Great athletes understand the importance of a balanced diet, rest, and strength training to perform at their best. Similarly, businesses implementing Artificial Intelligence (AI) technology are realizing that they must put in the work to reap the rewards. Many businesses are leveraging the potential of AI to transform their processes. However, a poll conducted by PWC in 2021 revealed that many businesses are struggling to achieve a good return on their AI investments, and some are even struggling to break even.
Understanding the value of AI investments
To determine the true value of AI efforts, industry leaders need to adopt a forward-thinking and creative approach. By fostering a collaborative and charismatic atmosphere, organizations can gain a deeper understanding of the diverse effects of AI and better define the Return on Investment (ROI) for their AI initiatives.
What Exactly Do We Mean When We Say That Investments in AI Pay Off?
According to the McKinsey Global Survey on the status of AI in 2021, businesses that have successfully embraced and integrated AI into their operations have witnessed significant ROI across various business performance metrics. AI has demonstrated a remarkable ROI in the following areas:
- Revenue growth: Utilizing AI technology, businesses have been able to enhance their products and services, optimize pricing, and effectively target their customers, leading to increased sales.
- Cost reduction: AI applications have enabled businesses to automate procedures, boost productivity, and optimize resource allocation, resulting in reduced costs and improved profit margins.
- Decision-making: AI empowers businesses to make informed, data-driven decisions, resulting in higher ROI for strategic projects.
- Enhanced customer experience: AI-powered solutions, such as chatbots and tailored suggestions, have assisted companies improve customer retention and satisfaction, ultimately driving long-term revenue growth.
- Innovation: Companies that have successfully integrated AI into their processes are better equipped to innovate, develop new products and services, and maintain a competitive advantage in the market.
Factors Influencing ROI: It is important to note that the ROI from AI investments can vary depending on factors such as the maturity of AI adoption, the industry in which a company operates, and the organization’s ability to overcome implementation-related challenges. Businesses with a clear AI strategy and the right mix of talent and skills are more likely to achieve higher returns on their AI investments.
The distinction between cost reduction and revenue growth is highlighted.
Costs might be greatly (> 20%) reduced with the application of AI, particularly for tasks like service operations and risk. Overall, there is a significant cost reduction across the services stated (beginning at 10%).
Revenue has been progressing consistently, although at a lower rate than cost reduction. There are a select few functions that can improve income by up to 10%.
How can AI be used to maximize return on investment?
Maximizing ROI Through AI Implementation
- Ready-to-use AI products: Investing in AI products that are readily available in the market can significantly accelerate ROI. For example, AI-enabled programs called chatbots replicate human-like discussions with consumers by using machine learning and natural language processing. Chatbot software can be easily integrated into a company’s website, messaging services, or customer support services, saving time and money. However, a lot of the pre-made AI solutions frequently involve some implementation overhead. Why? Businesses that operate in several areas and sectors, let alone those that specialize in various niches within a single industry, confront extremely specific difficulties that can only be effectively addressed by highly customized AI solutions. Simply said, one size does not necessarily fit all when it comes to AI. This is particularly true in industrial settings where AI solutions often need to be customized to consider a particular set of characteristics.
- Using specialized solutions from subject-matter experts: Leveraging customized AI solutions from experts in specific domains can lead to improved efficiency and optimization in complex industrial processes. For example, consider a production line for consumer-packaged products that you wish to improve for greater energy efficiency. A customized AI system can automatically optimize machine settings by capturing variables linked to low energy consumption and high productivity and infusing them with high-frequency production data. A machine learning model may then monitor a prescribed production plan to look for abnormalities and further optimize settings for the plant’s needs.
This type of scenario highlights the value of personalization when adopting AI in intricate industrial production and energy management contexts, which is something we see daily with our customers. The ability of AI to improve productivity, speed up the decarbonization process, and produce a return on investment may then be realized by catering to the specific demands of certain enterprises.
Investing in AI presents both opportunities and risks. How businesses approach AI investments and calculate ROI will ultimately determine their success. High-performing companies are already demonstrating the value of AI investments. To fully leverage AI and maintain a competitive edge, businesses need to strategically align their AI initiatives with company objectives, invest in talent and infrastructure, and continuously measure and optimize the performance of their AI-driven solutions. By doing so, they can unlock the potential of AI, capitalize on cost reductions and revenue growth, and thrive in the rapidly evolving landscape of technology and innovation.
At eInfochips, our artificial intelligence solutions enable businesses to create highly customized solutions powered by cutting-edge machine learning algorithms. We also assist businesses in integrating these algorithms with image and video analytics, augmented reality, and virtual reality technologies to enhance customer satisfaction and gain a competitive advantage. To learn more about our key offerings and services, you can To contact our team of experts, you can click here.