PWC reports that AI is the biggest commercial opportunity in today’s fast changing economy
PWC published a report, “Seizing the Prize: What is the real value of AI for your business and how can you capitalize?”, where the potential contribution of AI to the global GDP and the high potential use cases per sector are discussed. This blog aims to share the highlights of this comprehensive report.
“What impact will AI have on my organization? Is our business model threatened by AI disruption? Where should we target investment? What kind of capabilities would enable us to perform better?” These are tough questions to be answered by business leaders since the introduction of the “AI Revolution” as a new paradigm in business.
One of the recent studies that might help business executives to find their way in this sophisticated area is published by PWC. The report mainly focuses on how AI can enhance and augment what enterprises can do and the threats and opportunities that they face.
AI Impact Index
PWC created an “AI Impact Index” to compare the economic potential for AI between now and 2030, including regional economies and eight commercial sectors worldwide. According to this index, AI is a big game changer with a potential contribution up to $15.7 trillion to the global economy in 2030, more than the current output of China and India combined. Of this, $6.6 trillion is likely to come from increased productivity and $9.1 trillion is likely to come from consumption side effects. Therefore, businesses should be aware of the fact that, one of today’s startups or a business that has not even been founded yet could be the market leader in ten years’ time.
In addition, global GDP will be up to 14% higher in 2030 – the equivalent of an additional $15.7 trillion.
What drives the economic impact of AI?
Over the last decade, we have passed through the first wave of digitalization based on internet and mobile technologies – the internet of people. Now, we are going through the second wave – the internet of things -, which means generation of huge data and domination of the three concepts: standardization, automation and personalization of the products and services.
In this new wave of digitalization, AI will exploit the digital data to automate and assist. This will bring out three main outcomes:
- Productivity gains:
This includes automation of routine tasks, augmenting the employees’ capabilities and freeing them up to focus on more stimulating and higher value adding work. Capital-intensive sectors such as manufacturing and transport are likely to see the largest productivity gains from AI, given that many of their operational processes are highly susceptible to automation. Labor productivity improvements are expected to account for over 55% of all GDP gains from AI over the period 2017 – 2030.
- Increased consumer demand:
In turn, increased consumption creates a virtuous cycle of more data touchpoints and hence more data, better insights, better products and hence more consumption. AI front-runners will have the advantage of superior customer insight. The immediate competitive benefits include an improved ability to tap into consumer preferences, tailor their output to match these individual demands and, in doing so, capture an ever bigger slice of the market. Healthcare, automotive and financial services are the sectors with the greatest potential for product enhancement and disruption due to AI.
- Some job displacement – but also new employment opportunities:
In addition to new types of workers who will focus on thinking creatively about how AI can be developed and applied, a new set of personnel will be required to build, maintain, operate, and regulate these emerging technologies. For example, we will need the equivalent of air traffic controllers to control the autonomous vehicles on the road. Same day delivery and robotic packaging and warehousing are also resulting in more jobs for robots and for humans. All of this will facilitate the creation of new jobs that would not have existed in a world without AI.
How the regions differentiate in terms of the impact?
China (Total impact: 26.1% of GDP) and North America (Total impact: 14.5% of GDP) are likely to see the biggest impact, though all economies should benefit. Developing countries will experience more modest increases due the much lower rates of adoption of AI technologies expected.
The high potential use cases
The areas with the biggest potential are designed in the report to help the businesses target investment in the short- to medium-term.
To sum up, considering the outcomes of the report, how should the companies act to face this huge trend? PWC describes four steps that the companies should take into consideration to make the most out of AI:
- Define the meaning of AI for your business:
First step is to be aware what is happening around by tracking the technological developments and competitive pressures coming up within the sector. Then, a company should identify the operational pain points that automation and other AI techniques could address.
- Formulate your response:
Formulating the response means building the AI strategy. For this, the enterprises should find the answers of the key questions such as: how can different AI options help the company to deliver the business goals; what is the appetite and readiness for change; does the company want to be an early adopter, fast follower or follower; is the company’s strategic objective for AI to transform the business or to disrupt the sector?
Although AI apparently provides efficiency, consistency and better customer experience, it is required to consider the technological feasibility of AI and the availability of the data needed to support it. Taking into consideration the possible barriers and finding ways to overcome them is also essential. What is the company’s data strategy? It is a prerequisite question to be answered before designing an AI strategy.
- Ensure that you have the right talent, culture and technology:
While the enabling technology is being commoditized, the supply of data and the ways it is used become the critical points. Therefore, the company should focus on building a data-driven culture. In a data-driven environment, the demand for data scientists, robotics engineers and other tech specialists is a challenging issue for the enterprises, as they are in short supply. As adoption of AI gathers pace, the human skills that cannot be replicated by machines such as creativity, leadership and emotional intelligence gain importance. It is crucial to prepare a hybrid workforce in which AI and humans work side-by-side and to define the role of the people in this new model.
- Build in appropriate governance and control:
One of the most important components of the issue is to build transparency and gain the people’s trust. There is a reputational risk in every AI-related action that the companies take. So the companies should be very decisive and careful not to train the AI in a biased way and remove all the possibilities of manipulation.
Download the full report