Mazars, the international audit and advisory firm, together with Board Agenda, and in association with INSEAD Corporate Governance Centre, published its new report, Leadership in AI 2021: boards, barriers and new beginnings. The report reveals the level of adoption in various organisations and the perceived benefits of AI but also the constraints and potential impacts of AI on businesses and their cultures.
Board bottlenecks threaten AI benefits
Artificial intelligence has jumped from our TV screens to our boardrooms in recent years. Once a staple of science fiction, it is now an everyday reality for businesses looking to improve customer experience, work more efficiently and reduce costs. However, our recent report finds ‘boardroom bottlenecks’ threaten to limit AI implementation and investment.
Boards recognise the value of artificial intelligence (AI) but are concerned about their ability to match rapid technological advancements with the necessary levels of technical knowledge and understanding, according to the report.
Despite high levels of interest in AI – 73% of survey respondents say they will implement AI in the next 12 months – business leaders fear they lack some of the relevant skills to make it happen. In the report, legacy IT systems (cited by 37%), unclear business value (33%) and a ‘resistant’ company culture (31%) emerge as the top obstacles to adoption. The survey was carried out at the end of 2020 among different business leaders from Australia, France, Germany, UK, and the US.
Over half of respondents say their boards are not sufficiently skilled nor knowledgeable about technology and AI and their business implications. Just 26% of respondents say the board and senior management had assessed the skills and training required to lead AI into the future. That means the potential value of AI is threatened by ‘boardroom bottlenecks.’
In Romania, the start of the pandemic has pushed companies over the technology pivotal moment and made them think on how to transform their business model. Although the health crisis has brought several years of change in the way companies do business, our country is still behind when we are talking about the new technologies.
„While we are witnessing a lot of talented people in Romania, with the right skills and knowledge to further innovate and develop new ways of business models with the help of AI, there is not yet sufficient openness to this type of technology. The adoption of new technologies is still slow, having poor data and legacy systems still operational as one of the main constraints alongside with low budgets allocated to this area”, mentioned Răzvan Butucaru, Partner, Financial Services and Advisory Leader, Mazars Romania.
Lack of understanding means a significant risk
In a world where a robot can write an entire article with the help of AI, there could be various reasons on why the technology is absent from the market, like the fear of the unknown, investment, culture, or governance.
If the boards are not recognising artificial intelligence as a vehicle for positive change, this will cause not only constraints but also a significant risk for organisations.
One of those risks is ethical and cultural change: there is widespread interest in how organisations source and manage the data that feeds AI, with concerns over data bias and transparency. Some 76% of respondents agree ‘the use of AI in the firm will introduce significant ethical or cultural changes within the firm, which will need to be carefully managed.’ Hands-on experiences with AI, live demonstrations, and clear communications are all necessary if an organisation wants to take full advantage of AI, advises the report.
„AI with all its components has proven its usefulness in many activities of our daily lives. Much of the interesting progress we have seen in recent years is due to the way we use this technology. The adoption of AI by companies will generate competitive advantages and financial benefits,”, mentioned Horațiu Nistor, Senior Manager, IT Audit & Assurance, Mazars Romania.
In Romania, there should be a joint effort between employers and employees, as well as narrowing the gap between what the board wants to do in terms of new technologies, and what the people are prepared to accept. If a company has over 60% of employees that are Millennials or Gen Z, then there is a bigger advantage towards adopting those technologies. If the company has the majority of employees being part of Gen X (born between 1965 and 1980), that in general, do not have the skills or willingness to deal with technology, this means that more preparation and time to create a proper mindset for the adoption of new technology is necessary.
Improving customer experiences
Chatbots and CRM systems powered by AI are increasingly common components of customer experience and unsurprisingly nearly half of respondents (49%) say they are applying or intending to apply AI to their customer service operations. This is followed by ‘operations’ (45%), ‘data management’ (42%) and ‘finance and accounting’ (37%). The benefits most commonly expected from AI are: ‘increased efficiencies of productivity’ (76%), ‘reduced costs’ (55%), ‘improved customer relationships’ (53%) and ‘revenue growth’ (53%).
In Romania, according to specialists, several industries may be radically transformed by artificial intelligence and, in many of those industries, AI is already considered. For example, if we are talking about financial services, the loan approval process is one area that could benefit from AI, with the credit analysis being performed with the help of advanced technology. Additionally, the customer service operations which are key to many local business (e.g. E-commerce, shared service centers, telecom) is an area that already benefits of advanced technologies in their day-to-day activities, where AI “agents” are being used to interface with customers, inform them about the service inquiries or even facilitate sales.
On the other hand, if we are thinking about agribusiness or smart cities, there is a stronger resistance to artificial intelligence to be considered, even though they could extremely benefit from it.