AI is already seeping into every part of our lives, but what are the benefits and challenges of implementing AI in business?
These are no longer things for employees to imagine, but tangible realities that workers can now embrace.
As artificial intelligence (AI) platforms like the ChatGPT-4 generative AI language model have taken hold, more and more people are discovering easy ways to speed up and improve business processes.
The possibilities of AI are endless; yet with great power comes great responsibility.
BusinessBecause spoke to AI experts from top business schools to find out: What are the challenges of AI in business?
Meaning of artificial intelligence
You’d be forgiven if you didn’t know exactly how to define AI as AI covers a huge range of different things. It is normal for artificial intelligence and machine learning to be considered the same thing. Yet there are stark differences between these two terms.
Jacob Kinsey (pictured) is the director of Illinois Business Consulting at the University of Illinois Urbana-Champaign Gies College of Business and runs disruptive and strategic consulting workshops with business school students. 
Explain that “AI” is an umbrella term while machine learning is a subsection of AI.
“AI expands more broadly to encompass all forms of computer-simulated human behavior,” he says.
This breadth is one reason why it can be difficult to pin down an exact definition of a complex phenomenon like AI. It also defies precise definition as it adapts and changes day by day.
Ram Gopal is Professor of Information Systems and Management at the University of Warwick Business School.
“AI is about machines trying to mimic human activities and intelligence, understanding logic, reasoning and solving problems,” he explains.
Types of artificial intelligence
Since AI is a generic term, there are different branches or types of artificial intelligence.
The ChatGPT-4 generative language processing model is the most obvious example of AI but there are also deep learning models such as Dall-E, which transforms text into images, facial recognition systems, robotics, narrow AI such as Siri or Alexa , computer vision and more that is developing every day.
Well-known examples and application of artificial intelligence in business
There are few companies untouched by AI, and here are some of the common uses of AI in business.
Whether you’re looking for a new movie to watch on Netflix, looking for clothes or on YouTube, you’ll have noticed that you are presented with suggested products or services based on your previous habits – these recommendations are driven by AI.
Customer service chatbots are also popular among businesses, helping answer customer queries in seconds without the need for manpower.
Also, if you’ve ever had your credit card blocked after using it in a foreign country or for a large transaction, you’ll have experienced the AI algorithms at play. Artificial intelligence is regularly used in fraud detection and cybersecurity, using historical data to identify unusual patterns or “risks” that could constitute fraudulent activity.
Benefits of AI in business
There are endless possibilities and benefits that AI can bring to business practices.
“The key problem companies face revolves around uncertainty – AI can be a huge tool to deal with this problem,” Warwick’s Ram explains.
“There will always be blind spots when humans make decisions – AI can fix that,” he says.
For example, financial institutions and credit unions are using artificial intelligence to improve decision-making when taking out consumer loans. Using artificial intelligence in this process may have the benefits of increased accuracy in consumer underwriting decisions, reduced costs, and improved efficiency and performance, according to the Congressional Research Service.
Iis Tussyadiah (pictured), a serving professor of Intelligent Systems at the University of Surrey, explains that AI tools like ChatGPT
“It’s not just that you get more efficiency in creating content, but there’s also diversity in the content it can create,” she says.
Programming is another area likely to benefit from AI. ChatGPT can create useful code, help launch websites, and generally speed up complex programming-related tasks.
The power of AI to automate mundane tasks that require human intelligence is one of its major advantages, Warwick’s Ram believes.
As a result, the business world is likely to see a shift in the types of jobs available and the disappearance of jobs that can be done easily and effectively by AI.
“AI begs the question: do we all have to work 40 hours a week to create goods and services? With automation and AI, you don’t need as much human input. It will require a fundamental rethinking of what work means in this advent of technology,” adds Ram.
One example is service bots which are automated by artificial intelligence and can perform repetitive or dangerous tasks. On the one hand, this could be seen as taking jobs away from service or construction workers, while on the other hand, this could improve the economy as this work can be reallocated to other areas.
“The question then becomes as a society how efficiently do we reallocate that work, so that it doesn’t create economic hardship?” says Jacob of the University of Illinois Urbana-Champaign.
THE main challenges of artificial intelligence in the business world
While technological innovation aims to improve human life, there are challenges ahead. Furthermore, these challenges are likely to impact all industries, so business leaders need to prepare for these rapid developments.
One of the major issues with Generative AI involves data privacy issues and information ownership issues.
“With generative AI tools like Dall-E, sometimes they don’t provide references to the original data or source. This is where copyright infringement could be a potential risk,” explains Iis of the University of Surrey.
Companies can overcome these problems by ensuring that the basis for the idea or concept comes from the employee, while AI platforms can then assist in the process.
Another problem with AI is verification. If you’ve ever asked ChatGPT to complete a task like writing an article, video script, or providing a summary, you may have noticed that not all parts of the answer are actually correct.
Algorithmic management is another cause for concern.
University of Surrey IIS studies the implementation of artificial intelligence in hospitality and tourism management. She explains that managing workers via artificial intelligence in gig economy platforms like Uber and Deliveroo can create problems as humans are essentially managed by an algorithm that dictates rewards, punishments and performance.
AI Regulatory: A Solution to Solving AI Challenges in Business?
As we pioneer a world that becomes more deeply embedded in AI systems, how do we work with the limitless capabilities of this disruptive technology? For many, the answer lies in the regulation of artificial intelligence.
“Regulation helps create clarity about where we can innovate and move industries forward,” says Jacob of the University of Illinois Urbana-Champaign.
While innovation is necessary to create these new possibilities, leaving innovation unchecked can have dangerous consequences.
“Regulation is needed to protect against discrimination, the unfair use of AI to harm people, and a lack of transparency,” Warwick’s Ram (pictured) says.
In 2021, the European Parliament proposed a regulatory framework for AI. This proposal is the first of its kind and suggests that AI systems used in various applications will be assessed and ranked according to the level of risk they pose to users.
While regulation is necessary in many cases, some argue it can also be prohibitively expensive, stifling the advancement of artificial intelligence.
“It’s about not limiting the development of the technology itself, but about identifying the far-reaching impact of applications and then ensuring that negative impacts are limited,” says IIS of the University of Surrey.
The call for responsible AI reflects the need to minimize bias and build an AI system that is fair and equitable.
The true potential of AI in our daily lives and business world will continue to be revealed. One thing is certain, however: business leaders and employees alike need to learn to collaborate effectively with AI for the greater good.
“If you look at human existence, technology has helped raise our standard of living – we are better off now than we were 1,000 years ago – this trend is likely to continue,” concludes Jacob of the University of Illinois Urbana-Champaign.
Next reading:
How is AI shaping the future of work?
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