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State of AI report: AI industry showing strong signs of maturity in 2021

Presented by Appen


As a rapidly-evolving and innovative industry, AI is a fascinating space to watch. In Appen’s 7th edition of our State of AI report, we provide a snapshot of where the AI industry stands today. Through surveying senior decision-makers on both the business and technical side of companies large and small, we discovered how leaders are finding ways to make AI work in the real world, what they’re prioritizing, and where they still face major challenges. These findings not only paint a picture of a maturing industry, they also serve as a useful resource for AI practitioners working toward their own deployments.

Highlights from the State of AI 2021 report

Finally, organizations are making meaningful progress toward beating the deployment odds, as AI moves from a fringe benefit to a core offering. Success may be more achievable than ever before with the right approach, although formidable barriers remain. To provide a better illustration of what factors are driving the industry, here are several key findings from the report, with commentary on what these may signify for companies in the space:

Increased AI budgets show a maturing industry

AI budgets from $500k to $5M have increased by 55% year-over-year, with only 26% of survey respondents reporting budgets under $500k. Not surprisingly, budget was highly correlated with company size. Respondents from companies with higher budgets were more likely to see themselves as market leaders.

What these increases show is that the AI market is maturing as a whole, bringing foundational changes to the way companies leverage technology for their customers and internally for themselves. A large AI budget is a strong indicator of success, demonstrating the resource-intensive nature of AI (an unfortunately limiting factor for new entrants in the space).

A shift toward maximizing internal processes

More than ever, companies are applying AI to support internal processes for efficiency gains. IT operations were ranked as the top use case for AI, with understanding company data and improving productivity of internal business problems ranked second and third respectively. AI products and services scored much lower, illustrating the major shift toward internal applications.

In these times of economic uncertainty, it’s reasonable for businesses to direct their attention inward toward cost-reduction endeavors. Internal AI initiatives are also less risky in terms of financial investment and brand reputation. With these factors in mind, we can likely expect to see this trend persist as the global pandemic continues.

C-level executives delegate AI responsibility

In past reports, we saw an upward trend of C-level executives becoming more responsible for AI initiatives in their organizations — in 2020, 71% of executives reported having responsibility. In 2021, that trend changed course, with the C-suite delegating to VPs and directors (a shift from 71% to only 39% reporting having responsibility for AI in their organization). We also are seeing technical leaders take on AI leadership roles more so than their business counterparts.

Priority gaps persist between business and technical leaders

Every year, we evaluate the levels of disagreement between business and technical leaders. In 2021, these two stakeholders are aligned in key areas like data diversity, the usage of AI, and external data providers. Yet, gaps remain most significant in ethics (technical leaders rate ethics as more important) and interpretability (more highly-rated by business leaders).

Given that these gaps remain, companies pursuing AI may consider ensuring upfront that all relevant stakeholders are aligned on key priorities for the organization. More often, companies are documenting these priorities in governance frameworks, which helps to create a strong foundation for strategic decisions around ethics, data, etc.

Majority of companies prioritize high-quality data

Throughout the report, respondents cited data as a top priority, with special attention to factors like data security. Companies are finally embracing the fact that data is mission-critical to high-performing AI. As a result, they understand the value of partnering with an external data provider, especially as data collection and preparation remain top challenges. Those that use external data providers (a vast majority of respondents) reported more successful deployments and were 1.5 more likely to claim their company is an industry leader.

COVID-19 continues to accelerate AI development

The pandemic has prompted businesses to connect with customers (and in many cases, remote employees) in more virtual and therefore more technology-focused ways. It’s unsurprising, then, that 55% of respondents report that the pandemic has accelerated their AI efforts in 2021 (17% report no impact either way). Even more companies, especially those of larger size, anticipate that the pandemic will accelerate their projects in the future.

Looking ahead

It’s an exciting time in AI as more companies learn how to successfully launch and scale their AI initiatives. We see organizations operationalizing AI for internal efficiencies, putting trust in technical leaders to carry out projects. We see the impact of the pandemic as the AI space is forced to evolve and innovate in response to new customer demands. And we also see the acknowledgement of the importance of high-quality data in training high-performing AI.

The results of this report suggest that companies are better understanding the priorities and tools they need to overcome barriers and launch AI confidently. Of course, there’s no tried-and-true pathway to success yet, but with these findings perhaps we’re one step closer to identifying the techniques that will get us there.

To learn more, download the full State of AI Report.

Wilson Pang is CTO of Appen.


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