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Facing the realities of AI application

By Adam Freill   

Construction Software

Management bought the AI hype and expect value but research shows lack of organizational readiness is primary hurdle.

(Image courtesy of IFS)

Although executives and the board may have “bought the AI hype,” organizations are often unable to deliver operationally on Artificial Intelligence (AI) expectations, says research from global cloud enterprise software company IFS.

The study polling 1,700 senior decision makers from around the world, forms the basis of the company’s Industrial AI: the new frontier for productivity, innovation and competition report. Key findings of the report include that the promise of AI is being held back by technology, processes and skills. Despite the hurdles, half of respondents remain optimistic that with the right AI strategy, value can be realized in the next two years, and a quarter believe in the next year.

When assessing AI prospects, 84 per cent of executives anticipate massive organizational benefits from the technology, with the top three areas where it is expected to deliver high impact value being product and service innovation, improved internal and external data availability, and cost reductions and margin gains.

The hype has become so high that 82 per cent of senior decision-makers acknowledge that there is significant pressure to adopt AI quickly. However, this same group express concern that a failure to plan, implement and communicate properly means AI projects will stall in pilot stages.


Many organizations have not prioritized elements of development, nor have the infrastructure required to reap the rewards or the skills to deliver on that promise. The study found that over a third of businesses had not yet moved to the cloud. While this is not essential to AI adoption, it is indicative of an unprepared enterprise unlikely to be able to scale AI across their business.

According to IFS, a robust Industrial AI strategy requires a potent combination of cloud, data, processes, and skills. A strong majority of 80 per cent of respondents agree that the lack of a strategic approach means they have insufficient skills in-house to successfully adopt AI.

“AI is poised to become the most transformational enterprise tool ever seen, but our research reveals that there are still fundamental misunderstandings about how to harness its power within an industrial setting,” stated Christian Pedersen, chief product officer at IFS. “It is telling that AI is expected to significantly reduce costs and raise margins, but a lack of robust strategy means most businesses are under-skilled and under-prepared to achieve these ambitions.”

The unfortunate reality of the skills gap means that in terms of AI readiness, many businesses are falling behind. IFS found that nearly half of respondents were most likely to say that they are gathering proposals and were much less likely to have a clear strategy and perceivable results.

A fifth of respondents are in the research phase, with uncontrolled tests taking place. Five per cent are lacking a coordinated approach and do not have anything in motion yet. Despite initial challenges, there is still optimism with almost half of respondents saying they feel that AI could make a significant difference to their business in one to two years, with a further quarter believing it could be within a year.

“Achieving this at scale needs a clear-eyed strategic focus, including the high-impact use cases specific to their industry, having a cloud-based infrastructure in place which has industrial AI embedded, and investing early in developing the skills needed,” continued Pedersen. “Adopting this approach will turn the tide of disillusionment and deliver the benefits that boards and the C-suite are demanding.”

One-fifth of respondents see the biggest impact coming in innovation with new products and services, growth and business model decision-making, empowering people and increasing talent retention, and enhancing the customer experience and customer service.

To reap the benefits, however, the IFS research suggests that enterprises need to leverage the most strategic asset they have, their data. The right data volume and quality is critical for the success of AI applications, says the company. While more than 85 per cent of respondents recognize how important real-time data is to successful AI projects, less than a quarter have completed their data foundation with it supporting both data-driven business decision making and real time response to changes.

“The lack of maturity at the data foundation layer needs to be addressed as part of an overall AI strategy, otherwise AI simply will never be the magic bullet that can turbocharge the enterprise,” advised Pedersen. “While AI is seen as a shiny new tool that will revolutionize business, like all technology, it is never that simple.”




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