Key Takeaways

  • Devin Mathews reports that 83% of private equity portfolio companies run active AI pilots, yet under 20% tie those projects to measurable enterprise value.
  • Around 80% of corporate AI pilots fail because they lack assigned executive ownership and upfront ROI hurdles, not because the underlying technology falls short.
  • The initial corporate mandate to experiment created widespread subscription clutter on corporate cards without accountability for business outcomes.
  • Justin D’Onofrio recommends giving every pilot a 90-day leash and clock: terminate initiatives without clear returns, fund those with good returns, and scale the clear winners.

The Orphaned Pilot Problem

Corporate boards spent the last eighteen months encouraging unconstrained technical experimentation. Management teams told business units to test every available generative tool. That open-door policy generated software license sprawl across corporate credit cards, but very little measurable EBITDA expansion.

Accordion Managing Director Justin D’Onofrio points out that the high failure rate across enterprise pilots stems from organizational design rather than software limitations. “Around 80% of pilots are failing AI pilots,” D’Onofrio explains. “From my experience, it's not that the pilots are failing, it's just that they don't really belong to anyone.”

When projects lack an operational sponsor who owns the P&L impact, software deployments turn into perpetual science projects. Engineering teams celebrate technical completion while the finance organization struggles to find any resulting cost takeout or revenue lift.

Aligning Board Oversight with 90-Day Clocks

A clear communication disconnect exists between technical leadership and board directors. Mathews describes the recurring boardroom friction: “The CTO saying, 'Let me tell about the great stuff we're doing and the great stuff we're going to do.' And the board asking, 'Well, how much is that going to cost? And how do we know it's working?'”

Sponsors are moving past open-ended exploration. Mathews notes that after a year of telling teams to experiment without constraints, leadership teams recognized they moved too fast without financial controls. The fix requires imposing tight evaluation cycles directly tied to capital allocation.

D’Onofrio recommends enforcing strict 90-day testing windows with predefined decision gates. “What we recommend with the experiments is give them a leash and give them a clock,” D’Onofrio notes. “In 90 days, kill it if it's not working out, fund it if you're seeing good returns, and scale it up if you're seeing great returns.”

Why It Matters

This dynamic signals a shift in how private equity sponsors treat modern technology budgets across their portfolios. The era of free-pass software experimentation has closed as sponsors demand that digital initiatives prove direct contributions to margin expansion before receiving growth capital. Portfolio companies that fail to install rigorous financial governance over technology spend risk margin dilution and lower exit multiples during sponsor-to-sponsor diligence.