Accenture Research: AI Boosts Industry Profits

“Businesses that successfully apply artificial intelligence (AI) could increase profitability by an average of 38 percent by 2035. The introduction of AI could lead to an economic boost of US$14 trillion in additional gross value added (GVA) across 16 industries in 12 economies.” — Accenture Research

The above key findings was derived from comprehensive new research on the potential economic impact of artificial intelligence (AI) in GVA, a close approximation of GDP that accounts for the value of goods and services produced, developed by Accenture Research in collaboration with Frontier Economics.

“Artificial intelligence will revolutionize how businesses compete and grow, representing an entirely new factor of production that can ignite corporate profitability. To realize this significant opportunity, it’s critical that businesses act now to develop strategies around AI that put people at the center, and commit to develop responsible AI systems that are aligned to moral and ethical values that will drive positive outcomes and empower people to do what they do best – imagine, create and innovate.” — Paul Daugherty, chief technology & innovation officer, Accenture

Here are 10 significant takeaways from the new Accenture Research on AI and its potential economic impact:

1. United States corporate profits reached their highest level as share of gross domestic product (GDP) in the post-war period but are now in decline.

2. AI potential impact is significant - impact by country based on Accenture research.

3. AI promises to significantly boost the productivity of labor in developing economies.

4. AI could double annual economic growth rates in 12 economies by 2035

5. AI could increase industry profitability by 38 percent.

6. By 2035, AI has the potential to boos GVA in 16 industries by US$14 trillion.

7. Top 10 industries benefiting by AI are:

1. Education, 2. Accommodation and Food Services, 3. Construction, 4. Wholesale and Retail, 5. Healthcare, 6. Agriculture, 7. Social Services, 8. Transportation, 9. Manufacturing, 10. Financial Services

8. AI can improve the bottom line through: intelligent automation, labor and capital augmentation and innovation diffusion.

9. AI strategies to augment your people starts with reinventing the chief human resource officer (CHRO) role to manage humans and supervise AI.

10. Crowd sourced data in the cloud with AI can help companies create new and disruptive business models.

To prepare for a successful future with AI, business leaders should consider the following eight strategies:

1. AI strategy and leadership – attaining value from AI will demand recognition and action from the top of the company; therefore, the benefits must be made tangible to the C-suite and a roadmap is essential.
2. Reinvent HR into HAIR – the Chief HR Officer’s role will not only be about managing human employees, but will evolve to also manage human-machine interaction -- or Human AI Resources (HAIR).
3. Learn with machines – to adapt their businesses to the changing nature of learning and employee training, business leaders must focus on the needs of their workforces, particularly in the area of agile skills development.
4. Appoint a chief data supply chain officer – this position will be needed to construct an integrated, end-to-end data supply chain.
5. Create an open AI culture – trust, openness and transparency are key for human and machine relationships to work well; business leaders must shape the corporate culture and guidelines to minimize the risks of a hybrid workforce while maximizing the opportunities.
6. Take the crowd into the cloud – the next phase of innovation will combine crowd-sourced data in the cloud with AI capabilities to create new and disruptive business opportunities.
7. Step beyond automation – with recent strides in AI, companies need to take a step beyond to harness the intelligence of dynamic, self-learning and self-governing machines.
8. Measure your return on algorithms – Unlike traditional assets that depreciate over time, AI assets gain value as time passes so CFOs will need new financial metrics to properly assess the “Return on AI,” which could include the value generated from each algorithm or a combination of initial outlay and ongoing costs.

To further understand the economic impact of AI, Salesforce commissioned a report from IDC on how AI-powered CRM - the fastest growing and soon-to-be largest category of enterprise software - will impact GDP growth and the job market. Here are the key findings:

• AI associated with CRM activities will boost global business revenue from the beginning of 2017 to the end of 2021 by $1.1 trillion.
• Net-new jobs associated with this revenue could, if respondent opinions bear out, reach more than 800,000 by 2021 in direct jobs, and 2 million if you add in indirect and induced jobs. This is a net-positive figure in that it includes an estimate of jobs lost to automation from AI.

“By optimizing processes with intelligent automation, augmenting human labor and physical capital, and propelling new innovations, AI can drive dramatic and long lasting profitability and economic growth.”

— Mark Purdy, Managing Director, Accenture Research

Here’s the link to Accenture’s full AI research report. This research builds on the Why Artificial Intelligence is the Future of Growth report released in 2016. The report found that AI could double annual economic growth rates by 2035 and boost labor productivity by up to 40 percent by fundamentally changing the way work is done. Please follow Accenture and Paul Daugherty on Twitter to learn more about AI research.