Up to 80% of AI projects flop. What’s causing them to fail?

In a new research, experts from the RAND Corporation conclude that more than 80% of artificial intelligence (AI) projects fail and provide a list of the root causes of the problem.

An 80% failure rate is twice the rate of failure for IT projects that don’t involve AI, researchers James Ryseff, Brandon De Bruhl, and Sydne Newberry said. That’s why understanding how to translate AI’s enormous potential into concrete results remains an urgent challenge.

Solving it is important because, although AI was once reserved for advanced technology companies with the ability to hire top talent and spend millions of dollars, all types of organizations are adopting AI today.

Private-sector investment in AI increased 18-fold from 2013 to 2022, and one survey found that 58 percent of mid-sized corporations had deployed at least one AI model to production.

After interviewing 65 data scientists and engineers with at least five years of experience building AI/machine learning models in industry or academia, researchers identified five leading root causes of AI project failure.

• First, industry stakeholders often misunderstand – or miscommunicate – what problem needs to be solved using AI.
• Second, many AI projects fail because the organization lacks the necessary data to adequately train an effective AI model.
• Third, in some cases, AI projects fail because the organization focuses more on using the latest and greatest technology than on solving real problems for their intended users.
• Fourth, organizations might not have adequate infrastructure to manage their data and deploy completed AI models, which increases the likelihood of project failure.
• Finally, in some cases, AI projects fail because the technology is applied to problems that are too difficult for AI to solve.

Needless to say, the advice for industry leaders is to, first and foremost, understand the purpose of the project and the problem rather than the technology. In other words, they should not give in to the hype and understand that patience is and will be needed, even with AI.

“The findings and recommendations of this report should be of interest to the US Department of Defense (DoD), which has been actively looking for ways to use AI,” researchers of the RAND Corporation, known for its close cooperation with the Pentagon, said.

The Pentagon spends $1.8 billion each year on military applications of AI, and DoD leaders have identified AI as one of the most crucial technologies for the future of warfare.

At the beginning of August, tech companies and their stocks found themselves in the middle of a devastating sell-off, and the reason might have been the growing possibility that GenAI will not deliver returns anytime soon – if ever.

Cybernews previously reported that there’s an increasing belief that big tech has become too obsessed with AI. Sure, it's transformative, but there is uncertainty about whether it will ever make money.