- The Loop
- Posts
- 🔆 The AI Cost Iceberg: Total Cost of Ownership (part 2 of 2)
🔆 The AI Cost Iceberg: Total Cost of Ownership (part 2 of 2)
The world's largest data center, AI deciphers immune systems, and the cost of organizational readiness.
Allegra Guinan & Emma G Moller
February 27, 2025
Was this email forwarded to you? Sign up here
🗞️ Issue 59 // ⏱️ Read Time: 7 min
Hello 👋
Last week, we explored the technical aspects of AI Total Cost of Ownership (TCO), covering build vs. buy decisions, pay-as-you-go models, and customization costs. Read that initial part here.
This week, we're discussing elements of cultural change, the often-overlooked but crucial aspects of successful AI implementation. After reading this second part of AI TCO, you will be able to navigate the costs of AI in a much better way than most other leaders. Did someone say competitive advantage? Let’s go.
In this week's newsletter
What we’re talking about: The often-underestimated costs of AI implementation beyond the technology itself: design thinking, cultural transformation, and organizational readiness.
How it’s relevant: Ignoring these crucial elements can lead to AI projects that underperform, create internal friction, or simply fail to deliver the expected ROI.
Why it matters: Successful AI isn't just about algorithms; it's about people. Individuals are the ones creating, using, and impacted by transformative AI. True leaders prioritize user adoption and cultural alignment because it significantly reduces negative consequences and reduces costs. In other words, it creates sustaining value.
Big tech news of the week…
🖥️ The former CTO of OpenAI, Mira Murati, launched Thinking Machines Lab, with the mission to develop top-notch AI with an eye toward making it useful and accessible. The team consists of around 30 people from competitors such as OpenAI, Meta and Mistral.
🧬 Researchers have developed an innovative AI tool called Mal-ID that can diagnose multiple diseases, including COVID-19, type 1 diabetes, and HIV, by analyzing immune cell gene sequences from a single blood sample, potentially revolutionizing medical diagnostics.
🇰🇷 South Korea is building the world’s largest AI data center, scaling up to 3 gigawatts of capacity, which is 400% larger than the current largest operational data center in the world (600 megawatts). This project positions South Korea as a global leader in AI and digital infrastructure.
📂 Chinese AI company DeepSeek is set to release key code and data for its popular R1 model to the public starting next week, marking an unprecedented move in the AI industry to share core technology. With this move, developers and researchers will be able to download, build upon, and improve the underlying technology of Deepseek’s AI models.
The Classic Pitfalls of AI Budgets and How You Can Avoid Them
When organizations budget for AI initiatives, they often follow a familiar pattern we’ve seen throughout the history of digital transformation. They plan for hardware costs, software licenses, and technical talent - the tip of the iceberg. But a larger set of considerations lies under the surface: Transforming how people work, think, and interact with technology.
Underestimating cultural and organizational change reflects a bias toward tangible, measurable costs over the less visible, but equally crucial, investments in what innovation and transformation actually boils down to. Let’s take a look at some commonly overlooked dimensions of transformation and their associated costs.
Design-Thinking: A Critical Part of Strategy
Delivering Value through User Experience
In modern business, design thinking has evolved from a buzzword to a critical strategic methodology for launching successful products and services. Its systematic approach to problem-solving - empathizing with users, defining problems clearly, ideating solutions, prototyping, and testing - has proven essential for creating solutions that people actually want to use.