Unlocking a 44% Increase in Productivity with Generative AI

Generative AI (GenAI) is more than just a hot buzzword; it's a groundbreaking technology that stands at the forefront of modern innovation.

What is Generative AI?

Generative AI is a class of AI that can understand language and context, and it has the ability to communicate and create content – thus offering the potential to automate human decision-making.

Think of generative AI as a graduate student who is pretrained with general knowledge but still needs to undertake specialized training programs to be effective in an organization.

Generative AI is evolving fast. What does that mean for businesses?

Generative artificial intelligence (AI) is a powerful, innovative technology that will automate a wide range of selling, general and administrative (SG&A) tasks – enabling companies to unlock dramatic cost savings and create significant capacity to reallocate employees to critical, value-generating priorities.

Researchers categorized the impact of adopting generative AI into key benefits:

1. Cost Reduction: Achieving a 40% decrease in SG&A costs.
2. Productivity Boost: Realizing a 44% increase in human productivity.
3. Staff Optimization: Potentially reducing SG&A staff by 40%.

These gains are expected over a period of five to seven years.

80+ SG&A business processes

The analysis studied the potential impact across all SG&A business processes that can benefit from generative AI capabilities – more than 80 business processes in total.

The impact of GenAI on three types of Work

Researchers analyzed the potential effects of generative AI on the entire customer-to-cash process, including detailed subcomponents like credit management and, more specifically, credit policy.

? Elimination of structured work – which is organized in a set and repeatable pattern – through automation

? Enablement of unstructured work – which is typically not organized in a set pattern – by adopting digital assistants

? Enhancement of interactive work – which requires at least a two-way interaction between the user and system – through personalization at scale

The impact of GenAI on costs and full-time equivalent (FTE)

Researchers discovered that after integrating Generative AI, a typical $10 billion company could achieve an average SG&A cost savings of $180 million and reduce SG&A staff by 1,379 employees across the 80+ processes analyzed.

Four steps to take now

For the first time, industry researchers have comprehensively quantified the profound impact that generative AI is expected to have over the next five to seven years across various SG&A functions, including finance, procurement, human resources, IT, marketing, and sales. Researchers recommend that organizations follow these four steps to prepare for leveraging the potential of Generative AI:

1. Educate Leaders and Set Policies: Ensure that executives understand generative AI, including its capabilities, limitations, risks, and governance needs. This involves focused education and clear communication to align strategic approaches.
2. Mobilize Resources: Assign dedicated individuals or teams in each department to explore how generative AI can be applied. These teams should work closely with leadership to integrate their findings into a cohesive vision and action plan.
3. Develop Proof of Concepts: Initiate pilot projects or proof of concept trials to test the technology on a smaller scale. This approach emphasizes practical learning and helps in understanding how generative AI can be effectively deployed.
4. Assess the Ecosystem of Solutions and Providers: Engage with your current technology and outsourcing providers to evaluate their generative AI capabilities and future plans. This will help in selecting the right partners and solutions for your AI strategy.

By taking a proactive and informed approach, companies can stay competitive in a rapidly evolving landscape and drive significant improvements in productivity and efficiency. Embracing generative AI is not just about technology adoption but about positioning for future growth and innovation.

Reference: The Hackett Group Inc.