Artificial intelligence is a term present not only on the lips of technology enthusiasts. For example, we are becoming more and more convinced of voice assistants, and we like the recommendation engine of Netflix or online stores. So artificial intelligence is ubiquitous in our daily lives, even if we are not fully aware of it. But is there all the potential of AI here? I would argue that the most important topic of recent years is the use of artificial intelligence in business. So what is behind this buzzword, how exactly is it used in organizations?
Oxford Economics and IBM surveyed 6,000 companies in the retail, manufacturing, financial services, telecommunications and healthcare, and artificial intelligence industries far ahead of others in the cloud and artificial intelligence deployment. It turns out that this elite group of companies puts investments in the cloud and artificial intelligence at the centre of their strategies and more willingly than others to report return on investment and show how the transformation has influenced business development.
Where do companies implement AI?
Most of the surveyed companies implemented artificial intelligence in the back-office and customer-facing areas, including customer service (58%), IT operations (57%), business operations (57%) and process automation (56%).
First of all, companies are adopting artificial intelligence to provide better customer experiences. Secondly, they know that greater flexibility in business and IT operations, financial operations, human resources, marketing, risk, and compliance gives them a competitive advantage and optimizes costs.
Pandemic impact on Cloud and AI investment
It appears that the global pandemic did not stop companies in their investment plans. On the contrary, companies maximize efficiency and resilience in the face of challenging market situations. The Oxford Economics and IBM survey say that at least half of IT executives invested in the cloud (59%) and artificial intelligence (50%) as a result of COVID-19, and nearly as many (47%) plan to increase spending and investment over the next two years.
It is worth mentioning that companies have different reasons for investments depending on their sizes. The study found that:
- smaller companies (revenues below $ 250 million) are introducing AI solutions to lower costs,
- while larger organizations are looking to become more competitive.
The McKinsey Global Survey State AI in 2021 also confirms the above trends. Respondents of the study report a higher cost decline due to AI across all functions, while revenue growth remains constant. Note that the comparison is between 2019 and 2020, and the effects of the pandemic heavily influenced the latter.
AI adoption and Return on Investment
Another research, the McKinsey State of AI in 2021, confirms the growing influence of AI on financial results. The percentage of companies reporting at least 5% of earnings before interest and taxes (EBIT) related to artificial intelligence increased to 27% in 2020 from 22% in 2019. The study clearly points out that companies that see the most outstanding returns from AI are more likely to adopt basic and more advanced practices.
The results correlate with the Deloitte Study, Global Insight Driven Organisation Survey FY 2020/2021, concluding that 32% of all respondents recognize analytics and AI as critical to their business success. A further 65% of companies have a formal strategy covering the areas.
How to ensure good results?
The Oxford Economics and IBM study respondents turned attention to several vital factors contributing to a high return on investment. The following ones belong to them:
- defining and communicating ethical standards for using AI (44%),
- increasing data sharing within the organization (41%) and with partners (33%),
- redesigning business processes in terms of compliance with AI (44%),
- developing existing talent to focus on AI (39%).
Obstacles to the successful Cloud and AI adoption
The path to the goal is usually not easy, especially when it means a significant change for the organization. Therefore, poor change management is seen as a significant obstacle to the successful adoption of the cloud and AI in many sectors.
Companies that are at the beginning of their path refer to:
- immaturity of technology on the market,
- budget problems,
- lack of employee skills.
Companies that are more advanced point to:
- difficulties in building and managing models with multiple providers of artificial intelligence,
- troubles in collecting relevant data to use artificial intelligence operational challenges using data in multiple clouds,
- operational challenges using data in multiple clouds.
Transformation to the cloud and AI changes organizations across the industries. However, the path of adoption is not easy. It is a significant change and requires preparation and coordination, but companies that pass through are winning. They see tangible returns on investments and increases in their long-term competitiveness.
- Picture 1. Driving digital transformation. Exploring the impact of a unified data and AI strategy, Oxford Economics & IBM, January 2021.
- Picture 2. Driving digital transformation. Exploring the impact of a unified data and AI strategy, Oxford Economics & IBM, January 2021.
- Picture 3. https://www.mckinsey.com/business-functions/mckinsey-analytics/our-insights/global-survey-the-state-of-ai-in-2021
- Picture 4a. https://www.mckinsey.com/business-functions/mckinsey-analytics/our-insights/global-survey-the-state-of-ai-in-2021
- Picture 4b. https://www.mckinsey.com/business-functions/mckinsey-analytics/our-insights/global-survey-the-state-of-ai-in-2021
- Picture 5. Driving digital transformation. Exploring the impact of a unified data and AI strategy, Oxford Economics & IBM, January 2021.