Despite widespread use of artificial intelligence, only 11% of companies say they see a significant financial return on their investment, according a new study by Boston Consulting Group in partnership with MIT Sloan Management Review.
The low yield was revealed in a global survey of more than 3,000 managers with 57% saying they have piloted or deployed AI, a significant increase over three years ago.
The authors of the study reported that companies can get the basics of AI right with the right data, technology, talent and strategy, but still see low ROI. “Only when organizations add the ability to learn with AI do significant benefits become likely,” the authors said. “With organizational learning, the odds of an organization reporting significant financial benefits increases to 73%.”
The elements of learning with AI require companies to have a combination of machines learning autonomously, humans teaching machines and machines teaching humans. Deploying the appropriate interaction modes for human-machine interactions is “critical,” according to the report.
Organizations need to make extensive changes to many processes with AI to receive the best ROI. Sometimes the changes will even be” uncomfortable,” as the authors put it. “Organizational learning with AI demands, builds on and leads to significant organizational change.”
The report describes the experience of several organizations that have deployed AI. They include Repsol, a global energy and utility in Spain with more than 100 digital transformation projects that use AI in some manner, from drilling operations to retail service stations. AI is used to optimize the drilling of productive wells, reducing nonproductive time by up to 50% across 30 sites. AI is also used to prepare personalized offers for 8 million customers at 5,000 service stations with 400,000 offers each day with an increase in sales. The improvement in sales equals the value of having more service stations, up to 4.5%.
“Repsol does more than teach machines to drill, blend and serve,” the report says. “In effect, Repsol changed its processes to continuously learn with AI. Process improvements beget new behaviors and new human knowledge which is then fed back to machines. These dynamics play out continuously. Repsol’s ability to learn with AI is fundamental to obtaining significant benefits with AI."
The report endorses an organizational approach that views AI as a system of advanced, self-learning algorithms and underlying technology to produce a desire outcome.
“The key thesis of this report is about the imperative and benefits of creating a system in which both AI and humans perform better together to drive a desired outcome such as a critical business decision such as how to reopen stores during COVID or a creative design of a product or a difficult medical diagnosis,” said Shervin Khodabandeh, senior partner at BCG, via email.
“For example," he added, "a car designer may use AI to render multiple physical designs of a vehicle based on a set of objectives and constraints — the AI and the designer then work together to perfect the design and deliver a stronger finished product."
The survey’s finding of 57% of companies having AI pilots or deployed solutions in 2020 is up from 44% in 2018. Also, 59% said they have an AI strategy, up from 39% in 2017.
The full report is online.