RESOLVING THE LEDGER
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Centralizing AI governance is critical for managing costs and ensuring the technology drives returns.
EY has created an "AI Value Realization Office" to govern its AI strategy.
Creating an office will be a "critical part" of clients' AI journeys as well, said Dan Diasio, EY's global consulting AI leader.
AI can't be managed by any existing department, so EY is creating a new one.
The Big Four firm is setting up a new function called the "AI Value Realization Office" to centralize its AI spending and ensure the technology delivers measurable impact.
Dan Diasio, EY's global consulting AI leader, told Business Insider the firm expects the office to be fully operational within a couple of months.
Its job is to govern AI spending , drive returns, monitor usage, decide which AI initiatives to scale, and oversee how AI reshapes jobs.
Most companies allocate corporate budgets along departmental lines. However, AI spending and its potential payoff can cut across IT, finance, sales, HR, and operations, said Diasio.
"If you fund by department, you end up addressing a bunch of use cases inside of each of the functions. And what that often means is that you're leaving a lot of value on the table," he said.
EY-Parthenon research found that 75% of the potential enterprise value from AI comes from horizontal value streams — meaning across multiple functions — compared with 25% from projects contained within individual functions, Diasio said.
The AI office will govern the value strategy, looking not just at the dollar-for-dollar calculation but at a broader assessment of whether AI initiatives are changing business performance , Diasio said.
It "will help make sure that funding flows where the biggest opportunities are," he said.
Dan Diasio, EY's global consulting AI leader. EY
Creating a corporate function to manage a growing cost or risk isn't a new idea. Modern-day HR departments emerged during the Great Depression as companies sought more systematic ways to hire and fire workers, while treasury teams took shape in the 1970s, when floating exchange rates made currency movements a bigger risk for multinational companies.
The AI value realization office is the modern-day equivalent, reallocating a set of responsibilities scattered across finance, technology, and other teams to a strategic function in its own right.
'Client zero'
The Big Four professional services pitch themselves as "client zero" for the AI future. By testing the technology on their own employees and operations, they can show clients what works — and sell them advice on doing the same.
The firms have also committed billions to the new technology. In 2023, EY said $1.4 billion went toward building the foundation for the EY.ai platform.
Like all businesses, AI providers' move to change pricing models has put pressure on professional services firms to use the technology effectively and limit costs.
EY has implemented an "invisible" AI router behind some of its specialized AI tools. The router directs employees to the best model for the task at hand, and has helped reduce token consumption by 60% since its implementation in April, alongside other governance strategies.
Saving measures are also becoming more important to clients as they get a clearer idea of what AI actually costs, said Diasio. Many started by experimenting while AI providers subsidized some of the expenses. Now they are confronting the real price tag and asking EY how to organize themselves as they scale AI.
In an EY US AI Pulse survey released in July, 98% of 534 senior decision-makers said token spending had made them reconsider their approach. The survey was conducted between April and May.
So far, companies have generally paid for AI by tightening budgets across the board and reallocating money, said Diasio. Giving AI governance more clout — through a function like the AI value realization office — will be a "critical part" of how EY's clients move forward, said Diasio.
Most clients aren't setting up dedicated AI offices yet, Diasio added.
"It's something that I imagine over time will become a function," he said. "The focus is beginning to shift more toward what the organization looks like on the other side of this."
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