“How do we measure the ROI of AI?”

“AI costs are going up. How do we prove the ROI?”

These questions — coming mostly from IT — start more of my client engagements than any other. As usage of AI credits ramps up and token costs roll in, it’s IT that foots the bill and it’s CIOs who are on the hook to justify the spend.

When I dig into AI ROI challenges with a client, I always uncover a strategy problem at the heart of them. Without knowing why you are investing in AI, where in your business it needs to show up, and having a plan to invest and measure the value, IT is left trying to prove the ROI of workforce enablement and individual worker productivity investments. You are going to have a hard time proving that helping employees write emails, schedule meetings, or produce PowerPoints actually lands in your P&L. Lack of ROI then becomes a scapegoat for bad or missing strategy that forces hard choices about what to focus on and what to deprioritize.

Our new report, Your Enterprise AI Strategy, addresses these pain points. It comes out of nine months of collaboration across Forrester and interviews with more than 40 leaders at 25 organizations, plus hundreds of client engagements. Another freshly updated report, Introducing The Forrester AI Value Matrix: A Framework For Measuring What Matters, tells you what the right value looks like.

Your AI Strategy Must Answer Why, Where, When, And How

The enterprise AI strategy report introduces a three-part model where:

  • The vision sets why and where you win with AI. Saving a bit of money isn’t a vision, and neither is handing every employee a copilot. CITGO’s CEO helped write his company’s AI strategy, spelling out the expected outcomes in plain business language: Reduce cost per barrel, raise production output, and improve safety, each with a KPI target to which the board could hold him. A vision also says where you won’t play.
  • An action plan commits to big bets, timing, scaling, and funding. Planning is what moves a firm from hundreds of use cases to a handful of investment portfolios, the way PepsiCo got to “four or five big bets.”
  • Principles and policies set how the organization behaves. They’re the part that most companies skip, because they force executives to decide who gives something up so others can gain, who pays for the change, and what people can expect for their jobs and skills.

 

Only The CEO Can Hold An AI Strategy Together

CEO ownership is what binds all three together. At Bank of New York, CEO Robin Vince drove the vision that took the bank from a common AI platform to AI agents that it calls digital employees. We’ve found that when the CEO owns the strategy, the company makes the hard decisions: which investments move the business substantially and what gets deprioritized to pay for them. At an organizational level, only the chief executive can make those calls. With the CEO in charge, a CIO has the incentive to prioritize data and AI readiness for the CMO’s growth ambitions and a chief AI officer no longer spends their day refereeing five executives who don’t report to them and don’t agree 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 for value that crosses where AI value lands on your P&L with how that value is delivered (productivity, engagement, and transformation). It gives you a three-by-three grid of nine value types. Productivity is the easy, quick kind of value. Engagement, how AI changes the way customers deal with you, takes longer and lasts longer. Transformational value is slow and hard to get, but it’s the biggest payoff and the most durable.

 

AI strategy and value management work as a pair. Without a target value that’s large and durable enough, firms rarely find the wherewithal to create and execute a strategy bold enough for the disruption that’s coming (our AI Disruption Model lays that out for you).

Once you understand why and where AI needs to show up in your business, and how large and durable the value needs to be, you can put an AI value management plan in place that tracks changes in business outcomes that create real, lasting advantage.

Read Your Enterprise AI Strategy, check out our updated AI Value Matrix, then book an inquiry or guidance session with me. Bring your use case list, and we’ll see what value it’s really aiming for.

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