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The State of AI Adoption in 2021

It would be difficult to overstate just how much of a transformation we’ve witnessed over the course of 2020 when it comes to business technology.

While the first thing you may think of might be remote work-related tools—and you’d be right to a large extent—what we’re focusing on today is all about artificial intelligence; specifically, software automation bots.

Without further ado, let’s dive in and take a look at just what the state of AI in 2021 is for organizations across the country.

The State of AI Adoption in 2021

Not Just Zoom?

Before getting into the stats that tell the story, we should note why we’re looking at AI in this blog post.

Businesses need no reminding about the upending of traditional working practices in 2020, as lockdown restrictions effectively mandated organizations to implement technology allowing their workforces to continue their working days at home.

What might, however, be news to business owners and decision makers is the pursuit of tech and solutions by SMBs other than the remote work software you would expect.

In Microsoft’s Q4 2020 report, they noted, “Productivity and Business Processes and Intelligent Cloud segments, cloud usage, and demand increased as customers continued to work and learn from home.”

In other words, businesses have been implementing more than just Zoom over the last year. Productivity, referring to cloud collaboration platforms like Teams and Slack which have exploded in popularity in the last year, are of course front-and-center.

What’s worthy of note however is the uptick in demand for business process solutions and intelligent cloud. In short, businesses have been investing heavily in a myriad of new digital solutions aside from those you may expect.

The State of AI Adoption in 2021

Why AI?

While artificial intelligence is a buzzword that’s been around for decades, its applications among businesses have typically been limited to enterprise organizations.

Because of advances in cloud technology and the relative ease of expenditure over the last five years, more and more companies are choosing the cloud—whether it’s software-as-a-service or platform-as-a-service, it’s simple in 2021 for an SMB to build a great tech stack without breaking the bank.

With costs more affordable than ever, companies are investing in more than just cloud email servers, they’re looking to the cloud to solve other business processes, too.

And that’s where AI comes in. Businesses have been examining their processes and many have found that cloud automation has clear practical applications in many everyday working processes, not to mention cybersecurity and IT in general.

Why Are Businesses Investing?

In a survey taken last year, 451 Research asked businesses about their ambitions for investing in automation and machine learning technology.

A staggering 95% of respondents indicated that they considered AI technology to be “important to their digital transformation efforts.” 65% indicated it was “very important”, suggesting the overwhelming majority of organizations value and are intending to implement automation tech of some kind in their companies.

When it comes to the results that organizations anticipate from the implementation of AI, it won’t come as too much of a surprise to know that the biggest motivations for adoption were lowering costs (32.3%), increasing sales (31.4%), and improving workplace productivity (31.0%).

Other cited reasons were improving business agility (28.0%) and improving or developing products and services (27.0%). These are all the key areas that the majority of businesses have targeted as the main ambition of adopting AI solutions.

What Are the Use Cases for AI Adoption?

The biggest AI adopters are most frequently using them in situations where access to data is readily available and for the most part quite straightforward in terms of integrating that information into new systems.

In McKinsey’s 2020 State of AI survey, they found adoption to be highest among product- or service-development and service-operations functions. Use cases included:

  • Product and/or service development: New AI-based enhancements of products; product-feature optimization
  • Manufacturing: Yield, energy, and/or throughput optimization; predictive maintenance
  • Service operations: Service operations optimization; predictive service and interventions
  • Human resources: Optimization of talent management; performance management
  • Marketing and sales: Customer service analytics; customer segmentation
  • Supply chain management: Logistics network optimization; inventory and parts optimization

The majority of these use cases involve some form of ERP or another. Enterprise resource planning for the majority of companies implementing a new system today will be a cloud-based platform which unifies several different applications and databases across a single system.

Using Dynamics 365 as an example, a business can adopt the ERP to combine their customer relationship management, collaboration software, HR software, and any other number of working processes into one platform.

From there, business process automation can be implemented for these workflows and the use of AI can be integrated into many existing processes.

Related Post: What Is Microsoft Dynamics 365 Business Central?

Did the Pandemic Cause Any AI Adoption Slowdown?

One of the most notable consequences of the pandemic is that rather than lockdown measures causing businesses to put their AI initiatives on hold, the opposite effect took hold.

AI adoption status has been climbing nine percentage points year-over-year, according to McKinsey, with just 28% of US companies putting their AI plans on hold in response to COVID and the rest increasing their adoption.

50% of businesses report that their companies have adopted AI in at least one business function.

This is further evidence that organizations are increasingly turning to AI adoption as a means to improve their processes and as an opportunity to prepare themselves for the future as automation becomes a central priority for many.

Value of AI

Of course, all this investment means nothing if it doesn’t benefit organizations adopting AI.

What’s interesting is that companies described as “AI high performers” are nearly twice as likely as others to report earnings before interest and tax (EBIT) growth of 10% of more.

Three overall factors contribute to this success—the use of AI in workflows and processes; engagement from C-suite executives in AI initiatives; and a resource commitment to AI from their digital budgets, with many having plans of around three years into the future.

For businesses that struggle in their implementations, a lack of strategy and vision are the biggest issues.

In Deloitte’s 2020 State of AI, it was concluded that many organizations have a “preparedness gap”—often either not recognizing the practical applications of the software they’re implementing or not having a quality long-term plan in place for adoption and continued support.

Indeed, when you consider McKinsey’s own analysis, it was shown that 55% of AI high performers had a road map clearly prioritizing AI initiatives linked to business value across their organization, compared to just 29% of all other respondents.

Future Outlook

What does the outlook look like for AI adoption among businesses?

If current trends are anything to go by, we expect AI adoption to increase substantially over the next three years and beyond.

75% of organizations believe that AI will “transform” their company within the next three years.

AI and its associated technologies are being implemented heavily by businesses in response to modern challenges with regard to data use and remote working capabilities.

Just 9% of businesses don’t believe that their industries will transform because of AI within the next five years.

As companies more frequently recognize the benefits of adopting AI, we’ll see more investment over the coming years from even the smallest SMBs.

The most important differentiators between those whose initiatives will prove successful and those whose won’t are a clear strategy, buy-in at all levels—particularly from the top—and a commitment to the long-term with a vision for the future.

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