Forrester’s 2024 Predictions Report warns of AI ‘shadow pandemic’ as employees adopt unauthorized tools

Forrester Research unveiled its highly anticipated 2024 predictions report on Thursday, charting a course for more measured AI growth while warning business leaders to prepare for rampant “shadow usage” as employees rely on their own AI tools to be productive.

The 38-page report sees AI platform budgets tripling in 2024 as companies invest in scalable solutions to build, deploy, and monitor AI models. But Forrester cautions this won’t be enough to satisfy employee demand. The report predicts 60% of employees will use their own AI tools at work, introducing new regulatory and compliance challenges.

Forrester sees 85% of companies expanding AI capabilities with open-source models like GPT-J and BERT rather than relying solely on popular proprietary choices like ChatGPT. It also expects 40% of enterprises to proactively invest in governance for AI compliance, getting ahead of looming regulations in the EU, U.S. and China.

Open-source models and risk management

On the innovation front, Forrester predicts a major insurer will begin offering AI “hallucination insurance” in 2024, covering errors and harms specifically caused by AI mistakes as the technology proliferates.

Forrester’s 2024 Predictions Report overall cap a wild year that saw generative AI explode in popularity among consumers and employees, putting pressure on CIOs and CDOs to deliver business results.

The report strikes a pragmatic tone, warning leaders not to get distracted by AI hype and “fun and games” as they build strategies to capitalize on AI’s emerging potential.

Forrester sees 2024 as the start of the “era of intentional AI” as companies move the technology out of R&D and into productive business applications.

“Without a doubt, 2023 will go down as the year of AI as we saw the rise of consumerization of generative AI. Announcements rolled out about mergers, acquisitions, wild company valuations, and oversized VC and internal investments,” Forrester’s team of analysts say in the report.

“We predict that 2024 will galvanize enterprise teams to be proactive, develop a meaningful AI strategy, and deliver on the AI promise while keeping an eye on regulations and new risks,” they add.

Some of the biggest takeaways from the Forrester 2024 AI predictions report:

1. 60% of employees will use their own AI tools at work, creating security risks.
2. AI platform budgets will triple as demand for AI capabilities spikes.
3. 85% of companies will incorporate open-source AI models into their tech stack.
4. 40% of enterprises will proactively invest in AI governance for compliance.
5. Insurers will begin offering “AI hallucination insurance” covering AI mistakes.
6. Generative AI will see 36% CAGR growth from 2023 to 2030 as adoption surges.
7. Enterprises will move AI from R&D into production business applications.
8. AI strategies must focus on managing shadow usage and driving value.
9. Tech leaders feel pressure from employees and executives to adopt AI.
10. 2024 will start the “era of intentional AI” as hype gives way to pragmatism.

These predictions underscore the need for a focused AI strategy even as generative AI brings renewed excitement to the business world. Enterprise leaders must proactively address risks as they expand responsible AI adoption.

The Forrester report is a significant indicator of just how far we’ve come in the AI and data analytics landscape, and how much further we’re set to go. As we move into 2024, the predictions made in this report provide a roadmap for businesses, technologists, and policymakers to navigate the future of AI, data analytics, and automation.

The report serves as a reminder that while the AI revolution is promising, it is not without challenges. As we transition from the hype to the pragmatism of AI, it is important to approach these challenges strategically, ensuring that the promise of AI is realized while mitigating potential risks.