ROAi: Discussions On The Business Impact & ROI of Ai - Part 1

In today’s world, people can rarely discuss technology without AI or machine learning being injected in the conversation. AI is a hot topic with a lot of hype around the potential impact on business, jobs, society, and some of that discussion tends to get very dystopian and scary. Many people are focused on the what if scenario rather than the ROI that can drive with today’s AI.

 But, for those of us in the business world, the AI discussion is more pragmatic. We are exploring ways our respective companies can leverage AI to fuel competitive advantage, enhance customer service, boost employee performance, and improve cost management.

 Most companies agree that they should invest in AI (which means different things to different people), and are overcoming the “early” adopter syndrome so as not to become an industry laggard, or worse yet, be disintermediated from their customer base… . . . they must answer the question: Is the business value of AI worth the cost of AI?

 While the question is straightforward, the answer is seldom unambiguous. The first issue is: what do we mean by “business value”? With AI and Automation, there are primary benefits (cost avoidance, additional revenue), secondary benefits (NPS, Time-to-resolve, more customer contact, happier employees) and tertiary benefits (new business models, differentiated product and solutions).

 However, the one business value driver that leadership tends to fundamentally embrace is cost savings (the old better, faster, cheaper). That may seem one-dimensional and certainly, other business value factors cannot be ignored, but at the end of the day an enterprise must make a profit and most CFOs are first looking at reducing OPeX while driving higher revenue.

 That stated, the question might rather be: Will AI enable us to offset sufficient operating costs to justify the investment in AI?

 In simple terms, if AI costs $1,000 and has a $3,000 positive impact, the average business is going to (wisely) chose to invest.

 So, the essence of an AI business case is estimating the future (near term) financial impact of AI relative to the financial investment in AI to realize these. We refer to this as the ROAi (Return on AI)

 How this is done is a subject for future posts.