What the AI ​​revolution means for business

AI For Business

L'Oreal CEO Nicolas Hieronymus spoke at technology event CES in January. He talked about how this beauty company is leveraging his AI to serve consumers around the world.
Consumer Technology Association

  • The study found that many companies experimented with generative AI in 2023, but few adopted it widely.
  • Analysts, business executives, and professors argue that there is more to AI than low-level automation.
  • This article is part of '.CXO AI Handbook“ — Business leaders speak candidly about how they are testing and using AI.

After years of anticipation and speculation, artificial intelligence for the business world has arrived and is shaping the way companies large and small plan for the future.

Businesses are increasingly investing in AI, and there are many success stories of companies using AI to reduce costs. Although businesses no longer need convincing to use technology, many are still confused about how exactly AI fits into their operations.

Companies are interested in AI, but its uses vary

Most companies are at least thinking about how AI will impact their business. Goldman Sachs strategists found this year that 36% of S&P 500 companies mentioned AI in their fourth-quarter earnings calls. A PwC survey of more than 4,000 CEOs around the world conducted last fall found that 70% use generative AI (a type of AI that creates content such as text and images) in the way their companies produce, distribute, and capture content. The respondents answered that they expected the company to make major changes. Assess the value over the next three years.

“Today, public companies around the world, whether in the US, UK or Asian markets, are being asked by their shareholders, 'What is our AI strategy?'” said Umesh Sachdev, CEO of AI software provider Unifor, Business Insider told.

Sachdev said that before OpenAI's ChatGPT was released in 2022, companies were buying AI as separate solutions for different parts of their business. Companies are now taking a more centralized approach and looking at AI as “horizontal infrastructure across the business,” he said.

Despite all the buzz, adoption remains low: A survey of 300 business leaders across Asia Pacific, the Americas, and Europe by MIT Technology Review Insights and Australian telecommunications company Telstra found that 76% of companies were experimenting with generative AI in 2023, but only 9% had widely adopted the technology.

According to a paper from the National Bureau of Economic Research, manufacturing, information services, and healthcare industries had the highest levels of AI adoption in 2017, while construction and retail were some of the lowest.

Some companies just hype and don't take any action. Securities and Exchange Commission Chairman Gary Gensler recently said that companies that only claim to use AI are engaging in “AI washing.” In March, two investment advisers accused of making false and misleading statements about their use of AI agreed to pay six-figure fines.

AI helps make the workplace more efficient

An MIT Technology Review Insights study suggested that AI is most commonly used to automate unnecessary tasks.

Felipe Tomás, an associate professor of marketing at Oxford University's Said Business School, argued that there will be a divide between companies that use AI solely to reduce costs and those that use it to create value.

Thomas said that for companies in the first category, the approach is: “We're doing everything the same way we used to do it, but now we're going to do it with AI.”

“This is the least imaginative way to use multibillion-pound technology,” Thomas said, “but it's actually dominating the industry.”

For example, Citi told BI in a previous interview that AI is being phased in within the bank as part of a multi-year transformation process.

“Let's get out of the lab and go to the factory floor. Let's have people use it for small little things,” said Shadman Zafar, Citi's co-chief information officer. “It’s important to put your heart and soul into everything you do, which has a huge cumulative impact.”

AI brings new technological possibilities to business

In the second category, Tomaz cited L'Oréal as an example of a non-tech company that is doing innovative things with AI. The French cosmetics giant has developed an augmented reality tool that allows customers to virtually try on makeup. It has also launched a service offering customized skin care advice under its own brands Vichy and La Roche His Posay.

“What they get from that is better product recommendations, unprecedented customer relationships, and intelligence about the distribution of skin conditions around the world that helps them develop products and bring them to market. It will be reflected in the new products that will be released. There was nothing else.” Thomas said.

“They stay true to who they are as a company and their connection to their customers, but they're actually using technology to fulfill that role and benefit their customer relationships.”

Deborah Golden, Deloitte U.S. chief innovation officer, said AI has great potential. But, like Thomas, she argued that proper innovation requires him to deploy AI to make day-to-day operations more efficient.

“I feel like we’re a little too biased towards GenAI,” she said. “That's 100 times less than what AI can actually do.”

He said the technology could offer “cross-pollination” opportunities for the industry.

“Historically, the industry has operated in a very siled manner,” she said. “With AI, we can now really look at and determine how data in one industry can help solve data problems in other industries.”

For example, Golden said AI technology developed by the aerospace industry is being used in agriculture, as satellite data from space helps farmers manage land changes and decide how to plant crops. Stated.

Early AI adoption requires ongoing support

Sam Berndt, senior director of Gartner's supply chain research organization, told BI that factors such as employee resistance can hinder companies' efforts to expand their AI initiatives.

He said leveraging AI in enterprises will require ongoing investment, rather than a one-time upgrade.

“Over time, the models become less accurate for the real-world situations in which they are trying to generate content,” he said, and companies need to set aside resources to update the underlying data and models. he added.

Responsibility and ethical developments are also considerations, especially as legislation and litigation catch up. Air Canada was taken to court in February after its chatbot inaccurately told customers they could claim a bereavement discount after their trip. The court ruled that airlines are responsible for misleading information provided by chatbots and must compensate customers.

Meghan Higgins, a senior associate at London law firm Pinsent Masons who specializes in technology and digital regulation, said the case was a reminder for companies to consider the risks associated with AI. She highlighted the risks of AI hallucinating or fabricating information.

Higgins said companies could face defamation lawsuits in the future, as well as lawsuits over biased output and automated decision-making, if AI fabricates things about humans. Such lawsuits could lead to further vigilance against AI.

Despite the risks, there has never been more enthusiasm about the promise and promise of AI. Thomas said companies should approach AI as an evolution rather than a single transformation.

“What was said to be impossible six months ago is imminent today,” Thomas said. “We are no longer in a world that changes regularly.”

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