Four ways to create a lasting cost advantage from AI

Having advised companies across industries on cost transformations for more than two decades, I’ve seen a growing divide emerge as AI and agentic systems reshape the economics of doing business. It’s clear that most companies still struggle to turn AI pilots into profits. Yet a small number of companies are succeeding, in part by linking their AI and cost-reduction efforts.

In a recent BCG analysis, this group of AI leaders delivers 3 times greater cost reduction, 1.6 times higher EBIT margins, and 2.7 times greater return on invested capital than their peers. They’re also creating other advantages, such as increasing transparency, enabling faster decisions, and reallocating capital more effectively to fuel growth and innovation.

In that way, these companies are compounding their cost advantages from AI and improving overall performance. They show what’s possible and offer insights into how others can catch up.

Challenges to overcome

We see some common challenges across cost programs built around AI:

Too many fragmented initiatives, not enough scale. Many companies run AI experiments everywhere and lack clear priorities. They dilute their efforts and apply AI to areas where it might not have the biggest impact.

Foundational issues with data and technology. Successful AI pilots can be tough to scale. Organizations often lack the right IT or data infrastructure, and the testing and resiliency requirements for a company-wide implementation are far more complex than those for an........

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