When I look at the latest West Monroe survey of over 300 U.S. executives, one thing is crystal clear: AI and software aren’t just line items anymore — they’re strategy drivers. But the tricky part? Spending is skyrocketing while measurable returns remain frustratingly elusive.
Budgets Are Growing Fast
According to the report from West Monroe, 86% of organizations boosted IT budgets last year, and a similar number expect more increases ahead. Nearly two-thirds now allocate 7% or more of revenue to IT — a sign of just how central digital transformation has become.
And within those budgets, AI is no longer experimental. A full 25% of companies dedicate at least 10% of their IT spend to AI initiatives, signaling a real shift in priorities.
The ROI Problem
But here’s the catch: 95% of custom generative AI pilots are failing to deliver measurable ROI. That’s a staggering figure. It suggests that while companies are eager to jump on the AI wave, they’re struggling to connect projects with business outcomes.
There’s also nuance here. More than half of organizations are actively hiring AI talent — yet only 8% believe automation will actually reduce headcount. To me, that suggests AI is being treated more as an augmentation tool than a replacement, at least for now.
What It Means for Buyers and Providers
For enterprise buyers, the rising costs of SaaS and subscription models underscore the need for smarter procurement: stronger vendor negotiations, tighter portfolio management, and sharper ROI tracking.
For providers, the challenge flips: they’ll need to prove tangible business value, cut through feature bloat, and experiment with new pricing models if they want to win trust (and budgets).
Looking Ahead
The survey paints a picture of a market in transition: spending without clarity, innovation without alignment. Companies that find a way to bridge the gap — tying AI and software investments to clear business outcomes — will separate themselves from the pack.
For the rest, ballooning budgets without returns could become the Achilles’ heel of their digital strategies.
