It isn’t often that a form of technology affects virtually every aspect of the economy and society, but AI is one such technology. Although AI has been steadily developed and implemented for many years, we have now decisively entered the AI era. From the explosive arrival of OpenAI’s ChatGPT in November 2022 to the surging value of companies which are central to the AI ecosystem to mass adoption of the technology across a wide range of industries, the excitement over AI is constantly rising to new heights.
While there will be winners and losers in the AI era, the technology has already demonstrated its potential to generate tremendous ROI – both in terms of cost savings and revenue creation. Because AI is useful for such a vast array of tasks (many of which we haven’t even imagined yet) and has already proven its value over and over again, adoption rates will keep increasing. This means companies will have to replace cumbersome legacy systems and processes that make AI implementation more difficult if they want to fully leverage the technology.
AI will lead to tectonic shifts in the business landscape. The companies that aren’t focused on how and where they plan to implement AI will be at a severe competitive disadvantage in the years to come – perhaps sooner than they think.
The AI revolution isn’t just about the companies that are developing the technology – it’s about the companies that are best-equipped to integrate that technology with their businesses. There are many next-generation, cloud-native companies that are using AI to automate and streamline their operations, identify new markets, improve customer service, and increase performance across many other metrics. This makes them extremely disruptive to legacy players.
Between 2017 and 2022, AI adoption more than doubled – a rate of change that will continue to accelerate. Accenture expects LLMs like ChatGPT to affect 40 percent of all working hours – and that’s just one type of AI. Consider the impact of AI on call centers, a market which is projected to grow from around $340 billion in 2020 to almost $500 billion in 2027. In 2017, we invested in a company called ASAPP, which uses generative AI and natural language processing to improve engagement with customers, make interactions less expensive, and increase agent productivity. ASAPP reports a 52 percent decrease in cost-per-interaction for Fortune 100 companies, which will lead to hundreds of millions in savings each year.
This is just one example, and it shows how AI is already providing ROI for the companies that use it. The incentives for companies to adopt AI are already overwhelming – and they will only become stronger – so let’s take a look at how they can do so effectively.
For most businesses, AI functions like a turbocharger – it automates slow and error-prone manual processes, improves customer engagement, and reduces costs. But just as it wouldn’t make sense to strap a turbocharger onto a horse and buggy, attempting to integrate AI with inefficient legacy systems won’t accomplish much. This is why younger, cloud-native companies have significant advantages in AI adoption – their workforces and systems are agile enough to implement AI with minimal disruption.
No matter what operational hurdles a company faces, there are several principles that can guide them toward successful AI adoption. For example, it’s essential to bring the workforce onboard. There’s plenty of dire talk about how AI will lead to mass job displacement, but it’s always a mistake to underestimate human ingenuity and resilience. According to a recent PwC survey, employees who were asked how AI would affect their careers are more focused on the benefits than the costs. Another survey found that 88 percent of employees would definitely (47 percent) or probably (41 percent) take an opportunity to better understand or use technology at work.
Employees are ready to learn about how they can use AI productively, which is why companies like Springboard (which offers educational resources on AI, data science, software engineering, and other tech subjects) will see rapid growth. This is an encouraging sign, as education is crucial for helping companies adapt in the AI era.
One of the most exciting features of the AI revolution is the fact that the technology doesn’t have to demonstrate proof-of-concept – it has already done so. ChatGPT reached 100 million active monthly users between November and January of last year, making it the fastest-growing consumer application of all time. Other AI applications are improving at a blistering pace. And companies already have a clear view of the ROI that AI is capable of generating. Seventy-two percent of AI leaders say they can confidently evaluate the ROI of current AI implementations.
There are a few keys to maximizing AI ROI: smooth integrations with existing workforces and processes (which often requires the elimination of inefficient legacy systems), the identification of the right use cases for specific industries (such as automation and cost-cutting in customer service), and continuous performance assessments to determine what’s working and what isn’t. By observing these principles, companies will be in a strong position to navigate the AI era.
Telstra Ventures recognizes that AI has fundamentally changed the business and investing landscape, and we couldn’t be more excited to see what AI-powered innovations our companies will produce next.