Can AI generate profits for businesses?

Wed Jul 10 2024
Mark Cooper (3162 articles)
Can AI generate profits for businesses?

Corporate technology leaders across industries have been investing heavily in generative artificial intelligence over the past year. Now, individuals are seeking returns that extend beyond efficiency gains to tangible financial gains, although it remains uncertain when and if they will materialize.

According to a survey published today by professional-services firm KPMG, businesses now prioritize revenue generation over productivity when assessing the return on investment of AI. KPMG conducted a survey of 100 top executives and business leaders from large organizations in the United States.

Amidst a period of AI-generated turbulence within IT organizations worldwide, there has been a shift in focus. This shift is accompanied by hiring slowdowns in certain areas, changes in C-suite dynamics, and investments in a technology that many CIOs are finding challenging to implement.

According to market research firm International Data Corp, organizations are projected to invest a staggering $38.8 billion in generative AI by 2024.

Many CIOs have praised the efficiency savings of AI, citing examples such as a significant increase in productivity for software developers who utilize AI coding tools. As companies transition from pilot to production with the expensive technology, they are becoming more focused on its financial implications.

“I have a strong desire to initiate widespread implementation of AI,” expressed Luke Gee, the individual responsible for overseeing analytics and AI at TD Bank. Now is the opportune moment.

For technology companies that have the ability to incorporate generative AI into their products and services or provide AI products as standalone offerings, the path forward is more straightforward. “Our software with AI is inherently generating revenue,” stated Aaron Levie, the CEO of cloud company Box.

For companies in other sectors, quantifying the growth in revenue resulting from AI investments can be more challenging and may require additional time.

“Typically, it takes a few years for a new technology to fully develop,” Levie remarked. He mentioned that for these types of companies, revenue from AI use cases may become evident in earnings reports in the coming year or two.

According to CIOs, the increase in revenue can be attributed to customers spending more money due to AI investments that enhance their overall experience. As a result, businesses are turning to AI tools that enhance customer experiences and empower salespeople and customer service representatives to better engage with customers.

According to Stephen Chase, vice chair of artificial intelligence and digital innovation at KPMG, companies can drive more revenue by utilizing generative AI to enhance the performance of sales and service workers. According to an expert, the potential revenue generated by a salesperson using a tool like Copilot for Microsoft 365 would surpass that of a human-resources employee.

According to TD Bank’s Gee, the implementation of generative AI has the potential to increase revenue by tailoring product recommendations to individual customers. However, it is important to note that this technology is still in its early stages. According to the speaker, the bank is currently prioritizing the testing of the technology on internal applications before introducing it to customers.

According to Chief Data and Analytics Officer Francesco Marzoni, at Swedish furniture retailer IKEA Retail, prioritizing AI-powered experiences for customers is a top concern. With the introduction of IKEA Kreativ on the IKEA app, users now have the opportunity to capture visuals of their rooms, remove current furniture, and get a glimpse of how IKEA furniture would fit into their space.

Marzoni is currently focused on improving the user experience by incorporating generative AI-powered features. These features provide personalized recommendations tailored to users’ lifestyle and style preferences. As an economist would explain, the user mentioned a scenario where they have two kids and a cat. In this case, generative AI can be utilized to suggest furniture and kitchen surfaces that are child-friendly and resistant to cat scratches.

According to Marzoni, improved digital experiences will lead to higher revenue. Based on the initial version of Kreativ, customers who interacted with the experience had a significantly higher likelihood of making a purchase compared to those who only used the app or visited the website.

Kathy Kay, executive vice president and CIO of financial-services firm Principal Financial Group, emphasized the importance of developing effective generative AI tools for driving revenue and business growth. She noted that these tools require more time and effort to perfect compared to those that offer immediate efficiency improvements.

Kay mentioned that she is working on tools in this category that will set them apart. She chose not to provide further details, but mentioned her intention to implement them in the near future rather than the distant future.

Mark Cooper

Mark Cooper

Mark Cooper is Political / Stock Market Correspondent. He has been covering Global Stock Markets for more than 6 years.