Business leaders are struggling to keep pace with rapid advancements in genAI tools and use cases that are transforming their organisations, according to Deloitte’s latest State of Generative AI report.

The quarterly survey of more than 2,700 director and C-suite level executives across fourteen countries found more than two-thirds reporting that 30% or fewer of their AI experiments will be fully scaled in the next three to six months.

Among the major challenges business leaders reported this quarter when it came to scaling up AI use were worries about complying with growing regulations (38%), difficulty in managing evolving risks (32%), implementation issues (27%), and a lack of technical talent and skills (26%).

According to Deloitte, the uneven pace of change around the development and deployment of genAI is causing friction within organisations, adding to the moderate pace of transformation.

However, despite a longer than expected time to value, almost all organisations report measurable ROI on their genAI investments, with almost a quarter reporting 31% or more.

The use of genAI in IT appears to be furthest along, with 28% saying their most advanced initiative is in that function, while cybersecurity applications have also emerged as a standout, with 44% of business leaders saying ROI has surpassed their expectations, more than any other function. 

These successes are pushing firms to invest more into emerging tech, with the majority of respondents (78%) expecting to increase their overall AI spending over the next fiscal year.

Overall, Deloitte’s survey found a strategic shift emerging, going from businesses scrambling to keep up with technology to searching out competitive advantages using genAI. 

That shift is clearly witnessed in the attention leaders are now giving to agentic, or autonomous, genAI. More than a quarter (26%) of those questioned said they were already exploring agentic AI development to a large extent, and 42% to some extent, with the hope that systems that can work with minimal intervention could help accelerate the creation of value.  

Surprisingly, these advancements in genAI are not translating to ever increasing levels of excitement about the technology. Compared to Q1 2024, those in the C-suite reported being 15% less interested in genAI by Q4, while at board level, interest in genAI fell by 16%.

Deloitte said that this trend is evidence of a growing ‘pragmatic mindset’ among business leaders, with the initial fervor surrounding AI giving way to serious work to create lasting value.

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With the hype around genAI dying down, firms are now choosing to focus their energies on fewer projects in the hope of bringing them to scale. Over a third (35%) of executives reported their organisations have between eleven and 20 experiments or proofs of concept currently in work, with only 7% pursuing more than 50, and just 3% working on more than 100 projects.  

“GenAI use cases are rapidly proliferating in leading enterprises across industries,” said Joe Ucuzoglu, Deloitte Global CEO.

“We are seeing a shift as leaders move past the initial hype to strategically deploying GenAI in the core of their businesses. Focus is essential, prioritizing demonstrated use cases with measurable return on investment.”