Building the business case for AI: Proving ROI

We outline a structured approach to building a compelling business case for AI, helping organisations articulate the value of AI initiatives. It covers identifying use cases, calculating ROI, benchmarking performance, securing executive buy-in, and measuring impact, enabling businesses to confidently invest in AI and drive transformation.

In today's competitive landscape, businesses are increasingly turning to artificial intelligence (AI) to drive innovation, efficiency, and growth. Bain Hollister, Co-Founder of ClearPoint notes, "The opportunity we have as a community in New Zealand and our place in the world is profound." However, as Rob Cleghorn, CTO at ClearPoint, points out, "Securing executive buy-in and budget for AI projects can be challenging without a clear understanding of the return on investment (ROI)." 

We provide a structured approach to building a compelling business case for AI, helping organisations articulate the business value of AI initiatives.

Identifying AI Use Cases Tied to Specific Business Outcomes

The first step in building a business case for AI is to identify use cases that align with your organisation's strategic goals and deliver tangible business outcomes. Focus on areas where AI can:

• Streamline Operations: Automate repetitive tasks to reduce operational costs and improve efficiency.
• Enhance Customer Experiences: Personalise interactions to increase customer satisfaction and loyalty.
• Drive Revenue Growth: Identify new revenue streams or optimise pricing strategies using predictive analytics.

By clearly linking AI initiatives to specific business outcomes, you can demonstrate their potential impact and relevance to your organisation's objectives.

Calculating ROI Based on Cost Savings, Revenue Growth, and Other Benefits

To prove the ROI of AI initiatives, quantify the expected benefits in financial terms. Consider the following:

• Cost Savings: Estimate the reduction in labour costs, error rates, and operational expenses due to automation and improved processes.
• Revenue Growth: Project the increase in sales, market share, or customer lifetime value resulting from enhanced customer experiences and new business opportunities.
• Other Benefits: Include metrics such as improved decision-making speed, enhanced data accuracy, and increased employee productivity.

Create a detailed ROI calculation that compares the projected benefits against the costs of AI implementation, including technology, training, and ongoing maintenance.

"Technology comes along like this, which is just driving a truck through that kind of concept. I don't need to go and find 2,000 engineers at the cheapest rate per hour. I can find a local firm in New Zealand that is AI-enabled, that can build me something with a few high-performing people and probably give me the same outcome." - Bain Holister - Co-Founder, ClearPoint - Watch the full podcast here. 

Quantifying the cost savings and efficiency gains of AI is crucial for building a compelling business case and securing investment.

Benchmarking and Communicating AI Performance Metrics

Establish clear performance metrics and benchmarks to build confidence in AI investments. These might include:

• Accuracy: Measure the precision of AI models in tasks like predictions or classifications.
• Efficiency: Track the time and resources saved due to AI automation.
• Customer Impact: Monitor customer satisfaction scores, retention rates, and other customer-related metrics.

Communicate these metrics regularly to stakeholders to demonstrate the ongoing value and effectiveness of AI initiatives. Use dashboards and reports to provide transparent and accessible updates.

Securing Executive Buy-In and Budget for AI Projects

Securing executive buy-in is crucial for the success of AI projects. To achieve this:

• Engage Key Stakeholders: Involve executives and department leaders early in the planning process. Present AI as a strategic tool that aligns with their goals.
• Highlight Success Stories: Share case studies and examples of successful AI implementations within your industry to build credibility.
• Address Concerns: Be prepared to discuss potential risks, such as data privacy issues and implementation challenges, and how you plan to mitigate them.

By demonstrating a clear path to ROI and addressing stakeholder concerns, you can secure the necessary support and funding for your AI projects.

Measuring and Reporting on AI Business Impact Over Time

AI initiatives should be continuously monitored and evaluated to ensure they deliver the expected business impact. Implement a robust measurement framework that includes:

• Regular Reviews: Conduct periodic assessments to compare actual performance against initial projections.
• Continuous Improvement: Use insights from performance data to refine and enhance AI models and processes.
• Transparent Reporting: Keep stakeholders informed with regular updates on progress, challenges, and successes.

By maintaining a focus on continuous improvement and transparent reporting, you can ensure that AI initiatives continue to deliver value over time.

Conclusion

Building a business case for AI requires a structured approach to identifying use cases, calculating ROI, benchmarking performance, securing executive buy-in, and measuring impact. By following these steps and staying informed about the AI landscape, you can build confidence in AI investments and demonstrate their potential to drive significant business value. Embrace the power of AI to transform your organisation and achieve your strategic goals. 

As Malen Hurbuns, ClearPoint's GM of Engineering suggests, "Start with little experiments within the organisation, try building a small Gen AI application that solves a small problem, these can be quick to get outcomes and worst case you'll learn along the way. But sitting back and doing nothing is probably not the safest for now because this technology is moving at such a rapid pace." By embracing experimentation and continuously learning, organisations can position themselves to harness the transformative potential of AI.

Are you curious about the transformative potential of AI but unsure where to start? Our team of experts is offering a complimentary Lunch and Learn workshop to help you understand how AI can revolutionise your organisation. We will help you to realise the potential of AI and streamline the potential to meet your unique business needs. Find out more.