IT leaders’ AI priorities emphasize productivity over innovation

IT leaders are still aiming for the low-hanging fruit when using AI, zeroing in on improving employee productivity rather than more advanced uses such as enabling innovation or expanding revenue, according to a new survey.

Over two-thirds of IT leaders have focused their AI investments on employee productivity, with just over half using AI to improve customer support or to enable innovation, according to the AI Priorities Study from CIO.com parent company Foundry. Less than half are using AI to expand revenue opportunities or to increase the speed of development.

Replacing employees with AI appears to be part of the productivity goal, with more than half of those surveyed expecting that AI will eventually enable workforce reductions. Those expectations run counter to the message from many AI experts who have touted the technology as more of an employee assistant than a replacement.

Cost cutting vs. innovation

It’s not surprising that IT leaders are focused on efficiency gains and cost cutting as they explore uses for the relatively new technology, says Cheney Hamilton, research analyst at Bloor Research, a UK IT analysis firm.

More surprising is the contradiction between AI’s perceived role as an employee enhancement tool and the expectations of workforce reductions, she adds.

“To me, this suggests that many organizations still see AI as a cost-cutting exercise, rather than a powerful tool that can be used to redefine and improve how work is done,” adds Hamilton, also CEO of Find Your Flex Group, a workforce transformation consultant. “I see this as a short-sighted approach that could lead to talent loss, disengagement, and potential legal and ethical challenges.”

IT leaders should look at AI as more than a productivity or cost-cutting tool, she says. “I don’t think that focusing on employee productivity is necessarily unhealthy, but if businesses stop there, they’re missing the bigger opportunity,” she adds. “AI is not just about doing the same work faster but rather it’s about finding entirely new ways of working.”

Organizations can explore AI with a low barrier to entry by first focusing on employee productivity and customer support, says Patrick Richards, CIO of Motive, a fleet management company. In some cases, these features can be turned on in IT solutions already in place.

Many organizations will use AI to improve productivity while also driving innovation forward, he adds. For example, sales reps can set up agents that conduct deep research on prospects before they make contact.

“Is that innovation? Yes. Is that driving productivity? Absolutely,” Richards says. “We’re giving our employees agentic platforms and saying, ‘Show us the most innovative thing you can dream of that improves the productivity of your role or your team.’”

No need to charge more

Meanwhile, IT leaders responding to the survey are split on whether they should pay more for new AI capabilities in their existing IT solutions, with 45% expecting AI enhancements without additional charges from vendors. Another 42% say they’re willing to pay a premium for AI tools that meet their specific needs. Either way, cost concerns, including price unpredictability, are putting many CIOs’ AI strategies on edge.

Foundry / CIO.com

Outside AI experts also disagree about whether customers should expect to pay more for additional AI features. Organizations should be wary of AI as a “free add-on,” Hamilton says.

“It is key to see that AI is not just another software feature, but it is a fundamental shift in how work is done, and it comes with infrastructure, ethical, and compliance costs,” she adds. “Businesses need to be prepared to pay for AI solutions that genuinely help them rather than expecting vendors to bundle AI in for free.”

Many vendors will charge premium prices for AI because they need to receive a return on their investments, and they must create transparent ethics and fair use policies, she adds.

AI tools require constant tuning and adaptation to remain useful and secure, adds Kathryn Wifvat, a data science professor at Merrimack College and University of the Cumberlands.

“While some AI features may become standard, premium AI capabilities tailored to industry-specific needs will likely remain a paid offering,” adds Wifvat, also founder of EdTech company Nuubi. “However, because AI makes employees significantly more effective, increasing efficiency and automation, the cost can often be justified by the increased return on investment.”

But Motive’s Richards suggests that many IT vendors won’t remain competitive with AI features added. While AI features now cost more in some cases, he doesn’t expect the extra charges to hold up for long.

“Like all companies, [IT vendors] will have to find ways to use AI to save cost, move faster and build better products at the same or less cost,” he says. “I don’t want to pay more for AI just like I don’t want to pay more for products hosted in the cloud. Eventually AI will help companies building AI sell AI for less.”

Agentic AI, touted as the next wave of generative AI, is one area where several pricing paradigms are emerging, with IT leaders having to pay close attention to the details versus their expected AI agent use.

Investment rolls on despite challenges

The Foundry survey also finds that 95% of IT leaders say they are accelerating their use of AI, and nearly nine in 10 have invested or plan to invest in tools to build AI capabilities internally. More than half plan to increase their AI budgets this year, a slight decrease from the 61% who increased their AI budgets in the past year.

Nearly all — about 98% — of IT leaders reported challenges with implementing new AI initiatives. The top impediments included a lack of in-house expertise, business case justification, and competing priorities within the business.