BrazilNot the US or China, but Japan leads the world in AI
Some of the largest digital consultancies across the globe have come together to assess the state of global artificial intelligence (AI), revealing that Japanese businesses lead the way when it comes to AI adoption.
The study was conducted by US-based research firm ESI ThoughtLab in collaboration with a consortium of digital services and consulting firms operating at the cutting edge of AI. Deloitte, Publicis Sapient, Cognizant, Appen, Dataiku and DataRobot were all involved in the study, which surveyed more than 1,000 companies across 15 countries. The goal was to understand the size and scale of AI initiatives across the world.
According to the report, Japan emerges as a surprise leader in AI adoption. “Because of advances made by IBM, Microsoft, Google, and other Silicon Valley firms, the US is often seen as the leader in AI. But our study shows that when it comes to corporate adoption of AI, Japan takes the top spot.”
Even China is a bright spot for AI and robotics and would be many a punter’s bet for global AI leader, but the country places fairly low on the list behind competitor markets US, UK, Singapore, Brazil, Germany, Canada, India, Mexico and Australia. Several factors combine to give Japan the AI edge, putting it well ahead of the rest of the pack.
Driving the AI charge is Society 5.0 – a Japanese initiative that aims to use technology to reinvent society, setting the precedent for “super smart” societies around the world. The aim is partly to maintain productivity in an ageing country, which specifically involves the digitalisation of infrastructure, finance, healthcare and logistics. AI has a key role to play in each of these domains.
The efforts are born out of necessity, which help tackle the traditionally negative perception of AI as a jobs destroyer. “AI is viewed more favorably by business and workers in Japan, who see AI as augmenting jobs, not replacing them. Given an aging population and strict immigration laws, companies need to fill their ranks with machines,” explained the report. A digital skill drive among the working age population is enhancing human machine collaboration in Japan.
Lastly, the report highlights that Japanese firms happen to have the liquidity to invest in AI, which is an expensive investment and one that takes time to generate returns. In fact, the researchers reveal that 40% of all AI investments around the world are yet to yield profits, while returns on investment (ROIs) for the lucky profitable ones hover in and around 1% on average.
Reaping the benefits
AI is a tool that is most valuable when deployed at scale. Indeed, early stage AI adoption yields close to no results for companies, while enterprise-wide scaling of AI can take ROIs up beyond 4%. Companies usually take 17 months on average to break even on their AI investments. As explained by David Kuder, US Market Offering Lead for AI Insights & Engagement at Deloitte Consulting, AI implementation requires a structural overhaul of operations.
“AI doesn’t just magically automate what hundreds of people are doing. When thinking about applying AI to different individuals’ jobs, executives need to address the process complexity they are likely to find and be willing to reorganize to achieve the desired cost reductions. Many jobs may have to be redesigned and many employees will need to be retrained as the scope of their work changes,” said Kuder.
Few have managed to scale AI to its potential, although some sectors are clearly outperforming others. The report findings reveal a correlation between the state of AI adoption in a sector and the level of returns generated. Leading the way for AI adoption and ROIs by some distance are the automotive and banking sector, while healthcare, technology manufacturing, consumer and life sciences sector – among others – have some way to go in their AI journey.
