Dive Brief:
- AI will bring deep transformation to nearly three-quarters of business sectors by 2035, putting $4.7 trillion in profits at stake, according to a Tuesday report from Bain & Co. The global management firm compared profit trends and structural changes from the early era of the internet to understand how the technologies differ in their effect on business operations.
- Whereas the internet’s main impact was slashing the cost of distribution, and easing customer access for businesses, AI collapses the cost of production itself, Bain & Co.’s research found.
- CIOs who want to understand how their industry will be affected should continue to push their tech transformations, Dunigan O’Keeffe, a partner in Bain & Co.’s strategy practice, told CIO Dive in an email. “They need to place a stake in the ground on the future industry profit pool for their sector, how they will win, and then what that requires from technology,” O’Keeffe said.
Dive Insight:
AI vendors advertise the technology’s ability to accelerate work processes by taking over some human-led tasks and optimizing production in physical settings.
But while some managers report productivity gains from AI use, the ROI remains hard to measure. On average, automation saved workers about 11 hours a week, Glean’s Work AI Institute found in June, but employees reported spending much of that saved time managing AI outputs.
The impact AI will have on enterprises is less about the technology’s transformation, and more about business transformation, O’Keeffe said. The technology is driving meaningful change in operational capabilities for companies and the sectors they inhabit.
AI is set to triple the economic impact of the introduction of the internet in just about a decade, Bain & Co.’s research shows. About 41% of sectors were transformed by the internet between 1995 and 2015, compared to 71% projected to be transformed by AI.
“The CIO is uniquely positioned to play a leading role as this conversation requires a granular understanding of what the technology makes possible,” O’Keeffe added.
Productivity, innovation, market share and competitive shifts created by AI will provide the most impact on the business sector, Bain & Co.’s research shows.
Amid this period of transformation, CIOs should plan to build proprietary intelligence, O’Keeffe said — the specific data, technology, and learning systems that will create advantages for their companies.
Seeking out general productivity gains is good, but could have a smaller effect than chasing tailored, specific business goals that AI can help achieve, O’Keeffe said. Advancements in productivity represent $1.1 trillion in new profits, but innovation and competitive shifts represent $3.5 trillion in profit changes, the report found.
Tech leaders should benchmark their companies’ speed against the fastest-moving competitors in their sectors, and plan to share frontline learnings that build understanding about the direction of the company’s investments into the technology.
“The CIO is a catalyst for making the transformation dynamic, keeping the pulse on where the organization is seeing results, the new barriers to attack, and how the frontier of technology is evolving,” O’Keeffe said.
