How AI Went From Playing the Field to the Big Leagues in Digital Transformation
By Emily Newton is a tech journalist with over five years of experience covering how technology is changing industry and business. Keep up with Emily by connecting with her on LinkedIn.
Artificial intelligence has become almost synonymous with digital transformation. It plays such a big role in businesses’ technology initiatives that it’s hard to believe this wasn’t always the case. Despite its prevalence today, not long ago, AI-driven digital transformation was a niche strategy, not the industry standard.
While AI has always captured business leaders’ interest, many companies deemed it too risky to invest heavily. It seemed like it would provide value one day but it wasn’t ready for adoption quite yet. Now that AI has thoroughly disrupted industry after industry, many organizations regret taking that stance and not becoming early adopters.
Uncovering how AI went from a promising but unrefined technology to the key differentiator in digital transformation will help you make more informed decisions about it in the future.
AI Yesterday
AI-driven digital transformation reached a turning point at the start of the 2020s. Investments in this technology had grown steadily before then but jumped by almost 50% in 2020 before nearly doubling the next year.
AI’s slower, pre-2020 adoption pace doesn’t necessarily reflect its capabilities. Generative AI — one of the technology’s biggest leaps forward — hadn’t yet come to fruition, but AI was far from incapable. Even then, it held powerful predictive capabilities and could save organizations substantial time and money by automating basic tasks.
It wasn’t a technological leap that made AI suddenly catch on, but a rude awakening about the inefficiency of conventional business practices. The COVID-19 pandemic and all the disruption it brought was the turning point.
Falling revenues, supply chain backlogs, and mandates restricting in-person work highlighted how inflexible and inefficient businesses’ current operations were. These conditions forced companies to change to stay afloat amid the pandemic, spurring the uptick in digital transformation that continues today. Nearly 50% of companies in 2020 accelerated their AI strategies in light of these shifts.
Digital transformation is incomplete without recognizing the power and potential of AI. Just as this technology differentiated high-performers and laggards in the past, further innovations will do the same in the future.
AI Today and Tomorrow
Fast forward to today, and AI-driven digital transformation has thoroughly changed the business landscape. While most AI adopters see gains from it, AI-driven revenue growth follows a J-curve and is most impactful when businesses invest in complementary technologies. That means those who invested earlier and more heavily in AI and its surrounding innovations see the most benefits.
Looking at these trends from the past informs how you should approach AI and digital disruption today. While it’s important to acknowledge and manage new technologies’ risks, organizations at the forefront of adoption tend to perform the best long term.
AI’s growth and development are far from over. Generative models are unlocking new possibilities, and edge computing could revolutionize Industry 4.0 AI applications and make smart cities a reality. If you want to capitalize on these next AI booms, you should learn from the initial one at the onset of the 2020s. At the most general level, that means embracing AI-driven digital transformation to take advantage of innovations before they become standard.
How to Embrace AI-Driven Digital Transformation
Digital transformation encompasses more than just AI. However, AI has become a clear differentiator for the most successful digitization strategies. It takes other technologies further and unlocks new ways to derive value from complementary innovations. Here’s how to use it to improve your digital transformation strategy.
Recognize AI’s Biggest Values
Many factors separate the top AI achievers from the rest of the pack. Focusing on actual, relevant value statements is one of the biggest. Roughly 60% of AI high-performers prioritize AI applications that can bring value across the organization, compared to just over 30% of all other businesses.
Deriving the most value from AI starts with recognizing where it’s most impactful in your organization. Thinking of general improvements like “efficiency through automation” or “more accurate data analytics” isn’t helpful. Instead, target specific applications, goals and related KPIs to monitor progress in those areas.
To learn where AI is most useful, you must understand your biggest weaknesses. Review processes regularly to look for inefficiencies, error-prone workflows, or other room for growth. Then, compare these to emerging AI applications and supporting technologies to identify what specifically to invest in for the highest ROI.
Account for AI’s Current Weaknesses
An effective digital transformation strategy must also recognize technology’s shortcomings. Knowing where not to apply AI and its related technologies makes it easier to see where you should.
Tasks requiring more creativity, flexibility and experience are better for humans to perform than AI. Less predictable and repetitive tasks will require more training from people for AI to work effectively. At a certain point, that becomes too time-consuming and resource-intensive for the returns to be worth the cost. Be sure to account for that dynamic when deciding where to apply new technology to avoid costly mistakes.
The kinds of work AI and similar technologies can reasonably accomplish will change over time. Consequently, you should always compare these areas to AI’s current capabilities, not what was possible in the past. Regardless of the situation, some roles will always be better for humans and others for AI. The key to effective digital transformation is learning which is which.
Foster a Tech-Centric Company Culture
AI-driven digital transformation may center on AI, but technology alone isn’t enough to make a significant difference. You must also empower the people who will be using technology. Digital transformation is most effective when you have a companywide spirit of embracing innovation.
Training is a crucial part of this shift. Provide upskilling opportunities for employees to learn to use new technologies and reward them for pursuing this development. Encourage workers to experiment with new tools and learn about recent innovations. This ongoing learning will address the talent shortage that 90% of tech companies face and make it easier to implement new technology.
It’s also important to foster dialogue between tech leadership and workers at all levels of the organization. Encourage employees to speak up about what works well with their current technology, what obstacles they face in their workflows and how they can be improved. These insights will inform more effective tech investments.
AI-Driven Digital Transformation Is a Must for Modern Businesses
Digital transformation is incomplete without recognizing the power and potential of AI. Just as this technology differentiated high-performers and laggards in the past, further innovations will do the same in the future.
What seems overblown or underwhelming today may redefine the business landscape of tomorrow. Embracing an AI-driven digital transformation strategy helps you overcome these attitudes to capitalize on the next wave of innovation before your competitors.