AI’s lack of ROI is down to leadership, not tech

The increasing hype around AI has exceeded any other technology shift, perhaps ever. This has been met with a corresponding amount of investment. Gartner estimates worldwide spending on AI through 2025 will be nearly $1.5 trillion. Despite the staggering amount, most organizations continue to grapple with a chronic gap between promise and realized value.

The most widely recognized data point to support this comes from an MIT report from earlier this year that reveals 95% of gen AI pilots fail. A McKinsey study also found that nearly 80% of companies use gen AI, yet almost as many report no significant impact to the bottom line.

But there’s proof AI is working, if modestly. The 2025 Cisco AI Readiness Index shows 13% of all companies get consistently measurable returns from AI. So while this is a minority, leading organizations are starting to see value. But the origins of that value increasingly stem from leadership clarity, strategic alignment, and execution, not the technology itself. The Cisco AI Readiness Index measured this and found 99% of companies that have realized value from AI have a well-defined strategy that embraces change, and includes formal programs to help employees get comfortable with the new technology.

Today’s CEOs and CIOs face a generational inflection point. They must redefine success for AI not as a means of cost-cutting, but as a driver for capacity creation, innovation, and human-centric outcomes. The path forward requires breaking down work, reassessing where automation helps, and empowering talent to focus on growth and transformation.

Setting the stage: AI promise vs. reality

Among many CIOs, the biggest challenge is the C-Suite and board know they need AI but aren’t sure what for. This creates unrealistic expectations that AI will be a panacea to all problems and send productivity skyrocketing. When the outcomes are unrealistic, a successful project may be deemed unsuccessful because the initial goals were incorrect. A contributing factor to this problem is that many business units don’t have the KPIs to create the business metrics to measure.

An example of this is with contact centers where AI agents could be used for agent coaching, virtual agents, scheduling, scoring calls, note taking and more. Measuring the value of these can be difficult, so many businesses have defaulted to cutting costs by reducing agents. This can backfire if not done in a measured way. Klarna, for instance, eliminated about 700 agents, saw customer service scores tank, and then hired people back. This wasn’t a technology problem but rather leadership didn’t put the right plan in place to understand the impact.

Diagnosing the problem: Tech limitations or leadership gaps?

Issues with achieving ROI on AI and automation technology efforts are often confused with the diagnosis of the issue at hand. A lack of tech readiness concerning integrating complex data and scaling automation remains a challenge. More often than not, however, the issue that gets acted upon may be less with the technology itself and more with the way technology efforts are governed and led. This would indicate the obstacles that exist to technology’s successful implementation lie more with the board than the code and cloud setup. Failures happen because business leaders prioritize expediency driven by market hype instead of thinking about genuine business transformation.

It’s also important that prior to AI projects being kicked off, there’s clear business alignment and an understanding of the metrics being measured to calculate ROI. Projects launched as isolated technology experiments without a well-defined business case tied to a strategic priority are hard to measure and often vague in value, leading to projects that are easy to cut.

The leadership inflection point: Beyond cost cutting

The business world sits at a leadership inflection point where for the first time, workforce transformation will be more than just human. With the rapid adoption of AI and autonomous agents, leaders now face complex decisions about how value is derived and maintained within their organizations. This shift requires cutting costs but also reimagining the relationship between human skills and the technical capabilities of AI, which ensures organizational cultures and processes can adapt to this new era of hybrid workforces.

“Everyone’s been racing to build more AI models, compute, and agents, but the real bottleneck to enterprise AI adoption isn’t supply, it’s that enterprises don’t know where or how to use AI to do real work,” says Greg Shewmaker, CEO of enterprise intelligence company r.Potential. “We believe the missing piece is the coordination layer between human and digital work, where you can capture actual workforce demand, generate realistic and deployable configurations of human and AI capabilities, and tie them to real business outcomes. If we don’t get this right, the next wave of automation won’t just reshape companies, it’ll destabilize work itself.” 

His point underscores what many executives miss: AI’s promise isn’t just a technological or operational challenge, it’s an existential leadership one. As the boundaries blur between tasks suited for humans and those automated by machines, IT and business leaders will need to focus on maximizing value creation through deep integration of people, technology, and culture.​

So it becomes critical for the C-suite to reconsider timelines related to investments and expand capacity in accordance with tech and market needs. This shift in human capital management involves being able to forecast the future workforce and deploy human resources in sync with machine-based intelligence. Innovation should take precedence that’s less about adding to current performance and more about ensuring organizations can remain agile and ready to facilitate innovation in terms of related infrastructure and preparedness to reinvent themselves.

Breaking down work and value creation

Understanding the key components of work is essential to developing understandable ROI from AI. Any returns must consider the adoption of technology and the transformation of processes. The goal should be to leverage AI to amplify human effort in areas that require human judgment, empathy, and creativity rather than in areas where there’s only repetition of tasks, thereby assigning human resources to higher-value supervisory and human roles where they can be most productive and valuable.

The key to success is to refocus on enabling talent to drive revenue growth and innovation through AI. So the goal is to apply AI strategically to liberate highly-skilled people from working on the 80% of any job that can, should, and must be automated so they can focus on the last 20%, which drives new revenue growth, customer loyalty, and innovation breakthroughs.

The AI era will reshape every industry, and if CIOs and CEOs aren’t evolving, the AI investment will be wasted. The key to realizing real value in AI is to ensure leadership is future-ready and embraces new skills and change. It’s not about being the best coder in the room but instilling the right leadership structure. This involves a leadership mentality that uses AI to further human-centric goals and not simply fill an operational spreadsheet with AI data. This requires strict ethics and governance modeled in every aspect of decision-making, and firm alignment on the business side where every AI project has a defined purpose for the organization.