLeadingthreechallengesinstartingartificialintelligence(AI)projectsinbusinessworldwidein2022ThreeleadingchallengestostartingAIprojectsworldwide202240%37%34%35%30%25%20%15%10%5%33%0%ProvingbusinessvalueLackofexecituvecommitmentChoosingtherightAItechnologies22Description:Themostdifficultaspectofbeginninganewartificialintelligence(AI)projectwithinanenterpriseisthedifficultyinprovingitsbusinessvalue.ThiscanstemfromamultitudeofreasonsbutmostoftenitisbecauseAIprojectstaketimetoshowtheirvalueandeveryindividualprogramwillaffecteachbusinessinslightlydifferentways.Nearly40percentofrespondentsbelievedthistobetheirmainchallengeinbeginninganewAIproject.ReadmoreNote(s):Worldwide;2022Source(s):StanfordUniversityWhichofthefollowingchallengesaremostlikelytoslowdownyourenterprisetransformationin2024Technologicalchallengesslowingdownenterprisetransformation202450%46%45%40%35%30%25%20%15%10%5%37%36%36%34%34%28%27%0%TechnologyCybersecurityorArisk-averseLackofskillswithin

ContraintsfromImmaturedata-managementstrategiesTransformationfatigueSpirallingcostsfunctionlacking

privacyconcerns

culturethatisslow

ourorganization

legacytechnologythegoveranceandcoordinationtoeffectivelysupporttransformationinitiativestoembracechange23Description:Technologybeingutilizedwrongorimplementedpoorlyisthemainissuestandinginthewayofenterprisetechnologicalchangesin2024.Cybersecurityandprivacyconcernscomesecond,areasonableissueasnewtechnologyisusuallyvulnerabletomalicioususageinitsearlystages.ReadmoreNote(s):Worldwide;2023;2100respondents;Executivesfrom16countriesSource(s):KPMGLeadingchallengesinimplementingartificialintelligence(AI)initiativesinbusinessesin2023MainchallengesinimplementingAIinitiativesinbusinesses2023Shareofrespondents0%

5%

10%15%20%25%30%35%40%45%42%ChallengesinmeasuringandprovingthebusinessvalueoftheAIsolutionLackoftechnologicalinfrastructuretosupportAIStorageofskilledAItalent38%32%Lackofcleandata24%LackoftrusttowardsAI-baseddecisionsAlgorithm/modelfailure22%19%17%InabilitytofindtherightdataLegalconcerns,risks,orcomplianceissuesLackofskillstoexploittheresults14%11%Lackofclearstrategy/clarityofsuccessmetricsLackofnewusecasesacrossthebusinessLackofongoinginvestment9%7%5%4%Lackofseniormanagementcommitment24Description:ChallengesinprovingtheusefulnessofAIinitiativestoabusinessisthegreatestchallengewhenattemptingtoimplementAIprogramswithinacompanyin2023.Thisisunsurprisingsincethetechnologyisrapidlygrowing,relativelyyoung,andmetricsoftendonotexistorrequiremoretimefordevelopment.Lackofinvestmentandseniormanagementcommitmentweretheleastfacedchallenges.This,too,isunsurprisingasinvestmenthasbeenheavilyfavoringAIsinceearly2023and[...]

ReadmoreNote(s):Worldwide;OctobertoNovember,2023;1,420respondentsSource(s):ColemanParkesResearch;Dell;Rackspace;VMwareLeadinginfrastructurechallengesforAIdevelopmentsworldwidein2023AIinfrastructurechallengesglobally2023Shareofrespondents0%5%10%15%20%25%30%35%DatamanagementSecurity32%26%ComputeperformanceNetworking20%13%Storage8%25Description:DatamanagementrepresentedthelargestchallengetoAIdevelopmentin2023.CompaniesaroundtheworldstruggletomanagetheconsiderableamountofdatarequiredandgeneratedbyAIuse.Storageofsaiddatawasonlyaconcernforeightpercentofrespondents,suggestingplentyofstoragecapacity.ReadmoreNote(s):Worldwide;2023;1,516respondentsSource(s):S&PGlobalMarketIntelligence;WEKACompanies'readinessintermsofartificialintelligence(AI)in2023,bydomainAIreadinessincompanies2023,bydomainShareofrespondentsPacesetters30%Chasers40%Followers50%Laggards60%0%10%20%70%45%80%90%100%4%StrategyInfrastructureData29%44%23%17%30%8%13%30%40%17%GovernanceTalent17%17%27%45%11%36%41%6%Culture9%40%38%13%26/statistics/1455751/ai-readiness-by-domainAsof2023,thestrategydomainistheonewiththelargestnumberofcompaniesclaimingtobeeitherapacesetterorachaserintermsofartificialintelligence(AI)readiness.Thedatadomainheldthelargestnumberoflaggardsinthetechnology.

ReadmoreNote(s):NorthAmerica,Asia,Europe,CentralandSouthAmerica;2023;8000respondents;CiscoAIReadinessIndexSource(s):CiscoSystemsCompanies'perceivedneedformoreeffortinreassuringcustomersoftheirdataprivacyintheuseofartificialintelligence(AI)in2023Needforfurtherdataprivacyreassurancestrategiesincompanies'AIuse2023Unsure2%Disagree7%Agree91%27Description:Asof2023,over90percentoftherespondentsclaimtheircompaniesmustinvestmoreintoreassuringcustomerstheirdataisbeingusedforintendedandlegitimatepurposesonlythroughouttheuseofartificialintelligence(AI).

ReadmoreNote(s):NorthAmerica,Asia,Europe,CentralandSouthAmerica;2023;2600respondentsSource(s):CiscoSystemsAmericanandEuropeancompanies'responsiblepersonfortheartificialintelligence(AI)strategyin2023,byindustryLeadersinchargeofAIstrategiesintheU.S.andEurope2023,byindustryIdo(AIexecutive)ChiefinformationortechnologyofficerAnotherexecutiveinthetechnologyfunctionCOOTheboardNooneCEOCFOTheexecutivecomm