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AI Opportunities
A German e-commerce shows us how it's done

Edoardo Pisciotta London - 16/05/2018
Artificial Intelligence (AI) is the next big trend for businesses and societies alike. The use of technology to make companies and administrations more productive is not new, yet AI promises to make processes completely automatic and independent of humans. There are already companies that are using AI applications in their businesses operations, reaping the benefits.

​A recent article on the Economist, portraits the application of AI in the operations of Otto GmbH, a German e-commerce retailer. Otto has put AI in charge of purchasing 200,000 merchandise items for customers through its predictive algorithm. The company has been able to reduce the surplus of stock it needs to hold by 25% and reduced returns for more than 2 million items a year.
 
The trend is rising affecting not just big companies like Amazon but also small and medium enterprises as well. Traditionally SMEs are not among the early adopters of new technologies. These are usually reserved to large companies or startups that have either the resource or the risk appetite for innovation. For these reasons, SMEs need to be careful and proactive in the AI race. As Frazer Bennett, the CIO of PA Consulting, put in an article for the Financial Times, SMEs can be early adopters of AI and benefit immensely from such move.
 
The advance of AI however does not come at the cost of human intelligence; AI can help humans take better decisions but cannot substitute human insight. But how can companies benefit from implementing AI in their business? The answer lies in two of the main applications of AI: accurate forecast and automatization. CEO has identified 5 main areas where AI will help companies:

  1. Logistics: automation and predictive algorithms will make logistics more accurate, reducing costs and increasing productivity in companies thanks to robots that operate 24/7 with no need for human input. 
  2. Simplification: AI will automate, scale, and speed up complex human work (i.e. accounting practises) while identifying business trends. Managers will have access to better data to make strategic decisions. 
  3. Sales: predictive algorithms that take into account hundreds of variables will help businesses by improving the purchasing process. Companies will be able to know in advance what customers want to buy and when they need it.
  4. Customer Service: AI will allow companies to manage customer services more efficiently, by having AI bots deal with clients' orders and complaints.
  5. Cyberdefence: while cyberattacks will become smarter and more aggressive AI will balance this threat recognizing attacks and alerting human operators in advance.
 
Given the immense benefits that AI could bring, should businesses welcome the advent of AI? 
 
It depends. AI will undeniably provide more benefits; however, it will also make competition unbearable: to put it bluntly, one cannot bring a knife to a gunfight. Businesses need to act fast on this trend, as the first mover advantage will be almost impossible to overcome in this race. 
 
Finally, while AI will simplify, make more efficient, scale and speed up business operations, it must be noted that is not a substitute for human intelligence and business acumen. Humans will still be at the helm of their companies and decide for them. 

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Collective Equity Ownership Ltd. does not offer activities of wealth management and does not provide financial advice or solicitation. CEO is the provider of CEO I LP, a small-scope alternative investment fund, domiciled in the United Kingdom, offered only to Professional Clients, as defined in COBS 3.5 by the Financial Conduct Authority.
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