It’s the Age of “Digital Darwinism”! Here are 6 Factors to Determine if AI is an Investment or a Cost
It’s the age of “Digital Darwinism”, an era where technology disruption is evolving at a faster pace than the ability of businesses and customers to adapt. However, technology disruption like Artificial Intelligence (AI) cannot be ignored, it’s here to stay, and empower.
“AI could contribute up to $15.7 trillion to the global economy in 2030.”*
21% of companies have already invested or planning (short-term) to invest in AI technologies such as Conversational Interfaces in 2018.**
As an IT decision-maker, CIO, CTO or CEO, if your company has not yet realized how AI can be used to maximize your revenues and optimize your processes, the chances that your competitors have should be a concern. Whether it is a conversational AI platform or an intelligent bot, the potential of AI is infinite. How you use the technology is what makes it an investment or a cost.
One of the main factors driving revenue growth at S4 Capital, according to executive chairman, Sir Martin Sorrell is the “emphasis on faster, better, cheaper executions”. With AI, there is immense potential of making processes faster, better and cost-effective. Integrating AI in your business may seem like an exciting proposition, something which you want to capitalize on before others do. But when the rubber hits the road, the pertinent question arises, “when does AI investment become a cost?”…
…When it does not deliver (immediate) business benefits or value
…When it is not cost-effective
…When ROI is not achieved
When it comes to investment in AI, the answers are ambiguous. Building a business case for AI investment begins with astute strategizing, defining use cases, and determining performance metrics that would generate quantifiable results for assessment. Here are six factors to consider in order to ensure ROI on your AI investments and prevent it from becoming a cost:
1. Strategize to understand your AI use cases – “37% of organizations are still looking to define their AI strategies and 35% are struggling to identify suitable use cases.” Before integrating AI, understand the underlying objective of implementation, the purpose it will serve, the processes it will improve and the cost it will save. Strategizing and understanding AI use cases relevant to your business, is a major factor that will determine the success of your AI implementation. Like Whit Andrews, VP and Analyst at Gartner, stated, “What matters the most is where your business should use AI. If you’re interested in exploring AI, the most important first step is to pursue something that is critical to your organization.”
2. Augment not automate human resources – AI integration is typically perceived as a replacement for human tasks. While AI is about automation it is more about augmentation. AI, when used strategically, can augment the value of human resources. For instance, by using AI to automate repetitive tasks, collect and analyze data, human decision makers get time to add more value by focusing on achieving strategic efforts such as personalization and customization. Perceiving AI as a means to an end, and not an end in itself, would derive better business benefits.
3. Aim for “soft” results to get hard outcomes – While determining the success of AI implementation, instead of a myopic perspective of expecting only immediate monetary gains, quantifiable results that would eventually translate to financial benefits is a better strategy. “Soft” results or hard outcomes, such as improvement in customer experience (CX) and satisfaction, the productivity of teams, and optimization of processes, are better metrics to assess.
Hard outcomes.in AI implementations are easy to define and evaluate, making them a preferred metric to showcase a measurable difference in business value. Like Whit Andrews, VP and Analyst at Gartner, stated, “Pursue small-scale plans likely to deliver small-scale payoffs that will offer lessons for larger implementations.”
4. Get corporate and IT buy-in – CIOs or CTOs need to educate CEOs and IT decision makers about how AI technology can benefit the business. Inclusion at the outset ensures that business strategies and budget allocations are aligned to the objective of enterprise-level AI integration, making an investment in AI more cost-effective eventually.
5. Acquire the brains behind the machine – Machines are as intelligent as the people who use them. Implementing and integrating AI in any business requires resources with specific skill sets. Knowledge of how the AI works and how it will be used would be a requisite. “47% of CIOs reported that they needed specialized skills for AI projects.” To leverage the power AI technology possesses and to ensure ROI, employing AI experts would be critical.
6. Evaluate vendors extensively – After determining AI uses cases that will add value to your business, it is time to evaluate vendors who fit your business requirement. The first step is to conduct extensive ground research to differentiate between real and ‘make-believe’ AI technology offerings. For better decision making, go beyond the traditional demo and question vendors in-depth. Here are some questions you could ask a vendor to get a better perspective about the suitability of a conversational AI platform:
• How will the AI platform or solution be used in any given business scenario?
•What is the AI learning method and the analytical model proposed to be used in the solution?
• Does the AI platform update rules based on self-learning? How are the rules defined? Does is it need to be updated manually?
•How much data is required to ‘train’ the platform and how often will it need to be retrained?
•What are specialized skills required to use the AI platform optimally?
AI integration is different from other IT implementations and the business benefits of investment in AI is difficult to predict compared to IT investment projects. The application of AI creates new business scenarios that need budget allocation without immediate business returns, posing a challenge for IT decision makers to get corporate buy-in.
…By identifying integral interactions that would improve customer experience,
…By determining how the business value of those interactions could be enhanced,
…By establishing how AI can add further business value to those interactions,
A concrete business case for AI can be created and hidden opportunities that AI has the potential of transforming would be unraveled.
AI could be an investment or a cost based on how you consider aspects of business use-cases, integration and implementation. Just because everyone is adopting AI, sleepwalking into AI integration and expecting it to generate business benefits would determine whether AI will become an investment or a cost for business.
Strategize to identify the business value that AI can augment…
Make AI a means to an end, than an end in itself…
Be the master, not the custodian of AI technology…
Embrace the disruption and make it work for you! Ask us how…
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