AI boom has an unlikely early winner – wonky consultants
NEW YORK - After ChatGPT came out in 2022, the marketing team at Reckitt Benckiser, which makes Lysol and Mucinex, was convinced that new artificial intelligence (AI) technology could help its business. But the team was uncertain how, so it turned to Boston Consulting Group for help.
Reckitt’s request was one of hundreds that Boston Consulting Group received last year. It now earns a fifth of its revenue – from zero just two years ago – through work related to AI.
“There’s a genuine thirst to figure out what are the implications for their businesses,” said Vladimir Lukic, Boston Consulting Group’s managing director for technology.
The next big boom in tech is a long-awaited gift for wonky consultants. From Boston Consulting Group and McKinsey to IBM and Accenture, sales are growing and hiring is on the rise because companies are in desperate need of technology sherpas who can help them figure out what generative AI means and how it can help their businesses.
While the tech industry is casting about for ways to make money off generative AI, the consultants have begun cashing in.
IBM, which has 160,000 consultants, has secured more than US$1 billion (S$1.36 billion) in sales commitments related to generative AI for consulting work and its watsonx system, which can be used to build and maintain AI models. Accenture, which provides consulting and technology services, booked US$300 million in sales last year.
About 40 per cent of McKinsey’s business this year will be generative AI-related, and KPMG International, which has a global advisory division, went from making no money a year ago from generative-AI-related work to targeting more than US$650 million in US business opportunities tied to the technology over the past six months.
Generative AI sales are helping the industry find growth after a post-pandemic lull. The management consulting industry in the United States is expected to collect US$392.2 billion in sales this year, up 2 per cent from a year ago, according to IBISWorld, a research firm.
The work that consultants have been enlisted to do varies from business to business. Some consultancies are advising companies on regulatory compliance as regions such as the European Union pass laws regulating AI. Others are drawing up plans for AI customer support systems or developing guardrails to prevent AI systems from making errors.
For businesses, the results have been mixed. Generative AI is prone to giving people incorrect, irrelevant or nonsensical information, known as hallucinations. It is difficult to ensure that it provides accurate information. It can also be slower to respond than a person, which can confuse customers about whether their questions will be answered.
IBM, which has a US$20 billion consulting business, ran into some of those issues on its work with McDonald’s. The companies developed an AI-powered voice system to take drive-through orders. But after customers reported that the system made mistakes, like adding nine iced teas to an order instead of the one Diet Coke requested, McDonald’s ended the project.
McDonald’s said that it remained committed to a future of digital ordering and would evaluate alternative systems. IBM noted that it was working with McDonald’s on other projects and was in discussions with other restaurant chains about using its voice-activated AI.
Other programs from IBM have shown more promise. The company worked with Dun & Bradstreet, a business data provider, to develop a generative AI system to analyse and provide advice on selecting suppliers. The tool, called Ask Procurement, will allow employees to conduct detailed searches with specific parameters. For example, it could find memory chip suppliers that are minority owned and automatically create a request for proposals for them.
Gary Kotovets, chief data and analytics officer at Dun & Bradstreet, said that his team of 30 people needed IBM’s help to build the system. To reassure customers that the answers that Ask Procurement provides are accurate, he insisted that customers be able to trace every answer to an original source.
Over seven weeks this year, McKinsey’s AI group, QuantumBlack, built a customer service chatbot for ING Bank, with guardrails to prevent it from offering mortgage or investment advice.
Because the viability of the chatbot was uncertain and McKinsey had limited experience with the relatively new technology, the firm did the work as a “joint experiment” under its contract with ING, said Bahadir Yilmaz, chief analytics officer at ING. The bank paid McKinsey for the work, but Mr Yilmaz added that many consultants were willing to do speculative work with generative AI without pay because they wanted to demonstrate what they could do with the new technology.
The chatbot now handles 200 of 5,000 customer inquiries daily. ING has people review every conversation to make sure the system does not use discriminatory or harmful language or hallucinate.
“The difference between ChatGPT and our chatbot is our chatbot cannot be wrong,” Mr Yilmaz noted.
Over a four-month period this year, Reckitt worked with Boston Consulting Group to develop an AI platform that could create local advertisements in different languages and formats. With the push of a button, the system can turn a commercial about Finish dishwashing detergent from English into Spanish.
Reckitt’s AI marketing system, which is being tested, can make developing local ads 30 per cent faster, saving the company time and sparing it from some tedious work, said Becky Verano, vice-president of global creativity and capabilities at Reckitt.
Because the technology is so new, Ms Verano added, the team is learning and adjusting its work as new tech companies release updates to the image and language models. NYTIMES