Research: AI Can Help Some Service Firms But May Not Work For Others

New research warns that AI may not be appropriate for businesses that rely on a substantial amount of human interaction or a variety of services. Alternatively, businesses with limited customer contact and choice will see more AI success.

A new study on replacing professionals with AI technologies says business owners should think strategically before succumbing to the temptation to use AI to lower labor costs and increase the bottom line. The research paper is titled “AI and Machine Learning in Service Management” and is published in the Journal of Service Management.

“AI has the potential to upend our ideas about what tasks are uniquely suited to humans, but poorly implemented or strategically inappropriate service automation can alienate customers, and that will hurt businesses in the long term,” says researcher Chris Meyer, a professor at the Lally School of Management at Rensselaer Polytechnic Institute in Troy, N.Y.

Meyer determined that in businesses where trust and reputation are critical to building and maintaining clients, people will be more likely to be effective than automated technologies. Conversely, in areas where human biases can harm offerings of services, AI will be a better tool for companies to employ.

Meyer also asserts that many businesses will ultimately be using a mix of people skills and automation to effectively compete. Even AI, which can handle very sophisticated tasks, works best alongside humans — and vice versa.

“Automation and human workers can and should be used together,” Meyer said. “But the extent of automation must fit with the business’s strategic approach to customers.”