Digitization and friendly artificial intelligence for future life

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Educational and Scientific Institute of International Relations

Taras Shevchenko National University of Kyiv

Department of International Business

Digitization and friendly artificial intelligence for future life

Vergun V. Doctor of Economics, Professor,

Khmara M. Ph.D. in Economics, Associate Professor,

Abstract

AI offers competitive advantages across industries, supporting human resources, transforming customer relationship management, enhancing energy management systems, and bolstering cybersecurity measures. Each organization and industry will have unique goals and use cases for AI, requiring careful implementation and consideration.

Key words: digitization, artificial intelligence (AI), digital transformation, business models, data protection, cybersecurity, automation, hybrid workforce, chatbots, smart cities.

Анотація

Цифровізація та дружній штучний інтелект для майбутнього життя

Вергун В.

Доктор економічних наук, професор кафедри міжнародного бізнесу Навчально- наукового інституту міжнародних відносин Київського національного університету імені Тараса Шевченка.

Хмара М.

доктор філософії наук з економіки, доцент кафедри міжнародного бізнесу Навчально-наукового інституту міжнародних відносин Київського національного університету імені Тараса Шевченка.

Цифровізація та дружній штучний інтелект (ШІ) грають вирішальну роль у формуванні нашого майбутнього. Ці технології значно вплинули на наше повсякденне життя та бізнес, що призвело до цифрової трансформації в різних галузях. Подібно до того, як поява інтернету стало глобальною революцією, цифровізація та ШІ можуть мати подібний, якщо не більш значний, вплив. Переваги цифровізації включають більш ефективні бізнес-моделі, зростання на основі інновацій, покращення задоволеності клієнтів і отримання цінної інформації завдяки аналізу даних у реальному часі. Проте все ще є невикористані можливості для подальшого зростання, особливо в секторах, які повільніше переходили на цифровізацію. Необхідно враховувати нормативні акти та міркування конфіденційності, такі як GDPR.

ШІ пропонує конкурентні переваги в різних галузях, надаючи підтримку у сфері людських ресурсів, трансформуючи управління взаємовідносинами з клієнтами, удосконалюючи системи управління енергією та зміцнюючи заходи кібербезпеки. Кожна організація та галузь матимуть унікальні цілі та варіанти використання ШІ, які потребуватимуть ретельного впровадження та розгляду. Майбутнє ШІ передбачає досягнення балансу між правилами, які захищають користувачів і сприяють інноваціям. Такі країни, як Німеччина, використовують ШІ для підвищення ВВП на душу населення, а інновації ШІ можуть вплинути на різні сектори, від безпілотних автомобілів до охорони здоров'я. Гібридна робоча сила, яка складається з людей і цифрових працівників, процвітає, а проекти автоматизації вимагають інтеграції інструментів на основі ШІ, щоб змінити форму процесів. Успішна співпраця людини та ШІ залежить від ефективної взаємодії, і очікується, що помічники на основі ШІ будуть звичним явищем у робочому середовищі. Загалом цифровізація та ШІ продовжуватимуть формувати наше життя та суспільство, пропонуючи трансформаційні можливості, вимагаючи відповідального масштабування та етичних міркувань.

Ключові слова: цифровізація, штучний інтелект (ШІ), цифрова трансформація, бізнес-моделі, захист даних, кібербезпека, автоматизація, гібридна робоча сила, чат-боти, розумні міста.

Introduction

The future of our society is being shaped by the rapid advancements in digitization and friendly artificial intelligence (AI). These technologies have already had a profound impact on our daily lives and businesses, leading to significant transformations in various industries. Just as the internet revolutionized the world, digitization and AI are on track to bring about a similar, if not more significant, wave of change.

The invention of the World Wide Web by Tim Berners-Lee marked a pivotal moment in human history. Decades after its emergence in 1990, the internet has become an indispensable part of our existence, spawning millions of jobs and services that were previously unimaginable. It is evident that digitization and AI will have a similarly transformative effect on society.

Main Results of the Research

Digitization offers a plethora of benefits, such as more effective business models, driving innovation-based growth, and fundamentally altering traditional analog methods of operation.

The key benefits include the following:

1. Embracing digitization leads to more effective business models. Cloud computing and data analysis empower employees, making their work easier and increasing productivity in the following ways:

• better resource management;

• integrated operations;

• improved transparency;

• efficient task delegation; and

• enhanced communication between businesses and customers.

2. It drives innovation-based growth, creating a digital culture that improves teamwork and results. Compared with traditional methods, it offers a new way of thinking and envisaging the context, enabling quick problem-solving and increased productivity.

3. It fundamentally transforms how businesses operate beyond traditional analog methods. This directly benefits the customer as processes become smoother and more efficient, enhancing customer satisfaction and increasing business.

4. Digitisation solutions provide valuable insights by tracking and analyzing metrics in real time. This instant feedback allows companies to make informed decisions and adjust strategies accordingly.

While digitization has become an integral part of our lives today, there are still untapped opportunities for further growth. This opportunity stretches across different companies, sectors, and economies. The growth of digitization has been progressively uneven since specific industries benefit quicker. For example, aviation will more often have digitized solutions, while construction will lag behind.

In the future, using digitization in companies, sectors, and industries that are lacking could be crucial. These measures will include the digitization of assets, operations, and workforce.

According to a McKinsey report, further digitization in Europe could lead to an additional €2.5 trillion in GDP by 2025 [1]. However, data protection and privacy laws, such as GDPR, must be considered [2].

AI utilizes algorithms to perform cognitive functions and solve problems through interactions. Therefore, AI technology can learn from data inputs and create its own outputs. digitalization artificial intelligence economy management

These processes involve machine learning, deep learning, neural networks, predictive analytics, and many others.

AI offers various competitive advantages across industries, but it is not a one-size-fits-all solution. Each organization and industry will have unique goals and use cases for AI, requiring careful consideration and foresight in its implementation.

The following shows some key aspects of its benefits:

• AI is a supportive tool used effectively in human resources. AI automation is being applied to repetitive and low-value tasks. It has streamlined processes such as administrative tasks, onboarding, talent acquisition, and analyzing datasets. Gartner reports that by 2022, more than 40% of large organizations will utilize Al-based human resources solutions [3].

• AI is also changing CRM or customer relationship management systems. Since this also involves large datasets, AI transforms it into a seamless and automated process. It ensures that the records are updated and error-free.

• Smart energy management systems based on AI lead to collect data from sensors affixed to various assets. AI algorithms analyze the data and deliver real-time feedback to decision-makers. The analysis leads to a better understanding of energy usage and maintenance demands.

• Cybersecurity is another aspect of AI that plays an important role. AI has a broader latitude of decision-making ability. Unlike traditional software, these features enable cybersecurity solutions that can handle scale and increasing complexity, providing better protection against cyber threats.

Security is a significant concern when it comes to AI. Some developers believe that using blockchain technology and encryption keys will protect the data. However, the European Union has placed data protection policies that could hinder AI innovation. Nevertheless, those who support the policies argue that they would instead cause a surge in development. The new policy requires that AI systems should have:

• human oversight;

• respect for privacy;

• traceability; and

• unfair bias.

AI is only as efficient as those initially programmed its running algorithms. There have indeed been incidences where AI was affected by a programmer's bias. The same can be said of any software. The future of AI involves having the proper regulations that will protect users yet allow the free flow of innovation.

Countries like Germany aim to leverage AI to improve or maintain their GDP per capita, especially in the face of an aging population. This will increase productivity, and it is projected that early adoption of AI could lead Germany to exceed its 2030 GDP targets.

As for AI innovations, anything is possible. AI innovations have the potential to impact various sectors, from self-driving cars and augmented reality to healthcare and urban systems. There are plans from AI digital agents to aid older people to more sophisticated plans to form solutions to improve urban systems and smart cities.

AI and other automation concepts like robotics and machine learning are set up in the customer service space for a major leap. With these developments, companies have already enhanced their brand names and improved their customer service policies. AI chatbots respond to various questions that might not necessarily need human handling.

This includes FAQs with ready answers for anyone seeking information, suggested questions from previous feeds, or the most straightforward questions.

Moreover, customers can get information from the comfort of their homes or offices at any given time. The bots offer these services 24/7; thus, information is always available. Customers do not need to queue or wait on hold as an agent serves another customer: answers come at the click of a button.

Studies have shown that up to 42% of B2C clients were return customers who cite excellent customer service experience as their reason for making more purchases. On the flip side, over 50% of customers report one poor customer service relation for not returning goods or services to the company [4].

AI-enabled bots are the modern solution to companies' relationships with their clients. Intelligent chatbots are unlike regular bots that offer stock responses to customers. An AI bot can message the customer as they seek information, including providing technical support as and when needed. Unlike a human being who can be busy, absent, or even unavailable such as at night, the AI interface is the door that never shuts for customers. Additionally, through live chats, AI-powered customer service can serve more customers than an employee would manage.

AI makes it possible for applications that use systems tailored to provide products and insights to customers. Because companies increasingly need personalized connections with their customers, giving relevant information at the right time and to the right customer is vital.

With the help of AI, companies can check through the client's previous orders and advise them on similar new available products or that they deem a preference for the customer. This aspect has seen the majority of companies using AI technology significantly increase their sales. AI can also monitor clients' location and buying patterns and develop highly effective customer profiles. A company can then rely on these profiles to offer products and services tailor-made for the customer.

Moreover, the AI unit can relay feedback to company agents about the most asked questions and searched products, thus guiding them on important decisions. They are therefore guided on which products and services to make available to their loyal customers. Companies can also offer other after-sale services, such as on-point delivery based on the generated customer profiles.

Digital workers are experiencing exponential growth worldwide. Studies indicate that digital bots and AI-powered systems will soon dominate a significant portion of industries [5].

As the number of digital workers continues to rise, their influence in various industries will become increasingly prominent. These digital workers will primarily handle mundane tasks in the office, offering advantages such as minimal training and running time requirements and fewer errors. However, instead of replacing human resources entirely, they will work in tandem, maximizing overall productivity.

While process automation has been a common practice for streamlining internal operations, hyper-automation, and cognitive automation projects require integrating AI-powered tools to reshape and redefine processes. Although rule-based and lacking intelligence, robotic process automation (RPA) has been a prevalent method.

Cognitive automation requires new, cutting-edge tools built solely for that purpose. You would need AI-powered control and process intelligence technologies to achieve that. It would enable the workers to acquire the skill and knowledge for dealing with relatively advanced challenges like reasoning and natural language processing.

Automated AI is expected to witness significant innovations, aiming to automate AI models' creation, deployment, and management to scale AI effectively. IBM's “AI for AI” initiative, known as `AutoAI,' launched in 2019, automates data preparation, model development, and feature engineering tasks [6]. This tool has been instrumental in helping data engineers create and deploy data models efficiently.

Additionally, advancements in distributed deep learning empower developers and data scientists to create AI engines more effectively, making AI accessible to a broader range of professionals through automated machine learning.

Although there is widespread speculation about AI being a future job-killer, the reality is that the hybrid workforce, comprising both humans and digital workers, is thriving.

Organizations are implementing RPA and cognitive AI to efficiently handle repetitive, high-volume tasks, leading to the growth of the hybrid workforce. Effective interaction between humans and AI systems is key to successful human-AI cooperation. Digital assistants like Siri, Alexa, and Cortana have already become commonplace, and in the future, AI-based assistants for work environments are anticipated.

AI-based tools are being increasingly employed in various spaces. As time passes, AI- powered systems will grow in capability, making them acceptable in many uncontrolled public spaces. More of us would start to interact with AI, knowingly or unknowingly. AI would interact with customers serving them information and providing services. Frequently it results in improved customer experience and higher customer satisfaction.

Automating AI has been growing in popularity for the last few years. It has witnessed a serious amount of research interest recently. Some good examples would be AutoML from Google or AutoAI from IBM. The first one is designed to simplify the creation and curation of inference models. AutoAI, on the other hand, is a platform that helps in data preparation, feature engineering, and hyperparameter optimization.

Neuro-symbolic AI, which combines data-driven and knowledge-based approaches, is another important aspect of AI's evolution. Collaborative efforts between IBM and MIT have resulted in the development of the Neurosymbolic Concept Learner (NSCL), a tool that tackles problems involving large data requirements and a lack of explainability [1].

Large organizations like Facebook or Google spend millions, if not billions, on creating and collecting the data. We will see an increase in the data synthesis methodologies to battle the adversity caused by the data-hungry models. Current methodologies, including most of the neural network and deep learning-based techniques, are super data-hungry, i.e., they need an enormous amount of data to work accurately.

Using less data-efficient models results in increased costs. Most small or medium-scale businesses cannot afford to allocate that much monetary resource to the data only. So we must have fewer data-hungry techniques.

Thanks to the recent advancements in these fields, many research areas can now generate their own training data. Methodologies like Generative Adversarial Networks (GAN) reduce the data requirements through artificial data synthesis, making AI models less dependent on vast amounts of data.

According to numerous subject matter experts, AI will remain a top priority for nations concerned about their military and economic security. Governments have invested millions, if not billions, in harnessing the power of AI as the next competitive frontier.

The development of military AI is advancing rapidly. In 2018, the US government allocated $2 billion over the next five years through DARPA, the Defense Advanced Research Projects Agency. DARPA aims to forge the next generation of AI-based technologies, including the ATLAS program dedicated to advanced targeting systems for autonomous target tracking [8]. China, for instance, has invested over $100 billion in AI alone, highlighting its level of seriousness and confidence [9]. European countries, such as the UK, France, and others, have also joined the race, collectively investing over a quarter of a billion dollars.

Addressing cyber threats has become a significant challenge for businesses. Various aspects of modern business operations rely on robust cybersecurity measures, including online payments and email communications. According to a recent survey, more than 60% of online businesses experienced different types of cyberattacks in 2018. As events like phishing, hacking, and social engineering attacks become increasingly common, the presence of AI in cybersecurity is expected to rise. Prediction algorithms and smart technology will be crucial in protecting us from fraudsters. AI can detect telltale signs and identify fraudulent attempts or harmful digital activities. The advent of new technologies like 5G opens up new horizons for AI, creating significant business opportunities.

AI can effectively contribute to pricing strategies in the retail industry. It is one of the most valuable applications of AI in the retail sector. Derivative pricing poses a complex challenge for traders who need to understand the demand price of a by-product before setting its price. AI applications in retail can assist traders in determining the optimal cost that attracts buyers while ensuring profitability for retailers through adequate pricing without losing customers. AI can also be utilized to select optimal advertising locations for companies, placing promotions where they can reach the most clients.

It is crucial to acknowledge other significant AI developments that profoundly impact society. To provide a better understanding of AI's true capabilities, let us briefly explore some other exciting stories.

From the outset, leaders have been prioritizing the optimization of business processes. With the emergence of new technologies, it is evident that leaders are turning to AI to enhance process efficiency. The goal is to improve business process management (BPM). Leading research group Gartner has identified ways machine learning (ML) and AI can enhance process automation [10].

Microsoft is one of the leading tech companies that invests in AI and assists other companies in improving the quality performance of AI and avoiding potential problems.

AI in chatbots is the next big thing. Current-generation chatbots already leverage AI to its fullest potential, but there is room for improvement to make them more human-like. Smart agents, AI-powered chatbots, are poised to transform how companies interact with customers, aiming to enhance the customer experience and ensure seamless interactions.

AI robots can also help in pandemic situations. There is currently a high demand for robots that can reduce risks by performing tasks such as disinfection or delivering supplies to those in need. An example includes robots equipped with concentrated UV light capable of killing germs in their vicinity.

Smart cities are set to revolutionize our way of life, but what about AI cities? Terminus Group, a Chinese company, is working on a new design where AI powers the entire city, aptly named AI CITY [11].

Conclusions

In conclusion, digitization and friendly artificial intelligence (AI) are poised to transform our future. These technologies have made significant inroads in various industries, leading to digital transformation and innovation. Just as the internet revolutionized the world, digitization and AI are set to have a similar, if not more significant, influence.

Digitization brings numerous benefits, including more effective business models, improved innovation-based growth, and fundamental transformations in operations. It provides valuable insights through real-time data analysis, enabling informed decision-making. While there are untapped opportunities for further growth, adopting digitization in sectors that have been slower to embrace it could be crucial for future progress. Governments and organizations must navigate data protection policies and regulations to ensure a balance between innovation and privacy.

AI, with its various applications, offers competitive advantages across industries. It enhances human resources, transforms customer relationship management, enables smart energy management systems, and strengthens cybersecurity measures. However, careful consideration is necessary for successful implementation, as AI is not a one-size-fits-all solution. Each organization and industry will have unique goals and requirements for AI integration. Regulation and oversight are crucial to ensure AI's ethical and responsible use while fostering innovation and protecting users' interests.

In summary, the impact will only grow as digitization, and AI continue to evolve. Embracing these technologies and addressing the associated challenges will pave the way for a more technologically advanced and prosperous future.

References

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