SaaSletter - ICONIQ Growth's "State of AI"

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ICONIQ Growth’s “State Of AI” Report

ICONIQ Growth released its “State of AI” report.

Importantly, the report was based on a “survey of 215 executives at enterprises with $500M+ annual revenue, including CEOs, CIOs, CTO, and functional leaders.” My excerpts:

AI ROI by type of benefit - typically in the 5%-20% range. Unsurprisingly, revenue impact is slower to appear versus more immediate cost savings.

While the 5%-20% ROI results in the ICONIQ survey are well below the eye-popping but very selection-biased company disclosures of 55% AI gains…

… these “low” 5%-20% AI project-level gains can still yield notable margin improvements on an overall corporate P&L. As our many public equity investor readers know, an initiative that yields 33bps to 50bps in operating margin improvement is meaningful even for S&P 500 scale companies.

Combining a few ICONIQ slides, we summarized AI ROI by function below. The callouts:

• Very strong ROI across Sales, Finance, and Marketing
• IT ROI results were surprisingly poor

The vendor preference survey results suggest an uphill battle for AI Natives against incumbents:

This chart on budget sources suggests AI will be a headwind to core, non-AI revenue growth in the near-term:

August 2024 B2B AI Interest Index from Cloud Ratings

We’ve updated our B2B AI Interest Index through August 2024 - full slides below:

August trends represent a reversal from broadly negative trends in June and July.

Thematic Category Interest (n = 47 sub-categories tracked - i.e. “supply chain AI” or “security AI”) rebounded:

Bellwether Microsoft Copilot also rebounded… a bit, with other “Blue Chips” flat:

SaaS Incumbents (n=340, same 340 vendors tracked in our top-of-the-funnel focused, forward-looking SaaS Demand Index) remain flat:

Largely driven by continued explosive growth in PolyAI (“enterprise conversational assistants that carry on natural conversations with customers to solve their problems”), interest in AI Native apps (n=50) increased:

Curated Content

Sapphire Ventures ' latest “Market Memo” included a) table of private $100m ARR companies growing +30% and b) their view of Generative AI’s TAM: “shift will occur as we move from AI-powered applications, which incrementally increase worker productivity within the current paradigm, to Agentic systems that can autonomously complete not only tasks but more end-to-end user workflows. … Generative AI could theoretically be targeting an additional $7.5T to $12.5T of total spend within a decade.”

Hubspot’s Analyst Day (my excerpts) highlighted AI usage/gains, the power of a partner ecosystem, and the durability of multi-product growth:

More on this multi-product theme in our earlier platforms versus point solutions research with G2 :

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