The scenario is neither new nor unknown to the business community. High mortality rates of Proof of Concepts (PoCs) have taken the air out of many euphoric technologies like RPA, Blockchain, BoTs, and Virtual Reality; reducing their status to “technologies that never got their dues”. Here is another such candidate – Gartner predicts 30% of Generative AI projects will be abandoned after Proof of Concept by the end of 2025

PoC are small-scale experiments that validate technology ideas. These are tested in a self-contained environment before a large-scale deployment.

Usually, in about 10 weeks, a PoC can validate the usefulness of a particular technology at less than 10% of the actual deployment cost, which may take over a year to complete. They allow the management to visualize business scenarios, technical possibilities and operational outcomes in harmony. On the contrary, enterprises risk missing their vast potential by seeing the PoCs as mere validators of something in isolation, say technology or a process.

Consequences of non-industrialization of PoCs

Non-industrialization of PoCs adds to the systemic risk of enterprises. Failed PoCs represent opportunity loss or enhance enterprise risk on two fronts –

1. Technology non-adoption risk: PoCs allow the trial of new methods/ techniques in an agile, cost-effective manner. For example, we are currently witnessing significant interest wrt digital technologies which usually start as PoC before businesses integrate them into the mainstream.

2. Financial risk: A mid-size organization of US$5-10 bn revenue commissions about 25-30 different PoCs in a year involving different digital technologies. They spend about $50,000 to $80,000 per PoC with a 20x-30x top-line impact. If a vast number of these PoCs fail to deliver the scale benefits, then this is far too significant a number to ignore.

How the PoCs should be positioned along a Strategy- to- Execution journey

Image source: Author

Businesses should smartly use PoCs as a surrogate for major strategic action. They should deploy individual PoCs as a “strategy-in-a-box” and observe their effectiveness from strategy-to-execution. Thus, the PoCs would act as a starting point in a long sequence of strategy deployment exercises and not an event in isolation.