AI and Automation — How It Will Affect the Common Business

We get a lot of grandiose predictions about Artificial Intelligence. But very rarely does anyone discuss how it will affect the common business. I’m not talking about Google or Amazon. They are at a much higher level by most measures — size, scale, R&D investment, and technology deployment. Considering such companies are actively developing a mass AI product suite, it’s no surprise that they’d utilize it internally as well.

But what about the common business? The local businesses that can’t spend millions on AI development. The type of business that has a simple business model — restaurants, retail stores, etc. Or the medium sized businesses that might have a larger size and scope but are fundamentally driven by core business functions like sales/marketing, customer service, finance/accounting, supply chain management, legal, and operations. Will they be affected by AI too?

In short…Yes, quite profoundly.

This article goes function by function and assesses my prediction for what artificial intelligence will affect and what will it not.

Before I get into it, a few small notes. First, these are my predictions based on what I believe AI is best utilized for. AI is an emerging technology and is still finding its use cases. I’m very happy to be proven wrong and would encourage you to respectfully debate any of my predictions.

Second, it’s important to distinguish between what the technology is capable of doing versus what it will do better than humans. Just because the technological capability exists, doesn’t mean it will have a viable market for common businesses or will do things better than alternatives (like humans).

Third and finally, this will be a long-living article. I will likely go back and change things as new information comes to light. Likewise, this is a summary article; I will expand upon my thinking if engaged to do so (on any specific prediction or by applying it to a specific industry or business).

Without further ado…

I. Sales/Marketing

My prediction is that Artificial Intelligence…

• Will help with optimizing customer offers — pricing, promotion, incentives
• Will help locate leads — finding likely customers, accumulating customer information, and automatically targeting specific ads or offers
• Will facilitate cross-sell opportunities
• Will target marketing offers to the optimal customer segments
• Will help free up salesperson time — CRM automation, routine follow-ups, sending customer information, scheduling, etc
• Will not be capable of developing relationships with human buyers
• Will not customize offers toward specific customer needs (that can’t be deciphered via data or sales-form entry)
• Will not be capable of customizing strategy for new products
• Will not design marketing materials or decide on the contents of these materials
• Will not be capable of core marketing fundamentals: generating awareness, persuasion, branding, etc

The net effect of AI sales/marketing investment will be vastly more effective sales teams and revenue enhancement. Because profits can be reinvested and the revenue/salesperson ratio will also likely increase, I expect hiring to grow in this functional area.

II. Customer Service

My prediction is that Artificial Intelligence…

• Will help optimize how customers are routed to someone that can help
• Will automate the most mundane tasks in customer service
• Will be able to automatically detect service outages or issues and either automatically fix them or set human service appointments
• Will not be helpful in servicing any customized requests
• Will not provide much use in helping customers with non-standard questions or answers that require elaboration
• Will not have any brand enhancement benefits via the outstanding customer experience that sets companies apart

Companies investing in customer service AI will see significant unit cost reductions. However, I expect they will reinvest their efficiencies by providing higher service levels and more customized servicing solutions. Likewise, their scalability enables expansion and thus more products requiring servicing. As a result, I see a net increase in customer service jobs.

III. Finance/Accounting

My prediction is that Artificial Intelligence…

• Will be able to automate purchasing and payments
• Will be able to largely automate standard bookkeeping and accounting functions — posting, close, financial statement creation, reporting
• Will be able to largely automate audits and enhance them via real-time anomaly detection, remediation tracking, and controls implementation
• Will be able to assess financial risks and their likeliness and severity
• Will be able to suggest financial enhancement opportunities
• Will be able to provide more accurate forecasting and the likelihood of alternate scenarios
• Will be capable of investing and managing cash with the optimal mix of returns and liquidity
• Will be capable of delivering information needed by bank lenders, insurance companies, or investors and integrating with their respective AI decisioning systems
• Will not be able to budget, as the AI won’t be easily integrated to evolving management strategy and investments
• Will not be able to produce analysis or custom models needed for strategic decisioning
• Will not be capable of implementing revenue enhancements or cost improvement opportunities
• Will not be capable of recommending viable strategies in things like new product forecasting, tax optimization, or market expansion

Finance/accounting can be automated more than almost any other function, as most activities are quantitative, transactional, and repeatable. However, AI will be sub-optimal in any judgmental financial analysis. As such, I see significant redeployment among staff into QA, financial optimization, and analytics roles. There will probably be a net decrease in jobs but not to the extent that many predict.

IV. Supply Chain

My prediction is that Artificial Intelligence…

• Will be able to largely automate the order to cash process
• Will be able to largely automate and optimize inventory management
• Will be able to largely automate and optimize the procurement process
• Will be able to largely automate manufacturing and engineering in coordination with robotics
• Will be able to largely automate distribution and logistics optimization
• Will be capable of performing high-level QA
• Will not be capable of assessing quality on any subjective measure
• Will not be capable of actioning the majority of defects
• Will not be able to troubleshoot issues that arise across the supply chain
• Will not be capable of sufficiently handling custom orders or requests
• Will not be capable of engineering product enhancements
• Will not be capable of generating reliable customer requests or feedback

Most businesses have seen their supply chain enhanced by robots and software over the past few decades. Big data and AI only enhance these processes further and automate many of the remaining manual tasks. However, a more efficient supply chain enables significant reinvestment. I foresee a lot more work in QA, system support, oversight, and customization. I think we’ll see a broad shift in responsibilities but doubt there will be much job loss here.

V. Legal

My prediction is that Artificial Intelligence…

• Will be capable of auto-creating contracts by populating common language and key terms
• Will be able to automate the execution of key contractual provisions (smart contracts)
• Will be capable of automating research (legal terms by jurisdiction, precedent, etc)
• Will automate record-keeping and auditability across the legal profession, while automating the same internally at companies or law firms
• Will vastly help in all elements of investigations and forensic law
• Will help in many aspects of deal due diligence (financials, contracts, IP, etc) but will not assist in assessing the qualitative aspects to strategically evaluate the deal
• Will not be proficient in interpretation of the legal code
• Will not be proficient in arguing or resolving disputes
• Will not be trusted to handle negotiations, even if the AI gives negotiators important intelligence

The law profession will likely recede as a result of automation. However, that’s not a certainty. We will still need policy-makers, litigators, and specialists. We still need corporate lawyers to negotiate deals, contracts, structure organizations, and handle cross-jurisdiction transactions. If automation increases business sophistication, there are more legal issues to resolve. Likewise, several entire new areas of law will arise from emergnig technology: virtual worlds, blockchain, and AI issues. My conclusion is that there will be a significant legal automation but still plenty of important work across the function (at least in the early years of AI).

VI. Administration, Operations

My prediction is that Artificial Intelligence…

• Will generate more data than ever before: what is happening now, what happened in the past, and what is likely to happen in the future
• Will generate interesting insights and automated reporting across operations and all areas of performance
• Will automatically alert stakeholders when relevant information arises
• Will automate repeatable tasks, activities, or movements
• Will automate decision-making and activities where judgment is not required; only information that can be expressed quantitatively will be programmable
• Will automate anything that requires classification, ordering, filtering, or scoring
• Will vastly enhance movement; the assembly and transport of all physical goods
• Will enable a smart office where most facility responsibilities are automated (via the Internet of Things, AI, and robotics combined)
• Will automate anything that solely relies on visual or audible information but will not offer any improvement where the other senses are required
• Will not automate anything requiring judgment
• Will not automate a business’ core competency or competitive advantage; it might automate tasks to make it easier or more profitable but won’t automate the core activity (as AI will be commoditized)
• Will not automate any decision that is crucial to the business and threatens its going concern risk, material financial position, or reputation
• Will not adjust any of the person-to-person interaction associated with a process, nor automate anything that requires customer communication
• Will not impact most support activities specific to a particular business, as the AI won’t be developed to solve functions lacking a major market

Operations are defined by the specific business type and business model so AI’s impact will vary. A lot will get automated but more specialized tasks won’t have a large enough market for AI to be worth developing. Businesses that do automate a lot will probably re-invest savings to product, technology, sales, or service. I expect operations spend and jobs to stay constant.

Concluding

The big theme across all functions is that AI investment is wise for almost any business type. AI startups are building some really valuable solutions and generating some great early returns for their customers. Larger enterprises are developing in-house solutions with similar use cases and benefits.

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