How does AI reduce costs and boost profits for your business?

With the rising expenses companies often struggle to balance budgets and aim to find innovative ways to streamline tasks with cost-effective methods. As per latest data, 90% of startups fail across all industries. 29% of such companies run out of cash and the other  18% suffer from pricing and cost issues.

Financial management plays the key role in determining the success of any business. As many companies find it difficult to optimise resources and make the most of their budget, AI offers a helping hand. AI helps to minimize expenses in several ways. 

For example, by automating tasks, optimizing processes, improving efficiency, and enabling data-driven decisions, AI reduces costs. 

What is AI?

AI (artificial intelligence) technology allows machines to think and solve problems like humans. In other words the machines like smartphones, computers and other electronic devices simulating human-like intelligence are called AI. It has various simple and complex forms like machine learning, natural language processing, generative AI, computer vision, etc. 

Here’s how AI reduces costs for businesses

AI has transformed into a handy tool across different business industries. It plays a vital role in automating repetitive tasks that reduces the requirements of manual labour. This has led to a greater adoption of AI worldwide. 

Research indicates that the IT and telecommunications sector has the highest AI adoption rate at 29.5% in the UK. This is closely followed by the legal sector at 29.2%. 

1. Automation of repetitive tasks

Handling mundane processes can be easily automated via artificial intelligence technologies and tools. This means a reduced burden on manual labor and also greater accuracy. For example, machines do not get bored with such tasks, and you can expect much greater accuracy levels.  

Real-life examples: 

• Chatbots: AI-powered chatbots handle routine customer inquiries, providing quick and efficient support.
• HR Onboarding: You can automate parts of the onboarding process with AI, such as screening resumes and providing initial information to new hires.
• Data Entry: Companies can enable AI systems to extract data from documents and enter it into systems. This reduces errors and saves time.

2. Manage risks and prepare well with predictive maintenance

AI can predict equipment failures before they occur. This means smooth scheduled maintenance and minimizing downtime and repair costs. Predictive maintenance is a data-driven approach that uses real-time data and analytics to anticipate equipment failures and schedule maintenance proactively. 

Thus, the technology facilitates minimal downtime and greater asset lifespan. AI costs reduction is visible in many industries.

Real-life examples: 

Manufacturing: Using vibration sensors on conveyor belts or machinery to detect early signs of wear and tear. This further prevents breakdowns and optimises production. 

Oil and Gas: Analysing oil samples to detect lubricant degradation or other issues. So companies can plan timely maintenance and avoid costly equipment failures. 

Transportation: Monitoring tire pressure, temperature, and tread depth in real-time to predict tire wear and schedule replacements, preventing blowouts and extending tire life. 

3. Supply chain optimisation

AI-driven data analytics lays the foundation for smoothly running inventory and helps to streamline processes. This means small and big companies can anticipate shifts in demands with predictive maintenance and keep the inventory up-to-date with optimum stock levels. AI does not have to be built from scratch to ensure maximum productivity. You can hire software developers to add AI into your existing IT infrastructure. 

Real-life examples: 

Amazon: The eCommerce company equips its fulfillment centers with advanced AI robots that assist with various tasks.

Walmart: Leverages AI to analyze historical sales data with precision. This paves the way for accurate predictions of product demand and preventing inventory shrinkage.

IBM: Uses AI for demand forecasting, product quality inspection, and supply chain integrity.

4. Data-driven decision-making

AI tools allow companies to make the most of data and implement well-informed decisions. They can collect data from several sources and identify patterns and insights in data that humans might miss. 

Moreover, AI systems can work 24/7, processing large volumes of data at pace much faster than humans. So, despite high initial AI costs it boosts higher productivity and quicker turnaround times.

Personalized recommendations: AI algorithms analyse user browsing and purchase history to suggest relevant products, boosting sales and customer satisfaction.

Dynamic pricing: AI adjusts prices in real-time based on demand, competition, and other factors, maximizing revenue.

Route optimization: AI analyzes traffic patterns, weather conditions, and delivery schedules to find the most efficient routes. This promotes reduced fuel consumption and delivery times.

How much does AI cost?

AI development costs widely range from £7000 for a simple project to over £100,000 for building complex, technology-intensive projects. Several factors, like project complexity, development type, and application types, influence the final cost. 

Factors influencing AI costs:

Project complexity: Simple AI projects can cost less because they can be completed in less time and have a few variables. In contrast, complex projects can be very expensive as they require bigger teams collaborating together and many months of hard work.

Development project type: Bespoke software development of AI solutions that are tailored to specific needs can range from £10,000 to over £100,000. 

Technology categories: Use of different AI models like conversational AI, computer vision, and recommendation engines, can influence the final costs. 

Consulting services: AI consulting services typically range from  £100 to  £300 per hour. It depends on the consultant’s hourly rate. 

When should businesses consider AI solutions?

Businesses that aim to improve efficiency, automate tasks, gain deeper insights from data, personalise customer experiences, or innovate their products or services must evaluate using AI. 

Here are some of the areas where AI proves helpful and boosts return on investments:

• AI can automate time-consuming and repetitive tasks like data entry, scheduling, and basic customer inquiries.

• Optimize various processes, like supply chain management, inventory control, and resource allocation, leading to significant cost savings and improved efficiency. 

• Streamline operations by identifying bottlenecks, optimising workflows, and automating tasks across different departments. 
• Personalising eCommerce shopping with AI in Adobe Commerce can help you launch greater customer experiences.

• AI excels at analyzing large and complex datasets to uncover hidden patterns, trends. It provides  insights that might be difficult or impossible for humans to detect. 

• It is used to predict future trends, customer behavior, and market demand, enabling businesses to make more informed decisions and stay ahead of the competition. 

• Businesses that are trying to personalise customer experiences by understanding individual preferences, needs, and behaviors. 

• Identifying new product opportunities, developing innovative solutions, and improving existing products or services. 

Nurture growth with AI development 

Maximising your business potential requires embracing futuristic changes and adopting the latest technologies. Whether you are trying to save on operational costs or gain a competitive edge, AI adoption can help you achieve objectives seamlessly.

At chilliapple, we can help you identify areas where artificial intelligence will prove helpful and boost growth. Our consultants have several years of experience and can help you stay ahead with modern, scalable solutions.