An owner of a mid-sized manufacturing company confessed that while they have been running their business for generations, for the first time they feel out of their depth when it comes to understanding market disruptions. 'How can we estimate the demand of the customer and estimate the price of the supplier in advance and with reasonable accuracy?' Given that both the raw materials and the finished products are commoditised, this insight will be critical for managing working capital, their survival in the immediate future, and eventually their growth in the medium- to long-term horizon. Artificial intelligence has proven that it can show the way.
This is not an isolated conversation. Our research shows that 92 percent organisations are optimistic about using AI to improve opportunities, create competitive advantages and innovate new products. Interestingly, India has witnessed the highest number of adoption of AI in organisations as compared to the organisations in leading countries such as US, Japan, and UK, according to PwC’s Global Responsible AI Survey 2020 and AI Adoption survey. Covid-19 and the ensuing economic crisis has ironically created the right environment for organisations to use AI more as a business necessity rather than a nice-to-have experiment. They will have to do three things:
Repair: Many sectors such as travel and hospitality have been adversely impacted because of the disruption in demand during the coronavirus crisis. It is encouraging players to implement AI-enabled use cases of dynamic pricing for targeted marketing in the medium to long term to emerge from the present crisis. Sectors like financial services, particularly in the retail business, have been adversely impacted because of the inability of the sales teams to conduct in-person meetings with prospective and existing customers. AI-enabled use cases around contactless selling and delivery have helped them to adapt to this new normal.
Rethink: The current situation has encouraged organisations to plan for transformation. For example, organisations in sectors like FMCG (fast-moving consumer goods) and pharma are using AI-based digital twins of their supply chain and simulation-based models to derive insights from the synthetic data. This is helping them build resilient ecosystems around supply chain and operations.
Reconfigure: The present disruption may not be looked at as an isolated event. The complexities of the external environment will increase and sensing the changes in the external environment, using AI-based predictive and prescriptive tools may be the only way forward to be future-ready
The future of AI in India may take a very different course than some of the developed countries. For example, PricewaterhouseCoopers (PwC) research shows that most of the uses of AI have been in transforming the front office function in terms of gaining a deeper understanding of the demand, and enhancing better engagement and satisfaction for customers. This contrasts with the use cases which are primarily focused on cost optimisation. We believe that the future of AI in India will be in ensuring that it is not AI vs humans but humans enabled by AI. This is particularly relevant for the healthcare, education and agriculture sectors in which cost-effective and scalable AI-enabled solutions will create a huge difference to the economic and social growth of India.
The traditional challenges in using and adopting AI have been on the supply side or around lack of in-house skills, reliable data or even the lack of tools and techniques. However, with the advancements in the tools and the democratisation of AI solutions, we expect these challenges to recede. In future, the challenges around the use of AI will be more in terms of understanding the business outcomes or Return on Investment (ROI) of the AI initiatives; the selection of appropriate use cases and efficient operations, and monitoring the AI applications.
Despite the overall optimism around the use of AI, there are also concerns around data security and privacy, bias and fairness, lack of explainability of the outcomes and overall lack of control and stability of the AI solutions. In fact, PwC research shows that only 5 percent of the respondents could scale AI in their organisations in India as opposed to the global figure of 25 percent. Building trust in AI solutions will be the key to its future. This requires using a structured approach to conceptualising, designing, building, and operating AI solutions in the organisation which balances innovation with control and governance.
In a world which is plagued by the asymmetry of wealth, disruptions caused by climate changes, lack of trust in institutions and disparity in age groups of nations, the future of any emerging technology like AI will lie in its responsible use by fully exploiting its unique advantages without taking the eyes off the risks and challenges. If used appropriately, AI has a great potential to help India leapfrog towards a bright and sustainable future.
The writer is Partner and Leader - Data and Analytics at PwC India