Your AI Budget Is Going To The Wrong Place

InnovationYour AI Budget Is Going To The Wrong PlaceByRohit Kedia,Forbes Councils Member.for Forbes Technology CouncilCOUNCIL POSTExpertise from Forbes Councils members, operated under license. Opinions expressed are those of the author. | Membership (fee-based)May 27, 2026, 11:45am EDTRohit Kedia is a software architect turned CEO of Xoriant, a AI-native Applied Intelligence digital engineering company. getty​Have you ever paused to think if AI is a wave to ride or a storm to survive? If you are a CIO or CTO at a banking, manufacturing, FMCG or high-tech company right now, you are almost certainly feeling both simultaneously.Let me address the seemingly bad news first. The storm is real. Over $1.5 trillion has already been wiped from SaaS valuations. Enterprise software categories that looked permanent three years ago are being disrupted overnight. The tools your teams rely on are being repriced, consolidated or made redundant by AI at a pace that no technology planning cycle was built to handle.The wave is equally real. Global AI solutions and services spending is projected to reach $1.3 trillion by 2029, growing at 31.9% annually. Eighty-eight percent of enterprises are now actively investing in AI across business functions. The competitive advantages being built right now by AI-forward companies are real, measurable and compounding.But here is the problem. Most enterprise IT leaders are placing their AI bets in the wrong place.The Layer That’s Getting All The Attention (And Why It Should Not Get All Your Budget)According to McKinsey's State of AI 2025, only one-third of companies have begun to scale their AI programs at enterprise level despite 88% reporting active investment. The remaining two-thirds are spending—just not where it counts. Their budgets are concentrated at the model layer: platform licensing, infrastructure, vendor partnerships and proof-of-concept development.The opportunity that is being left on the table sits entirely above that layer. T...