If there is something a CIO could do to enable the business to increase its earnings by 5%, everyone would be listening.
McKinsey recently highlighted the difference in performance between those companies regarded as leaders in the use of artificial intelligence, and those that have yet to see any major impact.
The headline figure is the 5% growth in earning before interest and tax (Ebit) of businesses regarded as AI leaders, compared to the average business growth.
Given that the Office for Budget Responsibility has forecast the economy will contract this year by 11.3%, the largest fall in output for more than 300 years, anything that can help businesses continue to operate and even grow during these difficult times, is going to be well received.
But AI is not a magic bullet. “Organisations can catch up, but unless you work fast, you will fall behind,” warns McKinsey partner, Michael Chui. According to the McKinsey global survey, The state of AI in 2020, it is not about whether a business has an AI strategy or has deployed AI. It is about using it well. It is also about having an organisational culture that accepts change, along with the right leadership and talent. Chui says: “Involvement and effectiveness of leadership is vital to capture value at scale.”
The McKinsey survey found that the largest shares of respondents report revenue increases for inventory and parts optimisation, pricing and promotion, customer-service analytics, and sales and demand forecasting.
Making process changes
The dotcom boom and bust happened over 20 years ago. It is highly unlikely a traditional business will do something so utterly amazing that it delivers a massive boost in its revenue. Chances are, if one is discovered, it will be the next AirBnB, Uber or Deliveroo, that will be best placed to disrupt industries.
Sadly, most organisations can only hope to make minor improvements to existing business processes. The thing is, if AI can help businesses make enough small improvements, they collectively add up to a significant business boost.
To succeed, such initiatives cannot begin at grassroots level, as skunkworks AI projects can requires a huge amount of IT expertise to get off the ground. Neither is it likely a top down approach, will deliver the necessary changes to working practices that will make AI in the business a success.
The sweet spot is somewhere in the middle. The CIO’s goal is then to deliver an IT infrastructure for AI, that business leaders can incorporate into an overall change management plan. At the same time the CIO needs to ensure the IT infrastructure deployed is flexible and easy to use so that people in the business can take advantage of advanced technologies without constantly having to ask IT for help.