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Artificial Intelligence (AI) - A New Era in Corporate Profitability
Artificial Intelligence. Does the name conjure up images of robots, or even aliens? The reality is very different but no less extraordinary - a brand new future and era in corporate and business profitability.
How We Got Here
Mechanical innovation has paved the way for human progress since the dawn of the Industrial Revolution.
In the 1970s, 1980s and '90s alone it was the computer, closely followed by the Internet, that completely transformed the way companies functioned. The arrival of everything from desktop computers to email, voicemail and electronic transactions across the Internet allowed businesses to morph and evolve in how they communicated with their customers, marketed and advertised and even in how they employed people (think telemarketing.)
AI is the next step forward and has the potential to offer the most positive impact on businesses and their profitability.
AI
So what exactly is Artificial Intelligence (AI)?
"Artificial Intelligence, as we see it, is a collection of multiple technologies that enable machines to sense, comprehend and act-and learn, either on their own or to augment human activities," states a 2016 report Future of Artificial Intelligence Economic Growth by the global management consulting and services firm Accenture LLP.
Wikipedia puts it a little more succinctly: "Artificial intelligence (AI), sometimes called machine intelligence, is intelligence demonstrated by machines, in contrast to the natural intelligence displayed by humans and other animals."
AI and Business Profitability
Today, at the tail end of the computer/Internet boom, business profitability across a wide range of industries is declining, according to an Accenture report: AI Boosts Industry Profits and Innovation, and AI is quickly stepping in to fill the breach.
All it takes is a cursory Google search to reveal the extent of AI's projected reach and impact:
Artificial intelligence business value to reach $1.2TN in 2018 - Gartner, The Future of Retail 2018: Artificial Intelligence - Business Insider, A Survey of 3,000 Executives Reveals How Businesses Succeed with AI - Harvard Business Review
Clearly businesses across a broad range of industries see a future, and a profitable one, in AI. In fact a 2017 report by Forbes states that AI "has the potential to increase corporate profitability in 16 industries by an average of 38% by 2035."
And among these industries it is information and communication, manufacturing and financial services that will see the highest annual growth rates in an AI scenario.
AI in Action
How exactly would AI work to reverse declining business profitability? Through 3 avenues: intelligence automation, labor and capital-intensive augmentation and innovation diffusion. How AI Boosts Industry Profits and Innovation. 2017. Accenture
In layman's terms this means that in labor intensive industries AI will help by augmenting the human workforce thereby enabling people to become more productive. For example "brand name companies like Amazon and UPS are already using AI to help employees succeed. UPS is using machine learning to determine the most optimal routes for drivers while Amazon is using robots to help people organize and retrieve packaging at fulfillment centers." 4 ways AI can transform your small business. John Boitnott.
In capital-intensive industries AI powered machines eliminate faulty machines and idle equipment delivering a constantly rising rate of return and profit increases of 39% by 2035. Accenture Report AI Potential Increase- Corporate.
Within the financial sector AI adds value in five major areas, according to Ron Barash in his online article How AI technologies create value in financial services. Intelligent automation creates more efficient processes, enhanced judgment improves quality of human decision making based on information gathering, enhanced interaction through hyper personalized customer experiences, intelligent products create a new class of products, services and business models while responsible AI can aid in compliance or detecting fraud.
The Workplace Transformed
The oft-repeated fear is that machines will one day replace humans. But experts beg to differ.
Boitnott notes: "McKinsey and Company found that only 5 percent of jobs can be fully performed by artificial intelligence in the near term."
Furthermore, he writes, it's likely that AI will itself create new human jobs with titles like: Data Detective, Bring Your Own IT Facilitator, Ethical Sourcing Officer, AI Business Development Manager, Master of edge computing, Walker/Talker, Cyber City Analyst and much more, all the while empowering humans to work more efficiently.
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