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Board-Level Strategies for Gen AI adoption
Board-Level Strategies for Gen AI adoption

August 1, 2024

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Gen AI is shifting market focus from experimentation towards seeking tangible business value with measurable financial returns.

If we talk about Adoption, A significant number of companies (20%) have started to scale Gen AI broadly across their operations, and a small percentage (4%) already consider it core to their business operations. ​Two-thirds of C-suite executives plan to invest more than $50 million in Gen AI over the next 12 months, primarily for responsible Gen AI governance programs, purchasing Gen AI technology, training the workforce, and enhancing customer experience. ​

Let us go through these points to understand Gen AI from the Board Perspective. These trends are the results of the survey conducted by KPMG named A Boardroom Lens on Generative AI, March 2024, and KPMG LLP AI Pulse Survey, April 2024.

The views of directors and C-suite executives surveyed appear to diverge. C-suite executives expect new business models (54%) and/or new product or revenue streams (46%) as the primary impact of Gen AI, while directors expect increased operating efficiency (69%). Following are some interesting trends.

A. 3 Ways through which Business Value of Gen AI can be assessed.

a. To develop new products and services.

Gen AI can be integrated into existing products to make them more powerful and user-friendly, enabling companies to re-engineer workflows and develop new business models.

b. Capturing the value at scale.:

1. Top-Down approach:  Usual POC approach, picking one use case at a time, drive proof-of-concept, pilots, demonstrating value, and then rolling out the solution to a larger number of people.

2. Other companies are using a bottom-up approach, simply providing Gen AI tools (with guardrails) to many employees in different functions and encouraging the technology’s use in day-to-day work. By monitoring what appear to be the most productive uses, companies can scale what works across the organization.

c. Quantifying the return on investment.

To quantify the return on investment (ROI) for generative AI (Gen AI) adoption, board members should identify specific use cases and benefits, estimate potential productivity gains, cost savings, and revenue generation, calculate all associated costs including technology acquisition, data integration, training, and maintenance, and measure productivity improvements and financial impacts over time.

B. Mitigating Risks:

Governance and Oversight: Establish a comprehensive governance framework for the development, deployment, and use of Gen AI. This includes defining clear policies and procedures, and ensuring there is accountability at the senior management level.

Data Quality and Accuracy: Ensure the accuracy and reliability of data used in Gen AI systems. This involves data cleansing, avoiding data poisoning, and implementing checks to prevent the generation of inaccurate or biased results.

Compliance and Regulation: Stay informed about and comply with emerging AI-specific laws and regulations, such as the European Union’s AI Act and relevant executive orders in the US. Ensure that all AI systems meet regulatory requirements and avoid uses deemed to pose unacceptable risks.

Intellectual Property: Protect intellectual property by preventing unintended disclosures of sensitive information and ensuring the use of third-party IP complies with legal standards. Clarify ownership of IP generated by GenAI models.

C. Gauging progress of the company’s Gen AI journey

To understand the progress, the KPMG report highlights some questions that can pose to be a direction for Gen AI journey.

To the CEO/chair: What are the company’s aspirations for Gen AI and strategy to get there?

To the CFO or chief strategy officer: Assuming that our customers, competitors, and suppliers are also rolling out Gen AI, what would that do to our company’s revenue and cost over the next one, three, and five

years?

To the COO, CTO, and CIO: Where is Gen AI currently being used, how many employees can safely access Gen AI tools at work,

To the CSO, chief revenue officer, CMO: How are we using Gen AI to sell and deliver our current products and services more efficiently and effectively?

To the chief risk officer, head of enterprise risk management, or chief information security officer:

What do you see as the major AI-related risks that we need to tackle first?

 

Source: https://kpmg.com/us/en/board-leadership/articles/2024/board-oversight-genai.html


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Madhumay
Deputy Manager - Research

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