The Real Deal: Investing in Technology Beyond the AI Hype

Early adopters are looking to cash in on the hype surrounding AI. A recent study suggests that investing in technology goes beyond following the trends. While AI has been receiving a lot of attention, ERP and IoT investments actually have a greater long-term financial impact. Financial services organizations, technology companies, and media and telecoms firms have all seen higher three-year returns thanks to AI technological developments. However, despite receiving less media coverage, ERP and IoT investments have proven to be more lucrative.

According to a study by Deloitte and MKT MediaStats, the hype around AI has reached new levels in 2023. The release of ChatGPT and Google Bard has sparked excitement around a ‘generative AI renaissance’ that promises endless possibilities for early adopters.

The study found that companies investing in AI have seen higher three-year returns compared to market averages. Financial services firms have experienced returns that are 6% higher, while technology, media, and telecoms companies have seen returns that are 12% higher. Furthermore, organizations investing in AI tend to outperform others in stock returns for up to eight quarters after the investments.

Despite the hype surrounding AI, there is another form of technology that is often overlooked but has a greater long-term impact. Enterprise resource planning (ERP) is a software system that helps organizations automate and manage core business processes. Although it receives less media coverage, ERP has proven to have more impactful long-term stock returns compared to machine learning. Over 12 quarters, ERP-related stock rises by 2%, while machine learning peaks at around 1.5% after six quarters.

Similarly, investments in the Internet of Things (IoT) have received less media coverage but can deliver a 3% stock return over eight quarters. IoT involves interlinking different machinery to optimize performance in areas such as electronics, communication, and computer science engineering.

In conclusion, the study suggests that maximizing the value of technology investments requires aligning them with an organization’s strategy. It is important to be intentional and avoid chasing hype. AI investments should be based on need rather than fear of missing out. While AI may be grabbing headlines, ERP and IoT investments offer greater long-term financial impact.