Commodization has been a staple of the information technology realm for years. It really doesn’t matter what personal computer or smartphone you use, and stepping it up in the enterprise, databases and cloud systems can readily be swapped, based on price and support servies. Is artificial intelligence reaching this point? Opinions vary.
Commoditization occurs when products or technologies are widely available and interchangeable. It also follows the democratization of offerings. Also, the products or technologies no longer raise enterprises above the market fray, any more than having a well-wired electrical system would. But a company. can’t thrive without it.
AI tools and platforms — particularly generative AI — it may meet such definitions — as it is now widespread, available to all at no or low cost. And since everybody now uses it to some degree, it may not offer significant competitive advantage. Does that mean, just as PCs and internet access are commodities that don’t necessarily deliver competitive advantage, AI is on the same path? Everyone needs it, but everyone will also have it.
Nicolas Carr, author and former editor of Harvard Business Review, identified this phenomenon two decades ago in his seminal work, “Does IT Matter?” In essence, IT had become a “utility” that everyone simply is expected to have. The affordability and availability of technology to all has leveled the playing field, and therefore no one gains any competitive advantage. No company gains market share as a result of having an exceptionally well-wired electrical system.
“When online shopping was new to all of us, ‘e-commerce’ was deemed a huge differentiator for companies,” says Brian Fitzgerald, chief revenue officer at Augury. “Today, e-commerce is status-quo, and we call it shopping. I think AI will follow suit in a similar way. People will no longer care about AI as a buzzword and novel enhancement, but rather the processes and business outcomes that it produces will become standard.”
Some companies “will be able to gain an edge by leveraging publicly available generative AI tools better or faster than their competitors,” write Scott Cook, Andrei Hagiu, and Julian Wright in a recent Harvard Business Review article. “But that advantage will be only temporary, and using the tools will soon become table stakes. This means established companies will have to rethink their business strategies and find new ways to add value to their offerings.”
A counter argument would be to look at the success of tech-savvy organizations such as Amazon or Uber, where they turned markets upside down using cutting-edge technology, including AI. There’s no denying the potential of AI and generative AI to advance business prospects is exciting. “By making it vastly easier and cheaper to improve or create products and services that previously required significant human labor and creativity, generative AI has the potential to disrupt or even commoditize many businesses,” the HBR authors state.
But, as the entire world gains access to the technology. businesses’ edge will come from innovative culture and forward-looking thinking. It’s what they do with the technology, not just having it. Anyone with a high-end smartphone can now make movies, but not everybody has the vision and skills to become the next Steven Spielberg or Spike Lee.
AI will deliver results when it’s treated as a tool “to improve businesses’ bottom lines, but less profitable if viewed as a standalone, shiny new product,” Fitzgerald states. “For example, when analyzing the ROI of AI, we shouldn’t look at AI alone but rather work backward to understand what business function AI is helping with and analyze the impact from there.”
For now, “current generative AI efforts remain more focused on efficiency, productivity and cost reduction than on innovation and growth,” a recent report out of Deloitte suggests. The majority of organizations surveyed are currently targeting tactical benefits such as improving efficiency and productivity (56%) or reducing costs (35%). Also, 91% said they expect generative AI to improve their organization’s productivity. A smaller percentage of organizations reported targeting strategic benefits such as innovation and growth (29%)
This will come into play as AI starts to get taken for granted. “People don’t sit around marveling at the internet or smartphones, but those technologies completely change how productive we are,” says Nick Frosst, cofounder at Cohere.
“AI will increasingly transform businesses without us even thinking about it,” Frosst continues. AI needs to assist in “finding key information across vast databases more easily, identify trends they might otherwise miss, quickly complete mundane tasks to free employees to better deploy their expertise in other areas. It’s not going to be artificial super intelligence, but it will change everything. AI will so fundamentally change how businesses operate that most people will stop thinking about it.”
In many ways, AI “is already invisible today,” says Cliff Jurkiewicz, vice president of strategy at Phenom. “AI is like oxygen. It’s all around us providing value in ways we take for granted every day — suggesting streaming content, updating package delivery status and providing alternate routes based on traffic and other road hazards. It’s also being used in health care to effectively diagnose cancer.”
Not everyone concurs that AI will fade from view or be commoditized anytime soon. “The initial hype brought on by the release of ChatGPT will certainly begin to subside,” says Robin Moore, principal product manager of AI and machine learning at Mimecast. “The incorporation of AI into our daily lives – personal and professional – has the potential to become even more apparent.”
If anything, just talking about AI implementations by provide a competitive advantage — and least initially. “Many businesses will likely rush to highlight how they are using AI for several reasons,” says Moore. “This will show their customers and prospects that they are at the cutting edge of using technology to deliver faster, better services and products. To highlight to their boardrooms and shareholders that they are using AI to supercharge their business’s productivity.”
