AI: What they dont tell you (but you need to know)

Date:
Mon, 02 Dec 2024 15:42:13 +0000

Description:
Discover practical strategies to harness Gen AI for growth, efficiency, and innovationwhile avoiding common pitfalls.

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Gen AI is transforming much more than technologyits set to reshape entire industries. Case in point: a recent McKinsey study projects that it could add up to $4.4 trillion to the global economy every year.

Gen AI isnt just another tool; its a powerful driver of growth, capable of streamlining operations, sparking innovation, and unlocking entirely new business models

But heres the kicker: while the potential is enormous, many companies are struggling with where to even start. With an overwhelming number of Gen AI tools and technologies flooding the market, figuring out which ones to adoptand how to actually see meaningful resultshas become a major challenge.

For businesses that want to get ahead, the key isnt just jumping on the Gen
AI bandwagon, but knowing exactly which applications will drive real, measurable impact. How to unlock value

Rather than trying to implement AI everywhere, businesses should invest in areas where Gen AI can deliver real, measurable impact. Heres how companies are driving meaningful results by applying Gen AI in three key areas:

Automating for efficiency: Gen AI can take on repetitive tasks that drain time and energy from teamslike content creation, data entry, and reportingallowing employees to focus on higher-value work. This shift doesnt just save time; it improves productivity and reduces costs. To see its
impact, track metrics like time saved, productivity gains, and cost reductions.

Making data-driven decisions easier: Gen AI processes large datasets at remarkable speeds, uncovering insights that fuel smarter, proactive
decisions. Through predictive analytics and trend forecasting, Gen AI helps companies anticipate shifts and respond effectively. When measuring success, consider faster decision cycles, greater accuracy, and how these insights drive positive outcomes.

Fueling innovation and speeding up product development: With Gen AI, companies can speed up every stage of product development, from ideation to prototyping. This acceleration enables businesses to get new products to market faster and gives them a competitive edge. Metrics to monitor include shorter development timelines, increased product launches, and revenue growth tied to new AI-driven offerings. Where to Invest

For Gen AI to act as a true growth engine, CIOs should allocate budgets
toward technologies that bring out its full potential: AI-Driven Personalization: Tailored customer experiences are essential for fostering loyalty and engagement. By leveraging AI to personalize interactionswhether through product recommendations, targeted content, or one-on-one communicationscompanies can make each customer touchpoint more relevant and impactful, strengthening long-term relationships.

Advanced data analytics: Real-time data platforms empower teams to make swift, informed decisions and proactively respond to customer needs.
Investing in advanced analytics not only keeps businesses agile in a dynamic market but also sharpens their competitive edge. With real-time insights, teams can pivot quickly to meet shifting demands.

AI governance and risk management: To ensure sustainable growth, its
critical to build frameworks for responsible AI usage. Establishing clear guidelines around transparency, accountability, and ethical practices helps
to mitigate potential risks and build trust with customers and stakeholders. By prioritizing governance, businesses lay the groundwork for reliable, secure, and trustworthy AI-driven innovation. How to measure impact

For Gen AI initiatives to demonstrate real value, organizations need a clear framework to track their impact over time. Defining and measuring success not only justifies investments but also aligns teams on goals and benchmarks that matter. Heres a look at some key metrics to evaluate the effectiveness of Gen AI:

Time and cost savings from automation: Start by tracking how much time and cost are saved by automating repetitive processes. For instance, calculate
the hours saved in areas like data entry, content creation, or customer service, and quantify these reductions as cost savings. Monitoring these efficiencies over time highlights the tangible ROI of automation and provides a strong case for continued AI investment.

Increase in employee productivity and satisfaction: With AI taking on time-consuming tasks, employees can focus on more meaningful, high-impact work. Measure productivity gains by looking at metrics like tasks completed per hour or customer requests handled daily. To understand the broader
impact, conduct employee satisfaction surveys to gauge how AI-enabled tools are affecting morale and job satisfaction, as a positive shift here
translates to higher retention and better overall performance.

Revenue growth attributed to AI-driven innovations: Track revenue generated directly from new products, services, or customer segments enabled by Gen AI. By isolating the revenue streams that are AI-driven, companies can better understand how much their Gen AI investments contribute to top-line growth. For example, a retailer that introduces personalized recommendations powered by Gen AI could measure the lift in average order value or repeat purchase rates to attribute revenue gains to these innovations.

Improvement in customer satisfaction and retention rates: AI-powered personalization, faster response times, and enhanced product experiences all contribute to customer satisfaction. Using metrics like Net Promoter Score (NPS), customer retention rates, and satisfaction survey scores, companies
can gauge the customer-facing impact of their Gen AI initiatives. Higher customer satisfaction not only leads to retention but also boosts brand loyalty and positive referrals Watch for the pitfalls

As businesses embrace Gen AI, its important to navigate potential challenges carefully. Here are a few common pitfalls to watch for to ensure AI investments stay aligned with business goals:

Overinvesting in technology without a clear business case: Jumping into AI without a defined strategy can lead to costly investments with minimal
return. Avoid this by establishing specific business objectives and
measurable goals for each AI initiative. Before committing to new technology, consider whether it aligns with your broader business priorities and how it will drive value in concrete ways.

Neglecting to retrain and upskill employees: AI can enhance team productivity, but only if employees are equipped to work alongside these new tools. Neglecting to upskill staff can result in underutilized technology and frustrated team members. Invest in training programs to familiarize employees with AI tools and workflows, and provide ongoing support to help them
leverage AI effectively in their roles. Empowering employees to integrate AI smoothly into their day-to-day work will maximize its impact.

Failing to address ethical concerns and bias in AI systems: As AI becomes a central part of business operations, so too does the need for ethical responsibility. Overlooking ethical considerations and potential biases in AI systems can damage customer trust and lead to unintended consequences. To build a foundation of trust, prioritize transparency, and ensure AI systems are developed with fairness, accountability, and inclusivity in mind. Regularly audit AI models to check for biases and communicate openly with customers about data usage and privacy protections.

Bottom line: Take a practical approach to Gen AI to stay competitive and drive growth. Focus on real applications and track results to turn Gen AI
into a core advantage for your business.

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This article was produced as part of TechRadarPro's Expert Insights channel where we feature the best and brightest minds in the technology industry today. The views expressed here are those of the author and are not necessarily those of TechRadarPro or Future plc. If you are interested in contributing find out more here: https://www.techradar.com/news/submit-your-story-to-techradar-pro



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