Although Artificial Intelligence or AI technology was accessible to businesses since many years, it is only after the global pandemic crisis, the technology started getting mainstream attention that was long overdue. Before implementing AI became a major global trend, several forward-looking companies had embraced AI technology in their regular business operations.
McKinsey’s recently published report basis it’s Global Survey on AI in 2020 made several encouraging revelations about AI. In the survey, conducted among a small contingent of people belonging to different sectors, have attributed about 20% or more of their company’s earnings (not inclusive of EBIT) to AI. They further added that elated by the positive results, they now want to further expand their AI initiatives to enhance their competitive edge.
Here are some key findings from the report that can help companies navigate their own AI journey more successfully and swiftly.
AI adoption and impact
More than 50% of the respondents reported adopting AI in at least one business function, like adding a new feature to an existing product. While AI adoption remained equal across regions last year, this year AI adoption in process or product in business function or unit, is more likely to be reported from developed economies.
While automotive and assembly sector was leading AI adoption last year, high-tech and telecom sector industries are more likely to surpass their lead this year. Adoption of AI is highest in product or service-development and service operation functions, along with marketing and sales.
Over two-thirds of respondents reporting the above AI adoption use cases have stated that it has increased their revenue. Among the use cases, cost reduction was primarily reported for talent management optimization, warehouse automation and contact-center automation. More than 50% of respondents who adopted these measures stated that using AI in those areas helped in cost cutting.
Among the companies which adopted AI, some report value creation at enterprise level. 22% of respondents attribute more than 5% of their company’s enterprise-wide EBIT in 2019, to use of AI, while 48% respondents report less than 5%.
Company strengths that generate maximum
The survey found that respondents of companies which report gaining 20% or more earnings from AI use, also report several strengths that enabled their organizations to maximize value generation. This set of strengths set these high performing companies apart from the other respondents.
Better overall performance
Companies drawing maximum value from AI use, see higher year-over-year overall growth than other companies that draw lesser value from AI use. Respondents at these high-performing companies are almost twice more likely to report at least 10% EBIT growth in 2019.
Superior overall leadership
Respondents from the high performing companies portray their C-suit leaders as extremely effective and are more likely to feel that their leaders are more knowledgeable about AI and genuinely champion the initiative for its benefits.
Higher resource commitment to AI
The survey clearly indicates that high performing companies are delegating a larger share of their digital budget to AI in comparison to companies that are creating lesser value from AI. These companies already have extensive teams developing AI solutions in-house and are also more likely to increase investing in AI in the next 3 years.
Overall, the survey clearly shows that while AI is proving to be beneficial for most companies, some companies are generating significantly more value from AI than others by doing things in a certain way. The above pointers shed some light as to what they are doing differently.
To know more about this, stay tuned for the next article – 6 sets of practices to adopt for generating more value from AI.