Benefits and Competitive Advantage Driving Explosion of AI

Introduction: Pressure for companies to use generative Artificial Intelligence (AI)-assisted applications to gain a competitive advantage (or at least not fall behind versus competitors) is steadily rising, and in 2024, CEOs will push their IT, Legal, Compliance, and Privacy Teams to deploy AI applications now, not later.

While AI promises tremendous innovation and productivity gains, the emerging compliance challenges and risks can feel overwhelming: Seemingly every week, new AI regulations are announced, the copyright and IP issues are only beginning to be addressed by the courts, and companies need to ensure they are using new AI technology both ethically and correctly. This business pressure to deploy AI countered by compliance, risks and accuracy issues is creating a tug-of-war within organizations.

There is a middle route that avoids deploying risky, non-compliant solutions or sitting on the sidelines as their competitors deploy AI. Smart companies today are developing AI Governance programs that drive compliance, identify, and minimize risks, and ensure the ethical, correct, and safe use of these technologies.

Benefits and Competitive Advantage

The advent of generative artificial intelligence (AI) offers the promise of tremendous leaps in productivity, new revenue, cost savings, and increased innovation. After decades of technological stagnation with respect to AI, generative AI has elevated it from the fringes to the mainstream. Contrary to doom forecasts from digerati of AI suddenly replacing (and taking over) segments of society, AI deployment will initially be piecemeal, with AI-assisted applications launched in legal, finance, marketing, product design, engineering, and eventually in nearly every single area of the organization. (Full disclosure: Contoural is launching an AI-based records management initiative.) Without overstating, AI has the potential to be transformative.

Driving this rapid adoption is the promise of a 10X productivity increase, (called the “10X engineer”), which states that an employee leveraging an AI-assisted application can become ten times more productive. Software engineers use AI to develop code. Finance employees can use AI to automate many finance tasks and controls. In HR AI can dramatically reduce the time it takes to create job descriptions or update policies. Much of records management can be automated. The potential productivity impact of AI is real.

Longer-term AI has the potential to offer real competitive advantages, potentially reshaping how companies operate. Much as the advent of the internet in the late nineties changed many businesses operate, generative AI promises to be equally impactful.

Investors understand the tremendous competitive advantages AI offers and are rewarding companies that are or have announced they are using AI. According to researchers Storible and WaltStreetZen companies that mentioned AI saw an average stock price increase of 4.6 percent, almost double that of companies that did not. This in turn has created a concern that companies may be making false claims about their AI use. Recently Gary Gensler, Chair of the Securities and Exchange Commission, warned companies against “AI washing,” or making false claims about their use of AI to drive up their stock price. Nevertheless, many CEOs in 2024 are eager to demonstrate that their companies are using AI.

Read the full white paper Creating an AI Governance Program on Insight Jam now.