Businesses that successfully apply artificial intelligence (AI) could increase profitability by an average of 38% by 2035, according to a new report from Accenture. The introduction of AI could lead to an economic boost of US$14 trillion in additional gross value added (GVA) across 16 industries in 12 economies.
To capitalise on the opportunity, the report identifies eight key strategies for successfully implementing AI that focus on adopting a human-centric approach and taking bold and responsible steps to applying the technology within businesses and organisations.
“Artificial intelligence will revolutionise how businesses compete and grow, representing an entirely new factor of production that can ignite corporate profitability,” said Paul Daugherty, chief technology & innovation officer, Accenture.
“To realise this significant opportunity, it’s critical that businesses act now to develop strategies around AI that put people at the centre, and commit to develop responsible AI systems that are aligned to moral and ethical values that will drive positive outcomes and empower people to do what they do best – imagine, create and innovate.”
The report, developed by Accenture Research in collaboration with Frontier Economics, measures the potential economic impact of AI in GVA, a close approximation of gross domestic product that accounts for the value of goods and services produced.
The research compared the economic growth rates of 16 industries in 2035 in a baseline scenario showing current assumptions of expected growth, to an AI scenario showing expected growth with AI integrated into economic processes, finding that AI has the potential to increase economic growth rates by a weighted average of 1.7 percentage points.
Of the industries studied, information and communication, manufacturing and financial services are the three sectors that will see the highest annual GVA growth rates in an AI scenario, with 4.8%, 4.4% and 4.3% respectively by 2035.
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This translates to an additional US$6 trillion in GVA in 2035 for these three sectors alone. Even labor-intensive sectors such as education and social services —where productivity growth is traditionally slow—will see a significant increase of US$109 billion and US$216 billion in GVA respectively.
In specifically examining industry profitability, the research demonstrates that AI offers unprecedented opportunities. In labor-intensive sectors, such as wholesale and retail, AI augments the human workforce, enabling people to become more productive, leading to a profit increase of almost 60%.
In capital-intensive industries such as manufacturing, AI powered machines will eliminate faulty machines and idle equipment, delivering constantly rising rates of return, resulting in equally dramatic profit increases of 39% by 2035.
Regardless of industry, companies now have a significant opportunity to apply AI and invent new business capabilities for growth, profitability and sustainability. To prepare for a successful future with AI, business leaders should consider the following eight strategies:
- AI strategy and leadership – attaining value from AI will demand recognition and action from the top of the company; therefore, the benefits must be made tangible to the C-suite and a roadmap is essential.
- Reinvent HR into HAIR – the Chief HR Officer’s role will not only be about managing human employees, but will evolve to also manage human-machine interaction — or Human AI Resources (HAIR).
- Learn with machines – to adapt their businesses to the changing nature of learning and employee training, business leaders must focus on the needs of their workforces, particularly in the area of agile skills development.
- Appoint a chief data supply chain officer – this position will be needed to construct an integrated, end-to-end data supply chain.
- Create an open AI culture – trust, openness and transparency are key for human and machine relationships to work well; business leaders must shape the corporate culture and guidelines to minimize the risks of a hybrid workforce while maximizing the opportunities.
- Take the crowd into the cloud – the next phase of innovation will combine crowd-sourced data in the cloud with AI capabilities to create new and disruptive business opportunities.
- Step beyond automation – with recent strides in AI, companies need to take a step beyond to harness the intelligence of dynamic, self-learning and self-governing machines.
- Measure your return on algorithms – Unlike traditional assets that depreciate over time, AI assets gain value as time passes so CFOs will need new financial metrics to properly assess the “Return on AI,” which could include the value generated from each algorithm or a combination of initial outlay and ongoing costs.
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“By exploring the macroeconomic impact of AI as it matures over the next few decades, it’s clear that organisations in every industry have tremendous opportunities to apply AI to unleash remarkable benefits,” said Mark Purdy, managing director, Accenture Research. “By optimising processes with intelligent automation, augmenting human labor and physical capital, and propelling new innovations, AI can drive dramatic and long lasting profitability and economic growth.”
This research builds on the Why Artificial Intelligence is the Future of Growth report released in 2016 that examined the economic impact of AI across 12 developed economies.
The report found that AI could double annual economic growth rates by 2035 and boost labor productivity by up to 40 percent by fundamentally changing the way work is done.
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