Most Companies Lack Visibility into AI Spending

Only 26 percent of companies have full visibility into their AI costs, a KPMG survey finds. The shift to token-based billing for AI services is putting finance departments in a tough spot, the Wall Street Journal reports. According to a yet-unpublished KPMG survey, just 26 percent of companies have full visibility into their AI spending.

Half have limited oversight, and 22 percent have no transparency at all - or only find out what they've used after the bill arrives. "It's a new resource that needs to be managed that didn't exist quite that way, and we're seeing exponential growth," Steve Chase, KPMG's global AI lead, told the WSJ. KPMG is already working with several companies that burned through their annual token and cloud budgets within just a few months.

One client saw a sixfold spike in token usage. Gil Luria, head of technology research at D.A. Davidson, expects the problem to hit more companies this year: "A lot of CFOs are going to see their Anthropic bill and freak out this quarter." Analysts and executives the WSJ spoke with are drawing parallels to the pandemic-era cloud boom.

Back then, companies poured money into cloud infrastructure, only to slash spending shortly after. Why this matters: The lack of visibility into AI spending has significant implications for businesses, developers, and consumers. As AI becomes increasingly integral to operations, companies must adapt their financial management strategies to keep pace.

The parallels to the pandemic-era cloud boom suggest that companies may be over-investing in AI infrastructure, only to pull back later. This could lead to a surge in AI adoption, followed by a sharp correction. Developers and businesses must prioritize transparency and monitoring of AI costs to avoid unexpected expenses.

Moreover, the industry must address the challenges of token-based billing and develop more effective tools for managing AI spending. As AI continues to grow, companies that fail to get a handle on their AI costs may find themselves struggling to compete.