Artificial intelligence (AI) is on the verge of causing the next wave of digital disruption, and businesses should get ready now. We can already see tangible benefits for a few early-adopting companies, making it more important than others to speed up digital transformations. The findings by top researchers are focused on five AI technology systems: autonomous vehicles, robotics, computer vision, virtual agents, language, and machine learning (ML), which includes deep learning and is the foundation for many recent advances in other AI technologies.
Digital behemoths such as Google and Baidu are leading the way in AI investment. According to estimates, tech companies spent $20 billion to $30 billion on AI in 2016, with 90% of the money going to research and development and 10% to acquisitions. Venture capital and private equity financing, grants, and seed investments grew rapidly, albeit from a small base, to $6 billion to $9 billion. Machine learning received the most investment from inside and outside the company as an enabler technology.
AI adoption is still in its infancy and is frequently experimental outside of the tech industry. It has only been used on a small scale by a few companies. Only 20% of 3,000 AI-aware C-level executives polled across ten countries and 14 industries said they use AI-related technology on a large scale or in a core part of their businesses. Many companies claim to be unsure about the business case or return on investment. Only 12% of the time, according to a review of more than 160 use cases, AI was used commercially.
The adoption patterns show a widening gap between digitized early AI adopters and the rest of the population. According to MGI’s Industry Digitization Index, high-tech, telecom, and financial services are leading AI adopters. They also plan to invest in AI the most aggressively. Leaders have adopted a wide range of technologies across multiple functions, with deployment at the heart of their operations. Automakers, for example, use AI to develop self-driving vehicles and improve operations, whereas financial services firms are more likely to use it in customer-facing functions.
Early evidence suggests that AI can provide real value to early adopters and be a disruptive force. According to a survey, early AI adopters with strong digital capability and proactive strategies have higher profit margins and expect the performance gap with other firms to widen. The potential of AI to improve forecasting and sourcing, optimize and automate operations, develop targeted marketing and pricing, and enhance the user experience is highlighted in many case studies in retail, electric utilities, manufacturing, health care, and education.
Because AI relies on a digital foundation and is frequently trained on unique data, businesses have no shortcuts. Companies cannot afford to put off their digital transformations, including AI. Early adopters are already gaining a competitive advantage, and the gap between them and the laggards appears to be widening. Many aspects of a digital and analytics transformation must be addressed for a successful program: identify the business case, set up data ecosystem, build or buy appropriate AI tools, and adapt workflow processes, capabilities, and culture. According to a survey, key enablers include top-level leadership, management, technical capabilities, and seamless data access.
AI promises benefits while also posing significant challenges for businesses, developers, governments, and workers. Cities and countries that are serious about establishing themselves as a global hub for AI development must join the global competition to attract AI talent and investment, and progress on the legal, ethical, and regulatory challenges that could otherwise hold AI back will need to be made.