Gen AI investment opportunities center on data, cybersecurity, and cloud, Deloitte survey finds
Deloitte’s State of GenAI quarterly survey explores where industry leaders are increasing generative AI funding as they work to implement strategies
Generative artificial intelligence. The vast majority of businesses today are evaluating and experimenting with it,1 and 78% of leaders surveyed have a high interest in its capabilities.2 The expectations for business growth, innovation, and efficiency are immense. However, our analysis of data from the second quarterly survey in Deloitte’s series on the state of generative AI in the enterprise, which surveyed nearly 2,000 leaders whose organizations are further along in their adoption and implementation of gen AI solutions, found that gen AI’s near- and long-term success hinges on continued co-investment in the wider technology ecosystem.
In addition to enterprise spending on gen AI, which Deloitte predicts will increase by 30% in 2024,3 the data shows that leaders across industries also expect to be making critical investments in the intertwined capabilities of data management, cloud consumption, and cybersecurity (figure 1). These three capabilities, each important in their own right, form a constellation that can create even greater impact—in this case, as enablers of gen AI.
While the prioritization of those investments varies by industry, the anticipated investments suggest that technology budgets may need to increase across the board to take advantage of gen AI’s promise. This research details where leaders across six industries—consumer; energy, resources, and industrials; financial services; life sciences and health care; technology, media, and telecommunications; and government and public services—plan to increase spend.
Data management co-investments are expected to increase among commercial organizations
Expected data management co-investment is high among leaders surveyed from across commercial industries, with 79% of consumer industries and 74% of tech, media, and telecommunications organizations anticipating increasing or significantly increasing investments. Government and public services organizations surveyed have significantly lower expectations of spending on data management, which could reflect their longer budget and contract cycles. It’s clear, however, that surveyed leaders view data management as a core capability required to enable gen AI.
Deloitte Global’s 2023 research into digital investments and regional priorities found that data analytics was already the top technology capability investment among global organizations.4 Plans to increase these investments demonstrate an almost universal recognition of the importance of strong data hygiene as a prerequisite for successful AI and gen AI strategies, with 70% of leaders in the Deloitte State of Gen AI study expecting investments will increase the value of data analysis capabilities. Most leaders see data as a strategic asset, necessitating robust management and analysis capabilities. As they focus on data management, data accuracy and model quality will likely be top of mind.5
Cybersecurity investments are expected to increase
While cybersecurity capabilities are seeing high co-investment levels from respondents across all six industries, financial services and government institutions seem particularly focused on increasing their cybersecurity spending to support gen AI initiatives. Financial services institutions, in particular, stand out with 74% of respondents saying their investments will increase in this area, likely due to the sensitive nature of financial data. This is an encouraging trend, given that Deloitte Global’s 2023 Future of Cyber study showed that cybersecurity budgets dropped as a percentage of organizational revenue among banking and capital markets and insurance sector leaders from 2021 to 2023.6
Additionally, government and public services respondents expect to increase investments in cybersecurity over the next year. While spending in other categories may respond more slowly to market shifts due to longer budget cycles and pressure to keep costs low, persistent pressure around privacy, security, and cybersecurity is an area where government and public services respondents have some operational leverage.7
Cloud co-investment plans are less pronounced but still important for scalability
Sixty-two percent of respondents expect their investment in cloud consumption to increase along with investments in gen AI. While this may seem like a high percentage, it represents the smallest co-investment of the intertwined capabilities, suggesting that it may not yet be clear to surveyed leaders how gen AI will impact their cloud computing consumption. According to our data, energy, resources, and industrials respondents were least likely to be increasing investments in cloud. This may hinder ambitions and scalability unless they are investing in on-premises alternatives.
For example, large language models (LLMs) require data processing, graphics processing, storage, and shared services to function.8 Organizations that have migrated their data to the cloud will be calling on that data every time the LLM operates, increasing cloud consumption. Cloud-enabled systems will be one source of data feeding into gen AI systems, and organizations will need to account for variable consumption costs. Additionally, even organizations that choose to host their LLMs in an on-premises data center will need to scale their applications and tap into shared services outside the organization through the cloud, requiring some level of increased cloud investment. Data, cloud, and cybersecurity capabilities can come together to help enable these gen AI solutions.
Fewer leaders intend to increase investments in traditional AI
The value from investments in AI to date has been significant. Deloitte research has shown that the stocks of organizations investing in AI perform better than competitors.9 For example, financial services institutions investing in AI reported stock returns six percentage points higher than three-year market averages. Similarly, technology, media, and telecommunications companies performed 12 percentage points higher.10
Investments in gen AI could supercharge that value. On average, 55% of respondents expect investments in traditional AI and machine learning to increase alongside investments in gen AI, suggesting that those spending more on both will be looking to combine predictive and generative capabilities in powerful applications. The increase is highest among those in the consumer; life sciences and health care; and technology, media, and communications industries.
Generating industry advantage
Generative AI is contributing to a renaissance in business strategy and technology exploration that can help to transform organizations, industries, and society. However, data is at the heart of the issue: how organizations manage and protect it, how applications consume it, and how it is distributed across the wider network. Gen AI business solutions will require organizations to invest in their core information technology infrastructure to create the tech stack needed to power and scale these solutions, particularly in data management, cybersecurity, and cloud consumption. When leaders thoughtfully integrate technologies to guide business agility and innovation, they can increase value from investments in AI. Industry leaders with already mature infrastructure in these areas could have a head start to gain industry advantage from their investments in gen AI.
