Horváth: 70% of Western European companies substantially increased their AI budget in 2024

• The increase in budgets targets the development of generative AI (GenAI) projects, especially in departments dealing with IT, internal services, customer services, logistics, management, marketing, sales and others.
• The main effects that are expected from the implementation of AI solutions are: (1) increased business efficiency; (2) better decision support; (3) new business models / sales growth potential.

Artificial intelligence (AI) budgets were increased by around 70% of Western European companies in 2024, substantially (by more than 30%) compared to 2023, according to responses from more than 150 executives from large Western companies. At the same time, only 5% of these firms – with annual turnover of more than 200 million euros and more than 200 employees – will reduce their AI budgets this year.

These are among the main conclusions of the study “Mastering the AI ​​revolution with a competitive edge”, carried out by Horváth – a management consulting company with 40 years of international experience, also present in Romania, since 2005. The study showed that the most consistent increases in budgets allocated to AI are found in the industrial sector, compared to trade and services, and the budgets are all the higher as the size of a company increases, in terms of turnover and number of employees.

The additional budgets will go mainly towards generative AI projects – a machine learning model that not only understands and recommends information, but can create original content such as texts (from simple social media posts to complex analyzes and business strategies ), images, music, programming code and more. The companies will mainly try to:

• (1) turn to external consultants for the use of GenAI;
• (2) provide training in GenAI to managers; and (3) analyze the potential of AI for company development. One of the findings of the study shows that the use of AI applications is becoming more widespread within companies, which can be used without the support of IT departments who, however, remain the main beneficiaries of increases in AI budgets.

On the following places are departments dealing with internal services, customer services, logistics, management, marketing, sales and others. The departments where artificial intelligence is used the least are: procurement, HR and finance.

Regarding the expected impact following the implementation of AI, the answers of the surveyed executives indicate, for now, a degree of uncertainty. On a scale of -5 (strong negative effects) to +5 (strong positive effects), although no one gave negative valences (responses from -5 to 0) to the AI ​​solutions, none of the expected improvements met either maximum score, no more than 4.

However, the Horváth study highlighted a ranking of the most expected effects related to the use of artificial intelligence:

• (1) increased business efficiency;
• (2) better decision support; and (3) new business models / sales growth potential.

According to the Horváth study, there are two areas where the impact of AI is expected to be significant. On the one hand, there is the labor market, where 77% of respondents believe that “in the future, the value of employees will depend heavily on their AI skills and experience”, while the belief that GenAI will bring about a major change in degree programs go up to 89%.

On the other hand, more than 80% of respondents expect GenAI to have a strong positive or generally positive impact on environmental sustainability.

Regarding the risks associated with the use of AI, the executives surveyed by Horváth fear the most:

• (1) the impossibility of guaranteeing data protection;
• (2) computer crime;
• (3) increasing social conflicts;
• (4) diminishing professional opportunities for those who will not have AI skills; and
• (5) lack of information transparency, which will lead to misinformation.

“All the executives we surveyed believe that the use of artificial intelligence is of strategic importance in the development of companies, but many still have difficulties in identifying the areas of activity where the impact of AI will be significant. Thus, increasing budgets is good news, but without focusing efforts on key areas and setting expectations correctly, there is a risk that the results will not be as anticipated. Instead, top managers in companies are convinced that the labor market will undergo major changes and want to invest in the training of employees, whose value will increase with the acquisition of AI-related skills”, believes Daniel Ioniță, Managing Consultant, Horváth Romania.

More than 150 executives participated in the study (of which 41% at board member and/or general director level and 36% divisional managers), from industry, commerce and services, operating in Germany, Great Britain, France, Italy, Spain and Denmark.

Horváth is one of the most important international, independent, management consulting companies, present on the Romanian market, since 2005. The company was founded in Stuttgart, in 1981, by Prof. Dr. Péter Horváth, one of the pioneers of Controlling- in Germany and has over 1,400 employees. Horváth has offices in Germany (Berlin, Düsseldorf, Frankfurt, Hamburg, Munich and Stuttgart), Austria, Romania, Switzerland, Hungary, Italy, Denmark, the United States of America, Saudi Arabia and the United Arab Emirates, but the company’s consultants are available to clients at global level. Horváth is a member of Cordence Worldwide, the largest active worldwide alliance of prestigious management consulting companies with nearly 70 offices in 24 countries located on three continents. Please visit our website at: www.horvath-partners.com/ro.