What are Frontier firms and how do they differ from other organizations using AI?
In the report, “Frontier firms” are organizations at the leading edge of AI maturity. They are not just experimenting with AI; they are using it broadly, strategically, and with clear business outcomes in mind.
IDC classifies companies into three maturity levels—Frontier firms, neutral, and laggards—based on several criteria:
- How widely they use generative AI (GenAI)
- How widely they use agentic AI
- How many impact areas (such as products, customer engagement, and operations) are affected by GenAI and agentic AI
- Whether they are already monetizing GenAI
- How mature their responsible AI (RAI) practices are
Key ways Frontier firms stand out:
- **Enterprise-wide AI adoption:** They are nearly universal adopters of AI in IT (78%), product development (75%), cybersecurity (75%), and customer service (74%), while laggards often show single‑digit adoption in most functions.
- **GenAI usage:** 98% of Frontier firms already use GenAI, compared with just 31% of laggards. Most laggards (69%) are still only planning to use GenAI.
- **Preparedness:** 84% of Frontier firms feel well prepared for AI, versus only 19% of laggards. This readiness includes data, compliance, and responsible AI capabilities.
- **Business outcomes:** Frontier firms report stronger results in top-line growth, brand differentiation, cost efficiency, and customer experience. Laggards often report “not applicable,” indicating limited measurable impact.
- **ROI:** Frontier firms see an average return of 2.84x on AI investments, compared with 0.84x for laggards.
Only about 22% of organizations worldwide qualify as Frontier firms, which suggests there is still significant room for others to catch up by scaling AI, strengthening governance, and aligning AI initiatives with business strategy.
How are companies actually using GenAI and agentic AI across the business?
The report shows that AI use is moving from isolated experiments to broader, more strategic deployment across business functions.
**GenAI adoption and scope**
- **68%** of all respondents already use GenAI.
- Another **26%** are not using it yet but plan to within 12 months.
- Frontier firms are especially advanced: **97%** of them use GenAI in two or more business functions, compared with **18%** of laggards.
- On average, Frontier firms use GenAI in **seven** business areas.
Current and planned GenAI use spans:
- **Customer service, marketing, and IT** – Over 40% of organizations already use GenAI here.
- **Other functions** – Product development, cybersecurity, sales, HR, finance, and supply chain are also seeing growing adoption.
Use cases are evolving in three layers:
1. **Productivity use cases** – Individual employee productivity and efficiency (for example, reducing time spent on analysis or routine tasks). These were the starting point and are now considered table stakes.
2. **Functional use cases** – Applying GenAI to specific business functions such as marketing, sales, IT, and supply logistics.
3. **Industry use cases** – Creating new business models, products, or services tailored to industries like retail, manufacturing, financial services, and healthcare.
Organizations are also shifting from:
- **Prebuilt GenAI applications** (40% today)
- To **customized or custom-built GenAI solutions** (expected to reach 70% in the next 24 months).
**Agentic AI adoption and plans**
- **37%** of respondents currently use agentic AI.
- Another **25%** are experimenting with it.
- **24%** plan to use it within the next 24 months.
Today, use of agentic AI by function is still modest, but the report notes that within two years, almost **three times as many** respondents plan to use agentic AI across lines of business such as:
- Customer service
- Cybersecurity
- Product development
- Sales and business development
- Marketing and PR
- IT and infrastructure
Frontier firms are ahead here as well, adopting agentic AI in areas like product development, customer support, and customer engagement, and using it as a differentiator rather than just a productivity tool.
What business value and ROI are organizations seeing from GenAI and agentic AI, and what challenges are they facing?
The report indicates that most organizations are seeing tangible value from GenAI and agentic AI, but they are also running into governance and risk challenges as they scale.
**GenAI value and ROI**
- **68%** of respondents use GenAI today.
- GenAI users report an **average ROI of 2.8x**.
- The **average time to realize ROI** on GenAI projects is **15 months**.
Organizations look beyond pure financial ROI and report several key outcomes from GenAI:
- **51%** see improved accuracy and consistency.
- **45%** report time savings.
- **40%** report enhanced customer experience.
On the revenue and cost side:
- **44%** of all surveyed organizations plan to monetize **industry-specific** GenAI use cases within 24 months, signaling a move toward more differentiated, domain-focused applications.
- Among Frontier firms, **67%** are already monetizing or using GenAI to boost revenue.
- Organizations are also using GenAI to decrease costs through productivity, functional, and industry use cases.
**Agentic AI value and ROI**
- Agentic AI users report an **average ROI of 2.3x**.
- The **average time to realize ROI** is **13 months**.
- The report notes that ROI from agentic AI is still emerging, but even in early pilot or testing phases, organizations are beginning to see meaningful impact.
**Challenges to scaling AI**
As organizations move from pilots to broader deployment, several obstacles become more prominent:
- Nearly **30%** of organizations identify **security, privacy, governance, and compliance** as the top challenges to scaling AI.
- Over **75%** rate **transparency** as very or extremely important, emphasizing the need for explainability and human oversight.
The report highlights that as AI deployments mature and become more complex, ROI can plateau if organizations do not invest in:
- Strong responsible AI governance
- Clear transparency and control mechanisms
- Alignment of AI initiatives with business strategy
Frontier firms are addressing these issues more proactively, using robust governance, data readiness, and responsible AI practices to sustain value as they expand GenAI and agentic AI across the enterprise.
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