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Special Edition: The Nuts, Bolts and Costs of Generative AI
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Good day. I'm Prabha Natarajan, chief editor of WSJ Professional Products.
Over the past 18 months, we have all heard ad nauseam of the transformative technology that generative AI is going to be.
But, in speaking with C-suite executives, we also heard caution, concern and prudence. Many companies are taking a measured approach to the technology.
WSJ Pro decided to explore the adoption of gen AI, see if it is handling repetitive processes or driving innovation, and most important, ask how companies measure return on investment.
Here's what we found:
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PHOTO ILLUSTRATION: THOMAS R. LECHLEITER/THE WALL STREET JOURNAL
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1. Companies from Motorola Solutions to Intuit are leaning on their finance teams to weigh the possible benefits against the costs—and keep budgets in check.
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For many companies, it is a leap of faith. And they are gauging returns using metrics such as productivity gains and employee satisfaction, as well as revenue.
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In many cases, it makes more sense to buy rather than build it out, CFOs say.
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“This might not be the traditional ROI,” said Todd Lohr, U.S. technology consulting leader at KPMG.
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2. While AI may speed up many customer-facing tasks and vastly improve efficiencies, people don't like interacting with AI, slowing adoption at some firms.
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Some early adopters, like mental health support service provider Koko, found that customers didn't like AI and were distrustful of messages even though the actual sending was approved by a human agent. Messages went out faster than they would have and users were put off when they learned a simulated confidant was behind the messages, said Koko Chief Executive Rob Morris. The company has paused until a better use case emerges.
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Similarly, commercial artists and advertisers can deliver personalized ads and messages at supersonic speed to consumers, if they use gen AI. But, people are already turning against the AI look and mock the seven-finger creatures.
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Still, ad and media-tech companies aren't giving up. There's a whole new class of creators who polish generated images.
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Walmart is shifting to a “Four in a Box” method that brings together employees with business, product, technology and user experience roles to identify and solve challenges through tech. It is planning to close Store No. 8, an idea-incubation arm.
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“We’re taking a different approach,” said Anshu Bhardwaj, chief operating officer of Walmart’s technology unit. “So associates are innovating while they’re driving the business.”
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4. In some areas, AI tools are delivering the holy grail of speed, lower cost and efficiency.
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With chatbots and software, companies are adopting more of gen AI in supply chain and logistics. German software firm Celonis is working with Mars to use gen AI, helping the snack-food supplier to reduce shipping costs and emissions while improving on-time shipments. Secondhand-apparel retailer ThredUp uses the tech to flesh out item descriptions on its website, for instance, rather than having warehouse workers manually type it in.
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Gen AI has supercharged what venture capitalists and investors can do. Some firms are building dashboards that synchronize internal data into a display with AI-driven scoring systems. These measure portfolio companies, prospective companies and competitors. AI is also being used to spot deals and do research and due diligence.
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5. Takeaway: Don't wait.
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Companies aren't waiting for regulators to determine how and when to use the tech. CIOs say they are combining best practices around customer data with a little guesswork to make AI applications regulatory friendly, while maintaining open dialogue with policymakers.
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Law firms and corporate advisers are keen to tap into the tech's ability to digest and process vast datasets and documents. Judges, however, are questioning the standards, ethics and accuracy of such reports.
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