There has never been more enthusiasm for enterprise AI, or more evidence that most of it doesn't work out. The headline figure is stark and well sourced: by RAND's estimate, more than 80% of AI projects fail, roughly twice the failure rate of IT projects that don't involve AI. The demo impresses. The pilot validates. And then the project quietly stalls somewhere between proof of concept and production.

It would be comforting to blame the technology, but the evidence points the other way. When RAND interviewed 65 experienced data scientists and engineers about why projects fail, four of the five root causes were organizational, not technical. The models are rarely the problem. What surrounds them is.

This report works through why enterprise AI stalls, grounded in the public research and in what we see building these systems, and what the successful minority do differently.

The six reasons AI projects stall

The wrong problem, solved well. The most common failure is also the least technical: the project optimizes a metric no one in the business actually needed, and succeeds technically while failing entirely.
The data was never ready. AI is only as good as what it learns from, and enterprise data is routinely siloed, inconsistent, or untrusted. Data readiness, not talent or tooling, is the most-cited obstacle to AI success.
Chasing the technology instead of the outcome. A bias toward the newest, most impressive approach inflates expectations and applies heavyweight solutions to problems a simpler method would have solved more reliably.
No infrastructure to reach production. Even when everything else is right, projects die at the deployment cliff, the drop between a demo that works for one user and a system that runs at scale. This is “pilot purgatory,” and it's the norm.
Asking AI to do the impossible. Sometimes the honest answer is that the current state of the art simply can't deliver what was promised. Recognizing that early saves months; discovering it late is one of the most expensive lessons in enterprise AI.
Treating a capability like a project. AI needs ongoing data, monitoring, and ownership to keep delivering after launch. The one-off project mindset is why so much value doesn't last.

The numbers, kept honest

This topic is plagued by failure statistics quoted as if they were interchangeable, 80%, 90%, 95%. They're not. They measure different things, across different years, from different research bodies (RAND, MIT, S&P Global, Gartner). The report lays each one out with its own source and explains what it actually measures, because reading the research honestly is the first step to not becoming one of its statistics. It also includes a six-question readiness check you can run against any AI initiative before the work begins.

Who it's for

CIOs, CTOs, heads of data and AI, and the business leaders who sponsor AI initiatives, anyone deciding where to invest, or trying to understand why a project stalled.

Written by the Plaxonic engineering team, drawing on real-world experience delivering production AI. Every figure in the report traces to a named third-party source; sections marked “Plaxonic's View” are our own perspective.

AI Strategy

Why 80% of Enterprise AI Projects Stall