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Building blocks: Digital capabilities precede AI for scale-ups

by Uma
iStock 1416425890

Building blocks: Digital capabilities precede AI for scale-ups

By Rafael S. Lajeunesse, co-founder and CEO of ReachX

The business world today looks very different from 5 years ago, technology has transformed our day-to-day lives, and for corporations, the need to keep up is ever-increasing.

The allure of artificial intelligence (AI) as a transformative force is undeniable, with AI start-ups and scale-ups attracting investors and funding, there is still a crucial truth to recognise. Without a solid foundation of digital capabilities, the potential benefits of AI remain out of reach, especially for companies aiming to scale up using the latest tech tools. Embarking on major AI initiatives without first bolstering digital transformation efforts compromises the entire structure and the results for businesses can be devastating. In this article, we’ll explore why scaleup businesses must ensure their digital capabilities are in order before adopting AI.

Digital capabilities encompass a range of foundational elements that enable companies to effectively harness the power of technology for operational efficiency, innovation, and growth.

Robust infrastructure: At the heart of any digital transformation lies a robust infrastructure. This infrastructure encompasses a spectrum of hardware, software, and networking components, all essential for seamless operations. Robust infrastructure not only ensures the stability and reliability of digital systems but also forms the bedrock upon which further technological advancements can be built. Companies must invest in scalable and adaptable infrastructure solutions to accommodate evolving business needs and technological trends.

Skilled data management: In addition to infrastructure, skilled data management practices play a pivotal role in the success of digital capabilities. Effective data management involves collecting, storing, processing, and analysing data to extract valuable insights and drive informed decision-making. With the exponential growth of data in today’s digital era, organisations must implement robust data management strategies to derive actionable intelligence from vast and disparate datasets. This requires expertise in data governance, data quality management, data integration, and analytics techniques.

Integration capabilities: Integration capabilities can prove challenging for businesses, but are crucial for creating a cohesive digital ecosystem where information can seamlessly flow between disparate systems and applications. Integration capabilities enable organisations to break down data silos, streamline business processes, and enhance collaboration across departments, enhancing a company’s ability to connect various business functions. Whether integrating legacy systems with modern cloud-based platforms or connecting various third-party applications, companies must prioritise interoperability and compatibility to ensure smooth data exchange and workflow automation.

Digital literacy and skills: Importantly, investing in digital literacy and skills among employees is paramount for maximizing the potential of digital tools and technologies.

Digital literacy encompasses a broad range of competencies, including proficiency in using software applications, understanding cybersecurity best practices, and adapting to new digital workflows. By providing ongoing training and professional development opportunities, organizations can empower their workforce to leverage digital tools effectively, foster a culture of innovation, and drive continuous improvement initiatives.

Case Studies: 

Successes and Failures: So what happens when you embark on a major AI project without robust digital transformation practices in place first? Below are a few examples of companies that failed and succeeded in this arena.

Failures

AI startup Lumos and drone producer Aria Insights failed due to a lack of previous digital transformation skills. Ford and VW-backed subsidiary, Argo AI, struggled to create profitable autonomous vehicles at scale.

Successes

Netflix and IBM have successfully leveraged digital capabilities to drive AI scale-up, positioning themselves as leaders in their respective industries.

Challenges in the journey: When embarking on a journey to develop digital technologies before integrating AI, companies inevitably encounter challenges that can hinder success, including:

Organisational readiness and culture- Resistance to change, entrenched legacy systems, and problems with digital literacy among employees can make efforts to begin major digital transformation projects difficult.

Resource constraints – Resource constraints, particularly for startups and small businesses, pose significant obstacles.

Regulatory and compliance requirements – Navigating regulatory and compliance requirements, especially in highly regulated industries, presents another complex challenge.

Future outlook: Looking ahead, the integration of emerging technologies like blockchain and edge computing will further augment the capabilities of AI-driven systems. These technologies promise to enhance data security, optimise computing resources, and enable real-time decision-making, expanding the horizons of AI applications across industries.

The democratisation of AI tools and platforms will empower more organisations to embark on their AI journey, fostering a culture of innovation and collaboration in the digital ecosystem. As AI continues to evolve and mature, companies must remain vigilant, continually reassessing and refining their digital strategies to stay ahead of the curve and capitalise on the transformative potential of AI at scale.

In conclusion, the mutual relationship between digital capabilities and AI scale-up is undeniable in today’s dynamic and highly competitive business landscape. Companies that prioritise a robust digital infrastructure, data management practices, integration capabilities, and digital literacy are better positioned to successfully leverage AI technologies for innovation and growth, but they must first understand the value it will bring to the business.

The future of digital capabilities for AI scale-up remains promising, as advancements in technology and continuous investment in digital transformation efforts pave the way for new opportunities and competitive advantages.

Moving forward, it is imperative for companies to continue investing in and adapting their digital capabilities to remain agile, resilient, and prepared for the evolving demands of the digital age. By doing so, they can unlock new possibilities, drive innovation, and thrive in an increasingly AI-driven world.

About Rafael S. Lajeunesse

Rafael is CEO of ReachX and is responsible for driving the company’s vision to be the trusted platform for institutional investors and corporates. Prior to founding ReachX, Rafael worked in consulting with Fortune 500 companies with McKinsey and as an investor with JP Morgan.

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