Artificial Intelligence (AI) has become a powerful force in the strategy of most businesses, promising to improve efficiency, reduce costs, and drive innovation. Yet, while organizations are making significant investments, most CFOs are struggling to quantify the benefits. Why is this happening? The answer is simple: they are not measuring AI ROI correctly, as traditional ROI metrics are insufficient to capture the full value of AI.

The method most CFOs use to calculate AI effectiveness is limited to traditional indicators like direct cost reductions, staff savings, and lower operating expenses. However, this approach overlooks the full potential of AI and fails to account for the long-term strategic impact it can have across the entire business. Essentially, traditional ROI is inadequate for understanding the total value that AI brings to an organization.

AI is not a cost optimization tool. It’s a platform for multiplying capabilities.

The true value of AI lies in areas that are not easily measured with a simple calculation. It is found in the ability to accelerate decision-making, boost team productivity, and unlock new opportunities. For example, the value of an AI system that analyzes market data and predicts trends isn’t measured just by the software’s cost. It’s measured by faster new product development, gaining a competitive advantage, and ultimately, increased profitability.

The difference between successful and failed AI investments lies in understanding that AI doesn’t replace people but enhances their capabilities. When an employee can deliver double the results in the same amount of time using AI-powered tools, the ROI isn’t reflected in reduced payroll costs, but in increased revenue per employee.

The proper method for measuring AI ROI must recognize these strategic impacts and calculate improvements in operational efficiency, innovation capacity, and the company’s competitiveness. Traditional ROI measures only direct financial outcomes, whereas a proper AI ROI framework also includes the long-term benefits that result from enhancing business processes.

Every quarter that passes with flawed AI ROI measurement comes at a cost: opportunities for proper budget allocation are missed, competitors gain market share using the same resources, the board of directors loses confidence in AI initiatives, and teams underperform because they lack clear success metrics.

To learn how to properly calculate AI ROI and recognize the full value it offers your business, the “AI Executive for Business in Action” training is the program you need. This two-day program, delivered by PwC’s Academy and TheFutureCats, will teach you the right methods for measuring ROI to turn your investments into measurable profits.

Learn more.