Beware the AI spending ‘Trojan horse’

There are two dominant pressures right now in the business world: the pressure to cut spending, and the pressure to invest in AI technology. Thus, the best strategy to score a purchase approval is to call it an AI project—even if it really isn’t.

That’s per a newly published report by Emburse, an expense-management software developer, which warns of the pitfalls of undisciplined AI spending. It commissioned a survey of 1,500 finance, IT, and business leaders in the US and UK, and found that 65% of organizations have been told to cut costs or reduce vendors. Talker Research conducted the survey and gathered responses from late September to early October.

Business leaders are having more success with getting the green light on software purchases and vendor contracts when they involve AI. But this strategy can be perilous. According to the survey, 55% of respondents said AI capabilities are a key factor in selecting a vendor. Most respondents (58%) said it’s easier to get software purchases approved if they’re related to AI, and an even greater proportion (62%) admitted they’ve labeled a purchase as an AI initiative “to secure budget approval.”

Organizations that put innovation ahead of cost discipline are falling for a “Trojan horse,” according to Emburse. The firm noted that the scramble to spend on AI “accelerates spend decisions without the discipline that typically protects budgets.” Reckless spending can lead to “overlapping pilots, unplanned licenses, and the emergence of shadow systems,” or unofficial tools and workflows that employees turn to when AI tools don’t match their needs.

“The real risk isn’t overspending on AI; it’s mistaking activity for impact,” Emburse CFO Owen Newman said in the report. “Finance has to be the value filter that transforms noise into strategy.”

Business leaders are feeling the pressure to adopt AI technologies so they won’t be left behind. But the spending spree comes with risks, like a potential bubble in AI company valuations, as CFO Brew recently detailed.

The call is also coming from inside the house. Executives at AI developers warn of careless spending, too.

“I think there are some players who are not managing that risk well or taking unwise risk,” Anthropic CEO Dario Amodei said recently, TechRadar reported. In August, OpenAI CEO Sam Altman said he thinks investors are getting “overexcited” about AI.