The Era of Artificial Intelligence

Touted as the most important general-purpose technology of our era, AI is leading us into the fifth industrial revolution and has already begun to unleash the next wave of digital disruption. After decades of slower than expected development, the conditions for a breakthrough are finally in place with AI poised for rapid widespread adoption. Businesses and whole industries will be transformed, leaving business leaders asking, how will my organization be impacted and how can we benefit from AI?

Whether we realize it or not, AI has already infiltrated many aspects of our lives. From the personal digital assistants on our smartphones, to home service robots such as the Roomba vacuum cleaner, AI can drive our cars or steal our privacy and is rapidly transforming the way we live.

What is AI? Clearing the Fog

So, what is AI ? There is fear and confusion around what exactly artificial intelligence is and what its advancement means for humans. In short, AI generally refers to the ability of machines to complete tasks that would otherwise require human intelligence. AI programs mimic some level of human intelligence and are able to execute tasks we humans innately know how to perform but can’t necessarily describe or write into code, such as how to recognize a friend’s voice. A machine programmed to execute a set of instructions in order to complete a task is not an example of AI.

The term, AI,  often conjures images of a race of artificially intelligent robots eventually outsmarting and rising up against humans a la many a Sci Fi movie. The truth is, we are a far cry from machines that can exhibit general intelligence across multiple, diverse domains the way a human can.

The major areas of advancement in AI have been in perception and cognition. Advancements in perception have mainly been in speech and image recognition. Voice controlled personal digital assistants such as Alexa and Siri make interacting with your mobile phone or digital device as seamless as talking to a friend. Image recognition technology now allows you to unlock your mobile device or log in to apps using facial recognition, and is being used to create the computer vision systems that make self driving cars a possibility. Advancements in cognition and problem solving have accelerated in the past few years as machine learning systems replace old algorithms.

Machine learning is a method of teaching machines what humans know tacitly, through experience. The machine learns from being introduced to many examples rather than being specifically programmed to execute a task. Machine learning has near endless applications and is currently being used to automate routine (or dangerous) tasks, analyze large amounts of data and provide insights for better decision making.

AI in Business

Success stories from early adopters of AI have demonstrated its ability to improve processes and asset utilization, create value and competitive advantage, and increase a company’s bottom line. AI can create value for businesses in several areas such as strategy, operations, marketing and customer experience to name a few.

The first, perhaps most obvious area AI can create value is by improving productivity through the automation of routine, transactional tasks. Automation can decrease costs, speed up processes, and even improve overall quality by reducing errors. Industries such as manufacturing and transportation are likely to gain the most here as their operational processes are labour and capital intensive and perfect for automation. Administrative tasks within any industry are also easily automated.  Automating routine tasks can free up employees to focus on other more meaningful work of higher value.

The second area AI can create value stems from its ability to collect and interpret large sets of data to identify new insights and opportunities. AI allows businesses to quickly analyze information on hand, create new information and forecast or predict outcomes at a higher speed and lower cost than traditional methods have allowed.

The third area where AI can create value is in marketing and customer service. Through data collection and analysis, AI allows businesses to tap into consumer preferences and tailor their output or target advertising to create personalized consumer experiences, creating a competitive advantage over those that don’t have such customer insight. Companies can use this same technology to dynamically price items to match demand. Customer service chatbots are getting smarter every day and are able to offer the advantage of 24 hour support with no wait times.

Finally, in an era where infinite data is being created and collected, businesses and people are becoming more susceptible to attacks such as fraud and identity theft. Thanks to its ability to collect and process large data sets, AI can be used for detective purposes to help businesses identify and fight against these threats. This technology is being used by the finance sector, namely banks and credit card companies, but any company that is responsible for the protection of personal data can certainly stand to benefit from AI security systems.

These are just some of the ways in which AI is currently being employed in businesses across many industries. The untapped potential and opportunities for the future are immense. Early adopters are seeing real-life benefits making it more urgent for the rest of us to accelerate our digital transformations lest we be left in the dust.

Disclaimer: This commentary is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice, nor does it constitute solicitation to buy or sell any securities referred to. Any tax information published on this blog is based on the facts provided to us and on current tax law (including judicial and administrative interpretation) during the time of publication. Tax law can change (at times on a retroactive basis) and these changes may result in additional taxes, interest, or penalties. Practice due diligence and if in doubt, speak with a member of our team.

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