What is the role of artificial intelligence in business?

After decades of promises and speculations about artificial intelligence’s potential, artificial intelligence (AI) for the business world is finally here, and it’s reshaping how organizations operate and compete.¹ According to the multinational strategy and management consulting firm McKinsey, 65% of all businesses report using generative AI, with 67% expecting to invest more in the technology over the coming years to cut costs, improve efficiencies, and save time.²

Corporations no longer need to be persuaded to use artificial intelligence, but many are still unsure about exactly how AI fits into their operations. This article will explore the role of AI in business, the challenges organizations face in implementing AI, and the future of AI in business.

More than 90% of executive leaders recognize the urgent need for reinvention and appreciate the role of artificial intelligence in enabling transformation at scale and speed.³ But how do machine learning and artificial intelligence technologies help businesses today?

Automating routine tasks and streamlining workflows are among the most appealing AI applications for many businesses. The ability to ‘set and forget’ repetitive tasks improves operational efficiency and gives organizations greater freedom to pursue business areas that need human attention.⁴

In addition, automation helps businesses improve profitability.

• Automating repetitive, mundane tasks that require minimum human input can save money on labor hours
• Task automation increases productivity, allowing employees to focus on high-value activities and improve efficiency
• Automation reduces the risk of human errors, which lowers costs associated with mistakes and rework

On the business communication side, automation using technology such as natural language processing can lead to better customer experiences.⁵ Businesses use AI-powered virtual assistants to answer customer inquiries promptly and big data analytics to personalize marketing, which improves customer satisfaction and loyalty.

While data can’t replace gut instinct and common sense in decision-making, it’s becoming an irreplaceable strategic weapon in the corporate arsenal.⁶ For example, data-driven organizations are 19 times more likely to stay profitable, 23 times more likely to outshine their competitors in customer acquisition, and nine times more likely to inspire customer loyalty.⁷ That’s generally because, with data analytics, every business decision is backed by solid evidence and deep insight.

Big data analytics tools transform raw data into valuable insights, uncovering patterns, trends, and opportunities that could otherwise remain hidden. Organizations then use these insights to inform strategic decisions, such as predicting customer behavior or future market trends.

According to Forbes, 56% of organizations today use AI to move from reactive to proactive customer care.⁸ AI’s ability to automate routine tasks, predict customer needs, and deliver personalized services in real time has made it integral for support services. With AI, an organization can address common problems customers encounter when using older support technologies. These include:

• Long wait times
• Multiple transfers between agents or departments before reaching resolutions
• Repetitive information requests that require a customer to provide the same information multiple times

Organizations are creating powerful customer service models that meet today’s customer expectations by combining AI-powered automation and human empathy.

As businesses increase their use of AI in their operations, they are getting tangible benefits that translate to significant financial value. The advantages that AI promises across industries include those following here.

AI is well-known for its ability to enhance operational efficiency and cut costs by:⁹

• Automating routine tasks
• Streamlining workflows
• Giving visibility into business operations for better decision-making

In fact, AI can automate tasks that consume 60-70% of employees’ time, allowing them to focus on more strategic initiatives and improve operational efficiency.¹⁰ This shift can enhance employee engagement, which can, in turn, boost a business’ competitive advantage.

AI-powered chatbots and virtual assistants can address simple customer queries to reduce wait time. The technology empowers organizations to offer personalized 24/7 support, leaving human agents to handle advanced issues. Further, businesses use AI to equip customer-facing professionals with the data necessary to provide more human interactions.¹¹ The improved time to resolution, 24/7 availability, and better human interaction improve customer satisfaction and can boost retention rates.

Any company that isn’t an industry leader requires every edge and tech advantage available in order to compete. AI promises to level the playing field for smaller organizations looking to compete with giants.¹² To create a competitive edge, a business leader can use AI to:

• Automate repetitive, time-consuming tasks to improve operational efficiency and free human resources for more creative and strategic aspects of their work
• Analyze customer interactions, behaviors, preferences, and demographics to create more personalized marketing campaigns that convert prospects into customers
• Reveal business insights that were initially difficult or impossible to discover and use them to make data-driven decisions

While AI's benefits outweigh its risks, businesses often face challenges integrating artificial intelligence into their operations.

One major hurdle in AI implementation is cost. According to a recent study, many organizations find that the initial AI implementation cost is much higher than they initially assumed.¹³ Even if these budget limitations are short-term, they can make AI seem inaccessible or stall AI projects.

Further, technical barriers pose significant challenges to AI implementation, often due to the intricate, specialized knowledge required to develop and manage AI systems. The complexity of integrating AI into existing business infrastructures can deter organizations from harnessing its full potential, as it necessitates substantial investment in both technology and skilled personnel.

While there’s no simple way to overcome cost and technical barriers, business leaders can consider implementing AI in areas that benefit their organizations most.

AI models require a large set of personalized data to generate high-quality output. Handling sensitive information, however, is a huge risk to a business and to its customers.¹⁴ Addressing privacy and security concerns requires businesses to comply with data protection regulations and protect sensitive information from security breaches.

Using AI responsibly means navigating issues such as data privacy, algorithmic bias, compliance with regulatory standards, and impact on human labor.¹⁵ While these are challenging to manage, an organization can:

• Ensure data privacy by implementing robust cybersecurity measures
• Audit its algorithm to mitigate biases
• Develop upskilling and reskilling programs to help employees transition into new AI-created roles

Numerous industries use AI because the technology provides a broad spectrum of implementations. A few examples of AI success in various sectors follow here.

In retail, businesses use AI to gain insights into consumer behavior, tailor product suggestions, and provide personalized customer assistance.¹⁶ Retailers also use machine learning for inventory management to ensure an efficient stock level and reduce the likelihood of stockouts or overstock.

Amazon is a prime example. It uses AI to analyze user behavior—such as browsing history, past purchases and items left in the cart—to personalize product recommendations in an effort to increase sales and customer satisfaction.

The role of artificial intelligence in healthcare businesses is primarily to scan health records, which helps providers improve medical diagnoses.¹⁷ A real-life example of this model is the IBM Watson. Since artificial intelligence and machine learning can analyze huge amounts of data faster than humans can, IBM Watson uses them to assess large caseloads of health records for more accurate diagnoses. After diagnosing a condition, the model can recommend personalized treatment plans based on the latest research and clinical guidelines.

The finance industry largely uses AI for fraud detection.¹⁸ A successful example is JPMorgan’s AI-powered fraud detection system. The bank uses machine learning algorithms to analyze real-time transaction patterns swiftly in order to identify and mitigate potentially fraudulent activities. Since the algorithm learns continuously from new data, it becomes more accurate in detecting and preventing fraudulent activities over time.

It seems like every day brings a new headline about AI. Look out for these examples of emerging trends and technology.

Today’s AI systems can simultaneously process and understand multiple types of data, such as images, audio, and text. This allows for more comprehensive insights and improves decision-making.

Virtual agents such as chatbots and video assistants are becoming more sophisticated. Today, businesses across industries can offer more natural, human-like interaction with virtual agents that can solve more complex tasks.

Businesses are tailoring generic AI models such as ChatGPT to perform specific organizational functions. This customization involves adapting algorithms to address specific problems, integrating them with existing systems, and using unique training data that reflects the organization's needs.¹⁹ This approach is intended to ensure greater accuracy, privacy, and efficiency in data processing.

Artificial intelligence has the transformative potential to redefine how businesses operate, from their foundational models to everyday workflows. Take, for example, the automation of business processes. By automating routine tasks, companies can shorten process cycles, reduce error rates, and proactively respond to changing market demand.

AI will also create new markets. The technology enables businesses to create innovative products and services, driving growth in new markets or through enhanced offerings.

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