‘Technology supported by people’ is the new business model

Professor Ilan Oshri from the University of Auckland Business School participated recently in a KPMG study that looked at global experiences with IA.

IA includes artificial intelligence, machine learning and robotic process automation (RPA) – technology that can make decisions, interact and learn at a human-like level was recently the province of sci-fi but is now a part of everyday life - think virtual bank assistants and CT scans reviewed by trained algorithms.

Researchers interviewed 80 business executives from multiple industries across North America, Western Europe and Asia Pacific about their experiences of adopting IA and their future outlooks.

Professor Oshri says there was a disconnection between expectations and behaviour. “Enterprises have high expectations about the transformative power of IA, but too few are making the kind of radical organisational transformations needed to harness that power.”

Firms need to be making IA investment decisions at the executive level, and changing the way they run their business around new processes driven by IA technologies, the report says. Growing evidence suggests that taking this strategic ‘digital first’ approach can pay for itself 5-10 times over.  

The main findings:

• nearly two-thirds of respondents plan to put in place RPA within three years, and nearly half plan to be using AI at scale in the same timeframe
• despite these high expectations, readiness was low, with nearly two-thirds indicating a lack of in-house talent and half struggling to define clear goals and objectives for AI and accountability for its return on investment
• most organisations are in the early stages of knowing where to prioritise deployment, how to measure benefits and reconfigure staff
• many respondents expect to increase investment in IA significantly over the next five years, but report authors doubt this will be enough in many cases
• respondents estimated that, by the turn of the next decade, about one third of jobs will be impacted by IA that can replace repetitive manual labour

The report notes that traditional boundaries between different parts of a company – finance, human resources, IT – are being eroded.

“The way we organise and do business is changing due to IA and other digital disruption,” says Professor Oshri, who is in the Graduate School of Management.

“Piecemeal attempts to introduce IA as ‘add-ons’ or replacements for existing processes just won’t cut it. Firms need to consider two dimensions when seeking intelligent automation solutions: their business models and their data structure.

“Firms that have not yet embarked on digital transformation are unlikely to significantly benefit from the wave of IA solutions; however, not all is lost. By considering a gradual shift to digital platforms as a service, even firms with legacy systems can still achieve significant transformation in terms of becoming a data-driven business and an innovative business model venture.”

A third of respondents said that management’s concerns over IA’s impact on employees was the biggest obstacle. But the report argues that automation done well could improve employees’ lot.

“The ultimate result could actually be happier employees… freed from routine tasks and encouraged to take on more strategic, significant work,” the authors write. “Ultimately, humans and virtual robots will work side by side – and, in many cases robots will be able to analyse data and answer questions, often faster and better than humans. What robots won’t be able to do is define the questions and problems that need to be solved, iterate deeply on the responses, and prioritise solutions.”

The authors say companies will need to set up ‘centres of excellence’ to upskill employees and recruit specialists, and some job losses are inevitable.

Professor Oshri: “While it is still unclear how society will be affected by automation and AI, some indications suggest that at this point in time technology is advancing faster than ethical concerns and business needs are challenging traditional employment conventions.

“It is the responsibility of academics, practitioners and policymakers to actively shape the new reality created by intelligent automation.”