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Artificial Intelligence for the Real World

 Here is an excerpt from an article written by Thomas H. Davenport and  Rajeev Ronank for Harvard Business Review and the HBR Blog Network. To read the complete article, check out the wealth of free resources, obtain subscription information, and receive HBR email alerts, please click here.

Credit: James Wheaton and Andrew Nguyen

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The contrast between the two approaches is relevant to anyone planning AI initiatives. Our survey of 250 executives who are familiar with their companies’ use of cognitive technology shows that three-quarters of them believe that AI will substantially transform their companies within three years. However, our study of 152 projects in almost as many companies also reveals that highly ambitious moon shots are less likely to be successful than “low-hanging fruit” projects that enhance business processes. This shouldn’t be surprising—such has been the case with the great majority of new technologies that companies have adopted in the past. But the hype surrounding artificial intelligence has been especially powerful, and some organizations have been seduced by it.

In this article, we’ll look at the various categories of AI being employed and provide a framework for how companies should begin to build up their cognitive capabilities in the next several years to achieve their business objectives.

Three Types of AI

It is useful for companies to look at AI through the lens of business capabilities rather than technologies. Broadly speaking, AI can support three important business needs: automating business processes, gaining insight through data analysis, and engaging with customers and employees.

Process automation.

Of the 152 projects we studied, the most common type was the automation of digital and physical tasks—typically back-office administrative and financial activities—using robotic process automation technologies. RPA is more advanced than earlier business-process automation tools, because the “robots” (that is, code on a server) act like a human inputting and consuming information from multiple IT systems. Tasks include:

  • transferring data from e-mail and call center systems into systems of record—for example, updating customer files with address changes or service additions;
  • replacing lost credit or ATM cards, reaching into multiple systems to update records and handle customer communications;
  • reconciling failures to charge for services across billing systems by extracting information from multiple document types; and
  • “reading” legal and contractual documents to extract provisions using natural language processing.

RPA is the least expensive and easiest to implement of the cognitive technologies we’ll discuss here, and typically brings a quick and high return on investment. (It’s also the least “smart” in the sense that these applications aren’t programmed to learn and improve, though developers are slowly adding more intelligence and learning capability.) It is particularly well suited to working across multiple back-end systems.

At NASA, cost pressures led the agency to launch four RPA pilots in accounts payable and receivable, IT spending, and human resources—all managed by a shared services center. The four projects worked well—in the HR application, for example, 86% of transactions were completed without human intervention—and are being rolled out across the organization. NASA is now implementing more RPA bots, some with higher levels of intelligence. As Jim Walker, project leader for the shared services organization notes, “So far it’s not rocket science.”

One might imagine that robotic process automation would quickly put people out of work. But across the 71 RPA projects we reviewed (47% of the total), replacing administrative employees was neither the primary objective nor a common outcome. Only a few projects led to reductions in head count, and in most cases, the tasks in question had already been shifted to outsourced workers. As technology improves, robotic automation projects are likely to lead to some job losses in the future, particularly in the offshore business-process outsourcing industry. If you can outsource a task, you can probably automate it.

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Here is a direct link to the complete article.

Thomas H. Davenport is the President’s Distinguished Professor in Management and Information Technology at Babson College, a research fellow at the MIT Initiative on the Digital Economy, and a senior adviser at Deloitte Analytics. He is the author of over a dozen management books, most recently Only Humans Need Apply: Winners and Losers in the Age of Smart Machines and The AI Advantage.

Rajeev Ronanki is a principal at Deloitte Consulting, where he leads the cognitive computing and health care innovation practices. Some of the companies mentioned in this article are Deloitte clients.

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