CIOs Believe AI Investments Won't Generate ROI for 2 to 3 Years

According to Lenovo's third annual study of global CIOs surveyed 750 leaders across 10 global markets, CIOs do not expect to see clear and positive return on investment from their artificial intelligence investments for two to three years. 

source: Lenovo 

We should not find this surprising. Consider the last generally-recognized general-purpose technology--the internet--and the lag in perceived benefits. 

Early internet technologies (1995, for example) were less mature and reliable compared to today, with slow connection speeds (dial-up internet was the consumer standard in 1995), limited functionality (the shift to multimedia web had just begun in 1995), while enterprises had to allay their  security concerns.

The internet disrupted traditional business models, so companies needed time to develop new strategies for marketing, sales, and customer service in the digital space. That took time.

Also, though it seems clear enough now, the potential applications of the internet for businesses weren't fully understood at first. Experimentation was required.

Additionally, assessing the return on investment for early internet initiatives was difficult, as firms lacked the analytics tools to quantify the impact of online marketing, e-commerce, or other internet-based activities.

Complicating matters was the widespread failure of many e-commerce startups in the dotcom bust around 2000. Since whole firms failed, benefits were zero or negative. 

Study	Publication Venue, Year	Key Findings
"Why E-Business Fails" by Andrew McAfee	Harvard Business Review, 2002	Analyzed early e-commerce ventures and found many failed to deliver on promises, highlighting the need for a strategic shift beyond simply setting up a website.
"The Productivity Paradox in Information Technology" by Erik Brynjolfsson and Lorin M. Hitt	Journal of Economic Perspectives, 1997	Examined the early years of IT adoption and the difficulty in measuring clear productivity gains initially, suggesting a time lag for realizing benefits.
"Diffusion of Internet Commerce: A Study of Knowledge Acquisition" by Sang-Pil Han, Young-Gul Kim, and Yoonkyung Kim	Journal of Electronic Commerce Research, 2003	Focused on small businesses and found that knowledge acquisition and overcoming technical challenges were crucial for successful internet adoption.
Diffusing the Dot-Com Revolution: The State of Business Transformation in the New Millennium"James C. Brancheau, Richard B. Clark, and Thomas G. Rowan	2001	This study found that many companies struggled to transform their businesses for the internet in the late 1990s, and the early benefits were primarily cost reductions rather than significant revenue growth
"Understanding Digital Marketing ROI: A Literature Review and Synthesis"Magali Ferro, Pauline Pinheiro, and David Thomas	2014	This review of research on digital marketing ROI (Return on Investment) highlights the challenges of measuring the impact of online marketing efforts, particularly in the early days when attribution models were less sophisticated.

That tends to be the case with most information technology innovations, other studies have found, looking at IT in general, e-commerce in specific or productivity. 

Study Title	Publication Venue	Date	Key Conclusions
The Elusive ROI of IT Investments	Strategic Management Journal	1997	Examined IT investments in large firms and found difficulty in directly measuring ROI (Return on Investment) due to factors like long-term strategic benefits and integration challenges.
From Bricks to Clicks: Does IT Pay Off?	Information Systems Research	2002	Analyzed data from over 200 firms and found a delayed effect of e-commerce initiatives on profitability. Early adopters often faced challenges like website development costs and changing consumer behavior.
The Productivity Paradox in Information Technology	The Review of Economic Studies	2003	Investigated the impact of IT on US productivity growth in the 1990s and found a "productivity paradox" where benefits weren't immediately apparent. The study suggests a "learning period" was needed for firms to leverage the internet effectively.
A Longitudinal Analysis of Web Site Traffic and Sales	Marketing Science	2004	Analyzed website traffic and sales data for multiple firms and found a positive correlation, but it took time for website traffic to translate into significant sales growth.
The Productivity Paradox in a Service Economy	Quarterly Journal of Economics	1998	Robert J. Gordon analyzed data from the US economy and found a productivity slowdown despite the rise of computers and the internet in the 1980s and 1990s. The study suggests a lag between technology adoption and measurable economic impact.
Diffusing the Dot-Com Revolution: An Organizational Perspective	Academy of Management Journal	2000	Andrew S. Melville, Thomas Durand, and Nina G. Guyader explored how established firms adopted e-commerce in the late 1990s. They found challenges in integrating new technologies with existing processes, leading to slow initial returns.
From Bricks to Clicks: Determinants of Success in Online Retailing	Journal of Retailing	2002	Kenneth C. Lichtenstein, James A. Lumpkin, and Elizabeth Van Wijnbergen analyzed early online retailers. They identified the need for significant investments in infrastructure and marketing before online channels became profitable.
Why E-Business Fails	Harvard Business Review	1999	Dorothy Leonard-Barton argued that many early e-commerce ventures failed due to a lack of strategic planning and a focus on technology alone, neglecting organizational change and customer experience.

The point is that, of course it will take some time for CIOs to demonstrate meaningful outcomes from applied AI. That is always the case when an important new technology--to say nothing of a general-purpose technology, is introduced. 

Whole business processes have to be redesigned, generally speaking, before the innovations can work their magic and produce measurable outcomes.

AI Impact on Data Centers

source: PTC

Lenovo CIO Study Finds a "To be Expected" Assessment of AI

According to Lenovo's third annual study of global CIOs surveyed 750 leaders across 10 global markets, CIOs do not expect to see clear and positive return on investment from their artificial intelligence investments for two to three years. 

source: Lenovo 

We should not find this surprising. Consider the last generally-recognized general-purpose technology--the internet--and the lag in perceived benefits. 

Early internet technologies (1995, for example) were less mature and reliable compared to today, with slow connection speeds (dial-up internet was the consumer standard in 1995), limited functionality (the shift to multimedia web had just begun in 1995), while enterprises had to allay their  security concerns.

The internet disrupted traditional business models, so companies needed time to develop new strategies for marketing, sales, and customer service in the digital space. That took time.

Also, though it seems clear enough now, the potential applications of the internet for businesses weren't fully understood at first. Experimentation was required.

Additionally, assessing the return on investment for early internet initiatives was difficult, as firms lacked the analytics tools to quantify the impact of online marketing, e-commerce, or other internet-based activities.

Complicating matters was the widespread failure of many e-commerce startups in the dotcom bust around 2000. Since whole firms failed, benefits were zero or negative. 

Study	Publication Venue, Year	Key Findings
"Why E-Business Fails" by Andrew McAfee	Harvard Business Review, 2002	Analyzed early e-commerce ventures and found many failed to deliver on promises, highlighting the need for a strategic shift beyond simply setting up a website.
"The Productivity Paradox in Information Technology" by Erik Brynjolfsson and Lorin M. Hitt	Journal of Economic Perspectives, 1997	Examined the early years of IT adoption and the difficulty in measuring clear productivity gains initially, suggesting a time lag for realizing benefits.
"Diffusion of Internet Commerce: A Study of Knowledge Acquisition" by Sang-Pil Han, Young-Gul Kim, and Yoonkyung Kim	Journal of Electronic Commerce Research, 2003	Focused on small businesses and found that knowledge acquisition and overcoming technical challenges were crucial for successful internet adoption.
Diffusing the Dot-Com Revolution: The State of Business Transformation in the New Millennium"James C. Brancheau, Richard B. Clark, and Thomas G. Rowan	2001	This study found that many companies struggled to transform their businesses for the internet in the late 1990s, and the early benefits were primarily cost reductions rather than significant revenue growth
"Understanding Digital Marketing ROI: A Literature Review and Synthesis"Magali Ferro, Pauline Pinheiro, and David Thomas	2014	This review of research on digital marketing ROI (Return on Investment) highlights the challenges of measuring the impact of online marketing efforts, particularly in the early days when attribution models were less sophisticated.

That tends to be the case with most information technology innovations, other studies have found, looking at IT in general, e-commerce in specific or productivity. 

Study Title	Publication Venue	Date	Key Conclusions
The Elusive ROI of IT Investments	Strategic Management Journal	1997	Examined IT investments in large firms and found difficulty in directly measuring ROI (Return on Investment) due to factors like long-term strategic benefits and integration challenges.
From Bricks to Clicks: Does IT Pay Off?	Information Systems Research	2002	Analyzed data from over 200 firms and found a delayed effect of e-commerce initiatives on profitability. Early adopters often faced challenges like website development costs and changing consumer behavior.
The Productivity Paradox in Information Technology	The Review of Economic Studies	2003	Investigated the impact of IT on US productivity growth in the 1990s and found a "productivity paradox" where benefits weren't immediately apparent. The study suggests a "learning period" was needed for firms to leverage the internet effectively.
A Longitudinal Analysis of Web Site Traffic and Sales	Marketing Science	2004	Analyzed website traffic and sales data for multiple firms and found a positive correlation, but it took time for website traffic to translate into significant sales growth.
The Productivity Paradox in a Service Economy	Quarterly Journal of Economics	1998	Robert J. Gordon analyzed data from the US economy and found a productivity slowdown despite the rise of computers and the internet in the 1980s and 1990s. The study suggests a lag between technology adoption and measurable economic impact.
Diffusing the Dot-Com Revolution: An Organizational Perspective	Academy of Management Journal	2000	Andrew S. Melville, Thomas Durand, and Nina G. Guyader explored how established firms adopted e-commerce in the late 1990s. They found challenges in integrating new technologies with existing processes, leading to slow initial returns.
From Bricks to Clicks: Determinants of Success in Online Retailing	Journal of Retailing	2002	Kenneth C. Lichtenstein, James A. Lumpkin, and Elizabeth Van Wijnbergen analyzed early online retailers. They identified the need for significant investments in infrastructure and marketing before online channels became profitable.
Why E-Business Fails	Harvard Business Review	1999	Dorothy Leonard-Barton argued that many early e-commerce ventures failed due to a lack of strategic planning and a focus on technology alone, neglecting organizational change and customer experience.

The point is that, of course it will take some time for CIOs to demonstrate meaningful outcomes from applied AI. That is always the case when an important new technology--to say nothing of a general-purpose technology, is introduced. 

Whole business processes have to be redesigned, generally speaking, before the innovations can work their magic and produce measurable outcomes.

AI Physical Interfaces Not as Important as Virtual

Microsoft’s dedicated AI key on some keyboards--which opens up access to Microsoft’s Copilot--now is joined by Logitech’s Signature AI mouse, with a button to open up the Logi AI Prompt Builder software and ChatGPT. 

Both might be viewed as equivalent to shortcut keys that simplify access to a chosen AI engine or feature on a device, and likely will be pitched as an easier way for some users to use a specific AI engine, though in principle more-evolved versions by these or other suppliers might offer access to a user’s chosen engine or engines, or offer context-aware AI functions. 

The issue there is the eternal balance between the values of curation (walled gardens that simplify or unify experience, provide greater security and consistency of experience) and the values of openness (flexibility, power, choice at the cost of complexity, risk and security). 

Some might view such interfaces as gimmicks of a sort, and they also represent walled garden approaches to use of generative AI. 

Proponents might argue such buttons or keys provide value by making it easier for users to use one AI engine.  

Instead of navigating menus or opening separate applications, a single click on the AI button brings up Logitech's AI Prompt Builder software, for example. Users can write prompts, customize the desired response tone and complexity, and receive results directly within the Prompt Builder window.

Using the AI button, users also might be able to quickly access ChatGPT's “summarize” function for documents or emails, as well.

AI keys or buttons might be useful for beginners or those unfamiliar with navigating menus, some might argue.

Skeptics might argue this is reminiscent of the early days of the multimedia web, when AOL offered a walled garden internet experience deemed helpful for new users, but was less helpful--or limiting--for users who had some experience. The idea then was to simplify the user experience, and perhaps AI buttons and keys will do that for some new AI users. 

One might envision such keys or buttons launching built-in AI assistants enabling voice commands or  dictation.  In some cases functions might become context aware.

Ideally, users might be able to program the buttons or keys to perform their preferred AI action, such as providing image editing suggestions or content creation prompts.

So AI buttons and keys are an experiment in making AI features more accessible and user-friendly.

In that sense, they resemble voice interfaces for smart speakers, and speech-to-text functions, which aim to make interacting with technology more natural and efficient. But, as with earlier efforts to simplify access, users might quickly outgrow the interfaces, opting instead for the more-flexible and powerful use of menus or other open-ended interfaces. 

Using the AOL analogy, users rather quickly outgrew the walled garden interface and opted instead to rely on open, general-purpose browsers. 

And some innovations simply do not catch on. Smart speakers have failed to become a dominant interface, though voice-to-text functions on smartphones are routinely used. 

It remains to be seen whether walled garden keys and buttons actually provide the intended value, and if so, for how long before users become more AI-proficient and outgrow the interfaces. 

The Graphical User Interface (GUI) and touchscreens, on the other hand, provide classic examples of successful interfaces. And there always are exceptions. The Apple iOS is a walled garden that works. Windows Phone is an example of a failed walled garden. 

In other words, there always is a tension between curation of experience and choice, customization, broad access to features and an open approach. 

Some of us might be so convinced AI keys or buttons will be enduring interfaces.