Artificial intelligence, regarded as "essential" to competitiveness, will have a dramatic impact on businesses by 2020, according to a study by India's leading IT services provider Tata Consultancy services.
Focused on the current and future impact of Artificial Intelligence (AI), the seventh Global Trends Study, concluded in June last year, polled 835 leading executives across 13 global industry sectors in four regions of the world, finding that 84 per cent of the companies see the use of AI as "essential" to competitiveness, with a further 50 per cent seeing the technology as "transformative".
Exploring the views and actions of decision makers from global companies with average revenues of USD 20 billion, the study revealed AI is spreading across almost all areas of a company.
The biggest adopters of AI today are, not surprisingly, IT departments, with two-thirds (67 per cent) of survey respondents using AI to detect security intrusions, user issues and deliver automation.
However, by 2020, almost a third (32 per cent) of companies believe AI's greatest impact will be in sales, marketing or customer service, while one in five (20 per cent) see AI's impact being largest in non-customer facing corporate functions, including finance, strategic planning, corporate development, and HR.
Companies participated from a range of industries, including automotive, banking and financial services, energy, healthcare, life sciences, industrial manufacturing and retail. This cross-sector level of insight highlighted AI's workplace impact as an important supplemental force for the next few years.
Examples include guiding customer service representatives to more quickly resolve customer problems and anticipate future purchases, quickly and securely reconciling mass overnight transactions for financial institutions, or giving time back to HR professionals by managing the time consuming on-boarding processes for new hires.
As for the ongoing debate regarding AI's impact on jobs, business executives in the study estimated net reductions in each function by 2020 of between 4 per cent and 7 per cent.
However, companies with the biggest revenue and cost improvements from AI see the need for at least three times as many new jobs in each function by 2020 because of AI, as compared to companies with the smallest AI-related revenue and cost improvements.
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AI is already being used to automate certain processes and drive efficiencies, help employees be more productive and devote more time to more strategic business needs, and create new work and services that were not possible in the past.
"As companies begin to gain a better understanding of AI's application for business, they will realise the significant impact of this transformative force. This is reflected in our Global Trend Study, which shows that forward-thinking companies are beginning to make major AI investments," said K Ananth Krishnan, Chief Technology Officer of TCS.
"Given the increasing digital disruption across every industry and the public sector, AI should become a key and integrated component of an organisation's strategy," he said.
As AI becomes a mainstream technology, financial investments in AI are set to rise, as 7 per cent of companies each earmarked at least USD 250 million toward AI in 2016 and 2 per cent already plan to invest more than USD 1 billion by 2020 - likely looking to gain a competitive advantage as early adopters.
The Global Trend Study revealed a clear correlation between investments in AI and business impact.
The companies that realised the greatest AI-related revenue improvements and cost reductions spent five times more on the technology than the companies with the lowest AI-related revenue and cost improvements.
In turn, leaders generated average revenue increases of 16 per cent from AI initiatives in 2015 versus 2014, whereas laggards saw a modest 5 per cent revenue growth.
At a regional level, North American companies were the leading investors in AI in 2015, with an average per-company spend of USD 80 million, followed by Europe with USD 73 million, Asia-Pacific with USD 55 million and Latin America with USD 51 million.
Executives participating in the Global Trend Study across all regions and sectors rated the top four factors as most important to AI gaining widespread acceptance and driving business benefits.
Almost seven out of 10 (68 per cent) companies currently use AI to detect and prevent potential hacks and security threats to their systems. And moving forward, the other key factors include developing cognitive systems that continually learn, have the ability to make reliable and safe decisions based on masses of data, and gain the confidence of managers to trust what AI is advising them to do.
The study surveyed companies in four global regions, with an individual mean annual turnover of USD 20 billion.
The four regions surveyed were North America (including Canada), Europe (the UK, Germany, France, Denmark and Switzerland), Asia-Pacific (India, China, Australia, and Japan) and Latin America (Brazil and Mexico).