Sergey - stock.adobe.com
Pioneering companies use AI to drive profit
The latest research from McKinsey shows that there is a strong correlation between an organisation's artificial intelligence maturity and profitability
The results of this year’s McKinsey global survey, The state of AI in 2020, suggests that organisations are using artificial intelligence (AI) as a tool for generating value.
This year’s survey found that a small contingent of respondents coming from a variety of industries attribute 20% or more of their organisations’ earnings before interest and taxes (EBIT) to AI.
McKinsey reported that these companies plan to invest even more in AI in response to the coronavirus pandemic, which suggests that there will be a wider gap between organisations leading in the deployment of AI and the majority of companies that are struggling to capitalise on the technology.
The 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.
According to McKinsey, the areas of AI deployment that most commonly led to cost decreases are optimisation of talent management, contact centre automation and warehouse automation. Over half of respondents who deployed AI in these areas said they had reduced costs.
According to McKinsey, the organisations that have been pioneers in the use of AI to drive business growth tend to engage in a number of common practices.
In particular, McKinsey found that leaders need to commit more resources to AI initiatives. The study found that AI high performers invest more of their digital budgets in AI than their counterparts and are more likely to increase their AI investments in the next three years.
High performers also tend to have the ability to develop in-house AI-based applications, and generally have a larger workforce of data engineers, data architects and translators than companies that are less advanced in their use of AI.
According to McKinsey, they also are much more likely than others to say their companies have built a standardised end-to-end platform for AI-related data science, data engineering and application development.
Commenting on the findings, Michael Chui, partner at McKinsey Global Institute, said: “What we’ve said in the past about ‘following the money’ to find where AI adds value in organisations still holds true.
“It’s also clear that we’re still in the early days of AI use in business, with less than a quarter of respondents seeing significant bottom-line impact. This isn’t surprising – achieving impact at scale is still elusive for many companies, not only because of the technical challenges but also because of the organisational changes required.”
While organisations in the IT and telecoms sectors have benefited most from the deployment of AI, McKinsey reported that organisations outside of tech also experienced a 20% increase in earnings thanks to AI. “It is possible for any company to get a good amount of value from AI if it’s applied effectively in a repeatable way,” Chui added.
Read more about how AI improves business
- Automating an inefficient process simply leads to a faster inefficient process. Artificial intelligence needs to be deployed to ensure business processes are optimal.
- We look at how a utility company in Australia is using artificial intelligence to automate at scale, improve the planet and reshape the Australian energy market.