FinOpsValue RealizationExecutive Advisory
Building an IRR model for enterprise AI investments
A defensible business-case template for AI initiatives that survives CFO scrutiny and post-implementation review.
Why most AI business cases collapse on review
I have seen hundreds of AI business cases. The two most common failures are:
- Run cost (inference, observability, retraining) modelled as a small percentage of build cost. In production, run cost frequently exceeds build cost within eighteen months.
- Revenue uplift modelled as a single point estimate with no probability weighting.
What a defensible model looks like
A clean enterprise AI business case has four sheets:
- Cost: build, run, change-management, decommissioning of legacy.
- Benefit: three scenarios (low/base/high) with explicit probabilities.
- Risk-adjusted IRR: discount rate elevated by a documented risk premium.
- Kill-switch: the leading indicator and threshold that triggers a stop decision.
This last sheet is the one most teams skip. It is also the one that earns CFO trust.