Enterprise AI systems exhibit fundamentally different risk profiles depending on their architectural paradigm. This paper presents a comprehensive economic analysis comparing narrow AI systems—purpose-built for specific tasks—with general-purpose AI (GPAI) systems, particularly large language models and foundation models that have proliferated since 2022. Drawing from 14 years of enterprise sof...
Category: AI Economics
AI Economics: Risk, Cost, and ROI Research by Oleh Ivchenko
AI Economics: Structural Differences — Traditional vs AI Software
In March 2022, a senior architect at a Fortune 500 financial services firm stood before his team with a troubling admission. His organization had spent $47 million over three years building what they called "the most sophisticated fraud detection system in the industry." The system worked—brilliantly, in fact—catching 23% more fraudulent transactions than their previous rule-based approach. But...
Enterprise AI Risk: The 80-95% Failure Rate Problem — Introduction
Enterprise artificial intelligence initiatives fail at rates between 80% and 95%—a staggering statistic that dwarfs failure rates in traditional software development. Despite billions in investment, most AI projects never reach production, and those that do often fail to deliver promised business value. This failure epidemic is not primarily caused by limitations in machine learning algorithms ...