Artificial Intelligence (AI) investments are growing globally dominated by giants such as Google, Microsoft, Facebook, Apple and few others. Tech giants spent about $20 billion to $30 billion on AI in 2016. Only about 10% of this money is spent on AI acquisitions, rest 90% is spent on R&D and deployment. However, many firms refrain from incorporating AI in their core part of business because they are very uncertain about returns on investment.
Firms at the top of the Industry Digitization Index, are the ones to adopt AI with ease, sectors like high tech, telecom etc. This is creating a wide gap between sectors that are digitized and others that aren’t. There is enough evidence to suggest that AI can be a powerful tool and provide tremendous marginal profits once incorporated.
The performance of firms that incorporate AI is expected to improve exponentially in the future. AI has the potential to improve forecasting, data analysis, outsourcing, optimise operations and enhance use experience. AI depends largely on digital foundation and has to be trained on unique data so the firms cannot look for shortcuts. Early adopters are already at an advantage and the gap has started to grow.
The key enablers towards successfully utilising AI to make profits are leadership, management, technical capabilities and seamless data access. Along with the benefits, AI also also cuts across firms, developers, workers and the government. In order to make progress the workforce needs to re skilled and appropriate talent needs to be attracted and recruited for firms wanting to compete on a global level. The legal, ethical and regulatory challenges also need to be taken care of.
AI has experienced thrice the growth since 2013 and startups have also invested about $6 billion to $8 billion in 2016. AI adoption is greatest in sectors that are already digitized. The early AI adopters usually are digitally mature larger businesses that can adopt multiple technologies and adopt AI in their core business. They are capable of providing C-level support for AI and strongly focus on growth and other savings.
AI has multiple benefits but the question really is if businesses are ready for this sort of technology and is it really going to change the way traditionally firms functioned. There are high expectations and various claims have been made. AI can enable machines to exhibit human behaviour, self drive cars and empower corporate productivity.
It can save workers from hazards or take away their livelihoods and jobs. There are as many perils as the benefits and uses. AI has existed for a very long time but it is only now that it has started to deliver real life benefits in business.
Algorithms are becoming more sophisticated, computer power is increasing and a large quantity of data is being generated globally. Tech giants like Baidu and Google are investing billion dollars in AI and so are private companies and some start ups. The great potential in AI is slowly being realised.
However, many uses of AI are in the experimental stage and but few products are expected to arrive in the market soon according to the suppliers of AI technologies. There is a division amongst people in terms of their opinion regarding AI, while some people are betting on it’s advantages; there are others who are still sceptical its economic benefits and safety.
There are several ways to categorise AI but usually for individual solutions, it is preferred to mix and match different algorithms and divisions to create technologies for specific problems. AI can be grouped by their functionality like text, speech etc or by their business applications like cybersecurity.
A great proportion of the investment in AI consists of spendings on research and development and deployment. These cash-rich native companies focus on different investments. While Apple and Google are working on suites of investment, Amazon is focussing on robotics and speech recognition.
Automobile manufacturers such as BMW, Tesla are focussing on machine learning for driverless vehicles. Industrial giants are also investing internally seeking to develop technologies in their core business activities and make processes more feasible and precise. The big tech companies have another strategy to secure talent in the AI sector and that is by purchasing AI start ups. Not looking for profit but merely focussing on securing talent.
Companies are not just increasingly investing in AI, they are also expanding their research abroad in search for talent. For instance, Google has invested in Montreal Institute for Learning Algorithms recently, Intel at the same time is working on establishing a machine learning and cyber security research centre at Georgia Tech and Facebook is opening an AI lab in Paris.
Investments in AI are still at the early stages and relatively small compared to digital revolution. From 2013 to 2016, investments in AI have increased. The deals are getting bigger and require lesser participants for financing. This stands as a testament to the fact that investors are becoming more certain of the AI sector and realising its potential. The companies on the digital frontier are incorporating AI easily while other companies are a little hesitant to act.
The reasons are multiple including but not restricted to the fact that companies at the digital frontier are already investing in related technologies and have to expand their scale a little. They seem to have a better understanding of technology and are not specialising in one type of technology. AI has also significantly contributed to cutting down the costs, that further motivates them. Hence the sector adoption of AI is very uneven. While automotive and assembling are incorporating AI at large scale, sectors such as education and healthcare seem to be a little behind.
There are many challenges prevalent in these sectors opposing AI and questioning the potential. This division of large firms have easier access to new technology while small firms usually have to struggle stands true for AI too. The same digital divide can be observed here. While smaller firms can benefit from AI, large firms usually have access to better structured data and have more employees with technological capabilities. In order to become successful AI adopters, firms also need to have strong leadership support and understanding of the technology.
The growth of AI cannot be precisely predicted because it primarily depends upon how firms and companies deal with the technical, commercial and regulatory challenges. All these challenges differ amongst the various firms and the success depends upon how the firm decides to overcome the problems to a large extent. Industries on the digital frontier and ones with better understanding of utilising AI in forecasting, marketing and outsourcing etc would benefit greatly from it.
Job securities continue to remain a concern and so does safety for all in general. Artificial Intelligence after a much debated and discussed phase is finally ready to transform lives and businesses today. A future where AI transforms every business model can easily be imagined despite various dilemmas that persist.