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Few user companies and organisations are putting artificial intelligence (AI) to work at significant scale, according to a McKinsey Global Institute (MGI) discussion paper. It shows AI adoption outside the technology sector to be exiguous and experimental, deployed commercially in only 12% of 160 use cases.
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The MGI’s paper, Artificial intelligence: the next digital frontier, draws on a survey of 3,000 executives in organisations across 10 countries and 14 sectors, as well as the case studies.
Only 20% of the 3,000 executives said they currently use any AI technology at scale or in a core part of their businesses. Just 10% reported adopting more than two technologies, and only 9% reported adopting machine learning, a type of AI that provides computers with the ability to learn without being explicitly programmed.
But the paper’s authors said: “Leaders’ adoption is both broad and deep, using multiple technologies across multiple functions, with deployment at the core of their business. Auto makers use AI to develop self-driving vehicles and improve operations, for example, while financial services firms are more likely to use it in customer experience–related functions.”
The institute’s paper looks at investment in AI and describes how it is being deployed by organisations. Its findings focus on five technology systems – robotics and autonomous vehicles, computer vision, language, virtual agents and machine learning. The paper contains case studies from five sectors – retail, electric utilities, manufacturing, healthcare and education.
It says large firms have much higher rates of adoption and awareness, adding: “Across all sectors, larger firms – which we define as those with more than 500 employees—are at least 10% more likely than smaller firms to have adopted at least one AI technology at scale or in a core part of their business. In sectors with lower rates of AI uptake, the adoption rate of bigger companies was as much as 300% that of smaller companies.”
The paper says AI investment is accelerating and amounted to between $26bn and $39bn in 2016, dominated by firms such as Google and Chinese search engine company Baidu. Venture capital, private equity and M&A funding in AI technologies has tripled since 2013, with 60% of current investment being in machine learning.
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The report says: “Machine learning and a subfield called deep learning are at the heart of many recent advances in artificial intelligence applications and have attracted a lot of attention and a significant share of the financing that has been pouring into the AI universe – almost 60% of all investment from outside the industry in 2016.”
The MGI said in a statement: “Early evidence suggests that AI can deliver real value to serious adopters and can be a powerful force for disruption. In our survey, early AI adopters that combine strong digital capability with proactive strategies have higher profit margins and expect the performance gap with other firms to widen in the future.”
The paper also draws on the strategy firm’s client consultancy, with McKinsey Analytics and Digital McKinsey practices feeding into the research.