AI: Manufacturers get ready to invest

Artificial Intelligence: Manufacturers get ready to invest

Almost half of Australian manufacturers recognise that artificial intelligence (AI) will become a technology that will be dominant over the next two years. Warren Zietsman examines the implications.

In September 2020, The Guardian published the first article ever written by AI. GPT-3, an OpenAI language generator, was set up with a few guiding principles and a central theme, and was let loose on the page to pen a 500-word opinion piece. The prompt given to the language generator was “Convince us robots come in peace”. Whether it be commentating on intelligent software or the (unnerving) door-opening robots designed by Boston Dynamics, AI technology has certainly come a long way in the past few decades. The idea of AI technology taking over our jobs is one that has struck fear into many people – and given the exponential speed of the technology’s development, it has certainly given me cause to think. As a global leader in enterprise applications, IFS partners with manufacturers across the globe. Our work with manufacturers has made it clear to me that there is so much to gain from investing in AI and automation technologies – so much so, I don’t believe that manufacturers can afford not to. In fact, in some digital transformation research conducted by IFS in 2020, 46% of Australian manufacturers said they believed that AI would be the most dominant technological development over the next two years. Powering Australian manufacturing

The Federal Government’s announcement of a $1.5bn package to empower and sustain local manufacturing in the wake of the coronavirus pandemic is a great first step and a welcomed statement of support from the Government. However, the way manufacturers use that support is of even greater importance. We believe that investment into AI and automation technologies, despite its related concerns, is the key to manufacturers becoming sustainable into the future. But this is easier said than done. Manufacturers will need to balance the concerns of their employees and customers who worry about the future of their jobs, with the benefits in both efficiency and productivity gained through implementing AI technology. Data is the new gold

You’ve probably heard the expression “Data is the new gold”. When I talk to senior executives, I hear a lot about the promise of new technologies. I also hear that the company data they need to be successful is buried deep within a lot of ageing and disconnected enterprise software systems. Don’t get me wrong, many aspects of manufacturing are specialised, and require specialised software systems, many of them developed by systems suppliers or local companies. However, these systems are not designed to provide the integrated information foundation— or “single source of truth”—that companies need. To get that sort of integrated functionality, manufacturers need to become smarter and take advantage of more intelligence in their operations. They need to become true challengers, and become leaders who embrace the power that technology, like AI, has to offer. Overcoming the technology hurdle

An IFS study conducted in 2019 found that 90% of businesses were planning investment into AI technologies. But despite best laid plans, manufacturers are struggling to adequately adopt AI technology across their business, according to a study from Plutoshift released in January 2020. Some 60% of business leaders said their company had been unable to come to a consensus on a practical strategy for AI implementation, while 72% said it had proved harder than expected to set up the technical and data infrastructure necessary to make the project viable. This is not uncommon within the manufacturing sector, and something we work hard with our customers and channel partners to overcome. Where to from here?

From my experience, a large part of the problem with implementation of AI technologies is related to job concerns. And what we’ve learned is very practical; once a strategic direction has been identified, the focus must be on change management. Employees need to understand and own their role in the business’ digital transformation. And that is: understanding that AI technology will largely take on mundane tasks, allowing them to focus on higher-value responsibilities and customer engagement. Stakeholders may have different fears, such as a loss of human contact with their vendor or robotic customer service. Finally, senior management must lead the change by finding ways to measure the value that is brought by this new technology, using AI-driven enterprise resource planning (ERP) to update standard metrics, key performance indicators, and return on investment calculations to reflect the new business reality. AI technology will enable manufacturers in Australia to become more efficient, more productive and ultimately help secure long-term business success. This technology is not something we should be turning away from, but rather something that we should embrace. Warren Zietsman is the Managing Director of IFS Australia and New Zealand

www.ifs.com/au