Are you ready for the AI business revolution?
By unleashing the power of big data, artificial intelligence is helping businesses supercharge their performance.
Ask people what they think about the rise of artificial intelligence (AI) and there’s every possibility they’ll conjure fearful images of Arnie in his infamous cyborg role.
When it comes to what AI means for Australia’s businesses, however, the reality is far less threatening… and much more of an opportunity.
Outside the realm of Hollywood, AI isn’t the threat of self-aware machines replacing humans. Instead, it’s the rise of a supercharged tool helping real people – real business people – make sense of big data so they can make smarter business decisions. The dramatic aspects come in both macro form – its impact on the global economy – and the more personal: allowing SMEs to take on even the largest competitor.
Rewards set to be huge
AI could have a larger impact on the world than the Industrial Revolution.
According to a McKinsey Global Institute report, AI has the potential to add 16 per cent – an average of 1.2 per cent a year – to global economic output by 2030.
By comparison, the introduction of steam engines during the 1800s boosted labour productivity by just 0.3 per cent a year, McKinsey notes, while robots just added 0.4 per cent in the 1990s and IT 0.6 per cent in the 2000s.
Any way you look at it, agrees the PwC 2019 Global Artificial Intelligence Study, AI will be huge. It predicts that, as a direct result of AI, global GDP by 2030 will be 14 per cent higher than it is today, the equivalent of US$15.7 trillion.
Unlocking ‘hidden’ potential
For Australian SMEs, what can AI do for them?
Dr Stefan Hajkowicz, senior research scientist at CSIRO’s digital specialist data sciences arm, Data61, uses the example of an ice cream shop to illustrate the potential of AI to deliver valuable insights from distinct and unstructured data sources.
Using AI tools like machine vision, the shop owner can monitor the flow of customers, track sales of various flavours and monitor stock levels. When this information is cross-referenced with internal business data, along with external data such as weather forecasts and local events, it can reveal previously ‘hidden’ insights to help drive sales and optimise operations.
“You can see how a range of business decisions in this ice cream shop, which were once made on intuition, can now be underpinned with solid data – helping human decision-makers identify trends, make predictions, increase sales, optimise staff rosters, maximise shelf life and reduce wastage better than ever before,” Hajkowicz says.
“This isn’t some futuristic scenario; the AI tools are there to put this into action today. The key to embracing AI is to ensure that it’s driven by the business and addresses key business outcomes.”
AI is already delivering results, with a US fashion retailer discovering that shoppers stock up on winter fleeces when the autumn forecast predicts a temperature drop of at least 12 degrees within six days – allowing it to better manage stock levels. Meanwhile, an Australian furniture retailer discovered that rug purchases are often the first step when remodelling an entire room – allowing it to better manage its approach to customer acquisition. Such insights can be fed back into the supply chain, while also helping with customer-facing aspects like sales and marketing.
Empowering SMEs to take on larger rivals
As for the AI tools Hajkowicz references, businesses are likely to first encounter them built into their existing accounting, customer relationship and enterprise resource planning applications and platforms, including those from the likes of Microsoft Azure, Amazon Web Services and Google Cloud. Used to their full potential, these powerful, enterprise-grade tools can help SMEs compete with larger rivals.
One example of this is in taking logistics to the next level, says the University of Adelaide’s Professor Anton van den Hengel, director of the Australian Institute of Machine Learning. He says AI-enabled tools can give any business the capability to predict who will buy a product or service, when and at what price.
“Not only does this data-driven capability let you optimise your supply chain and sales pipeline, it can flow right back to the development stage,” he says. “You can road test new products and services while they’re still on the drawing board in order to improve your profit margins.”
Returning to the ice cream shop metaphor, “rather than suck it and see, AI lets you run the numbers on a new flavour to measure success long before it ever hits the shelves”, van den Hengel says.
Take your business to the world
Beyond optimising existing operations to reduce costs and increase profits, Hajkowicz says the insight gained from AI offers the ability for forward-thinking SME owners to completely rethink their business model.
Van den Hengel agrees: “Some businesses think the primary opportunity with AI revolves around making a 10 per cent improvement to the way they produce widgets or offer services. But the big opportunity is to better understand your business and put this insight into action – potentially capturing a global opportunity in that space. Data-driven businesses like Uber and Airbnb show the power of this approach: they didn’t set out to become a slightly better taxi service or hotel chain, they used their insight to reinvent the business model.”
This thinking empowers businesses to become a disruptor in their sector, rather than the victim of disruption as rivals take the initiative.
As for Australia’s place in the rise of AI, Hajkowicz believes we’re well placed to be a driving force behind these new technologies – to become “an AI maker and not just an AI taker”.
“AI and data science present a huge growth opportunity for Australia in the digital age,” he says. “Not just for our own prosperity, such as applying AI to challenges like drought and food production, but also in taking that technology to the world.”
While on the smaller side SMEs from cafes to real estate agents are using AI, large Australian organisations making strides include Woodside, MJH Group, Qantas, WorleyParsons, Cochlear and Seek.
Will AI drive a jobs apocalypse?
Such a transformation will, of course, have a human cost, though likely not as great as some people fear. According to van den Hengel, AI will relieve humans of some tasks, but this will free them up to apply their skills at a higher level to help improve productivity and profitability.
The rise of personal computers and spreadsheets in the 1990s saw a similar shift in labour, he notes. With spreadsheets, business scenario planning that would have taken a team of people days to carry out manually is now done in seconds. People are still making business decisions based on this insight, it’s just that spreadsheets are a tool helping them make better decisions, more efficiently and effectively.
“In the short-term, the arrival of this technology cost some accounting jobs, but in the long-term it has empowered accountants to do so much more,” van den Hengel says. “Absolutely nobody wants to go back to the days before we had computerised spreadsheets – especially not accountants.
“We’re at the beginning of that process right now with artificial intelligence and machine learning – people are worried that these technologies are going to take their jobs, but the truth is that these tools are going to transform jobs.”