Steering Enterprises in the Age of AI-Augmented Everything

By Marco Cigaina, SAP Intelligent Enterprise Institute

The Envision Beyond Journal is a monthly publication of the Intelligent Enterprise Institute, the think and do tank of SAP to help business leaders inspire and accelerate change.

The issue is about Steering Enterprises in the Age of AI-Augmented Everything. This month, we’re exploring artificial intelligence to understand its potential to transform the way organizations operate and what opportunities it may bring in the future.

Don’t miss the Food for Thought section below to hear from other perspectives!

In today’s hyper-dynamic business landscape, it is essential for corporate leaders to explore the fascinating intersection of Artificial Intelligence and different dimensions of the enterprise context. The transformative potential of AI ranges from enhancing customer experiences to streamlining processes and revolutionizing business models. Beyond these direct benefits, AI is also emerging as a pivotal tool for managing sustainability, promoting cross-functional collaboration, and more.

Modern AI is emerging as a powerful, general-purpose, broadly applicable technology. Therefore, the C-suite should have a broad view of the potential business impact of Artificial Intelligence. Here we propose the AI-Augmented Everything (AAX) framework to explore how Artificial Intelligence is set to shape the business world:

Let us take a quick look at the elements of the framework:

First, Artificial Intelligence is set to have a significant impact on people, in particular on the experiences of individuals in their distinct roles (as consumers, citizens, or employees) and on work at large.

Second, Artificial Intelligence has the potential to impact many aspects of enterprises, especially in terms of six key elements: processes, business process management, transformation, solutions, business models, and innovation management.

Third, Artificial Intelligence is expected to affect not just individual businesses, but the way multiple companies collaborate within and across industries as business networks.

Finally, in a world of global-scale challenges, triple bottom lines, purpose-led management, and stakeholder economy, Artificial Intelligence can be a powerful tool to reach sustainability goals.

You are invited to explore the AI-Augmented Everything framework in more detail here.

The AAX framework captures the multifaceted impacts of Artificial Intelligence on businesses. But what are the implications for steering enterprises?

AI augments human decision-making by providing data-driven insights. Intelligent systems can simulate business decisions, allowing businesses to visualize and contextualize potential outcomes, which facilitates more informed decisions. For example, such systems can simulate the impact of new product launches, based on factors such as market conditions and customer preferences.

Smart algorithms can play a role in strategy development by amplifying human intelligence. AI has the potential to help identify and assess market opportunities by analyzing data and revealing new business opportunities, running scenario planning, simulating new business models, and updating decision and configuration criteria for business operations.

This leads to increasing synergies between human and machine intelligence. The implications of these developments for the C-suite are significant.

The CEO (Chief Executive Officer) can leverage AI to gain a better understanding of market dynamics, thereby making more informed strategic decisions.

The COO (Chief Operating Officer) can utilize AI to optimize operations, improve efficiency, and reduce costs.

The CIO (Chief Information Officer) can use Artificial Intelligence to optimize the IT (Information Technology) infrastructure, accelerate projects, streamline processes, and improve cybersecurity.

The CMO (Chief Marketing Officer) can employ AI for customer segmentation, personalized marketing, and demand forecasting, while the CHRO (Chief HR Officer) can use AI for talent acquisition, retention, and performance management.

Given AI’s increasingly critical role in enterprise decision-making, there may be a growing need for a Chief Artificial Intelligence Officer (CAIO). The CAIO would spearhead the integration of AI across all business functions, ensuring that smart, data-driven capabilities are leveraged effectively for decision-making at all levels. The CAIO would also be responsible for managing the ethical and legal implications of AI, ensuring transparency, fairness, and compliance with regulations.

So far, we have considered Artificial Intelligence as a tool contributing to the value chain. But what if sometime in the future AI is no longer a mere contributor to the value chain, but rather it is the value chain? Looking ahead, it is intriguing to turn our gaze towards an emerging phenomenon that may well redefine the very essence of economy and business: the machine economy. The concept of a machine economy envisions a future where businesses are not just powered by artificial intelligence but are designed from the ground up to be run by smart systems. In this scenario, AI would oversee decision-making, resource allocation, process optimization, customer engagement, and even innovation. This would be enabled by the convergence of technologies like machine learning, distributed ledger technology, and the Internet of Things (IoT). Machine learning would be the brain, distributed ledger technology would provide security and transparency, and IoT would provide connectivity and data generation capabilities.

In this machine economy, machines would own and control assets, perform financial transactions, and potentially create value with limited or even no human intervention. For example, an autonomous car could “work” for a ride-sharing app, earning income for its own maintenance costs; or an intelligent logistics system could manage a fleet of delivery drones. Business transactions would be conducted via self-executing smart contracts on blockchain technology, ensuring transparency and traceability.

However, this transition would require significant technological advancements and careful consideration of legal, regulatory, and ethical challenges. Questions about regulation, liability, labor market implications, and wealth distribution will need to be addressed, balancing innovation aspirations with ethical and social considerations.

Artificial Intelligence is not merely a tool for businesses; it is becoming the fabric of business, deeply interwoven with its strategies, processes, and value propositions. The rise of AI is not without its challenges. Issues such privacy concerns, ethical considerations, and the potential exacerbation of inequality are serious and demand thoughtful attention and action from policymakers, technologists, and business leaders. The AI-Augmented Everything era heralds a new epoch in business, one that is poised to redefine business landscapes and set new paradigms for how enterprises operate and create value. Keep the AI-Augmented Everything framework in mind, while you develop your AI business strategy!

• Delve into our Generative AI Value Framework to gain insights into assessing business value
• Read here the research from International Labour Organization to explore the potential effects of Generative AI on the quality of jobs as well as the amount of jobs
• This article in the Journal of Product Innovation Management discusses the growing trend of adopting transformer- based language models in AI.
• AI: First New UI Paradigm in 60 Years. Explore here from Nielsen Norman Group to learn more
• Harvard Business Review investigates the crucial role of Generative AI and its impact on creating value for the experience of customers.

The Intelligent Enterprise Institute helps business leaders understand the transformative potential of different forms of intelligence and use it for their organizations and life. It provides a platform to inspire and accelerate change, supported by market trends and SAP’s vision to help the world run better and improve people’s lives. By generating new insights and bringing together unheard voices and unique perspectives from leading thinkers and doers of the world, the Intelligent Enterprise Institute aims to foster different qualities in enterprises and their stakeholders alike, taking them into action for desirable outcomes.