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Consulting Firms Are Early Winners of AI Boom

Consulting Firms Are Early Winners of AI Boom

After ChatGPT debuted in 2022, the marketing team at Reckitt Benckiser, which makes Lysol and Mucinex, was convinced that new AI technology could help its business. But the team wasn’t sure how to do that, so they turned to Boston Consulting Group for help.

Reckitt’s request was one of hundreds BCG received last year. It now generates a fifth of its revenue – up from zero just two years ago – through AI-related work.

“There is a real thirst to know what the implications are for their business,” said Vladimir Lukic, managing director of technology at Boston Consulting Group.

The next big boom in technology is a long-awaited gift to scrappy consultants. From Boston Consulting Group and McKinsey & Company to IBM and Accenture, sales are growing and hiring rates are rising because companies are desperate for technology experts who can help them figure out what generative AI is and how it can help their business.

As the tech industry looks for ways to make money from generative AI, consultants are starting to make money.

IBM, which has 160,000 consultantsSecured more than $1 billion in sales commitments related to generative artificial intelligence for consulting and… com. watsonx The system, which can be used to build and maintain artificial intelligence models. Accenture, which provides consulting and technology services, achieved sales of $300 million last year. About 40% of McKinsey’s business this year will be related to generative AI, and KPMG International, which has a global consulting division, has gone from making no money a year ago from work related to generative AI to targeting more than $650 million in business opportunities in… United States this technology over the past six months.

The demand for technology advice is reminiscent of the industry’s dot-com boom. Companies sent consulting requests to their consultants in the 1990s. From 1992 to 2000, sales of Sapient, a digital consulting firm, rose from $950,000 to $503 million. Subsequent technological shifts, such as the move to mobile and cloud computing, have been less rapid, said Nigel Vaz, chief executive of the company, now known as Publicis Sapient.

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“In the mid-1990s, CEOs would say, ‘I don’t know what a website is or what it can do for my company, but I need it,’” Vaz said. “It’s similar. Companies say: Don’t tell me what to build. Tell me what you can build.

Consulting companies strive to show what they can do. In May, BCG hosted a one-day conference at a Boston convention center where it set up demonstration booths for OpenAI, Anthropic, and other AI technology leaders. It also demonstrated some of its AI work in robotics and programming.

Generative AI sales are helping the industry grow after the post-pandemic lull. The U.S. management consulting industry is expected to generate $392.2 billion in sales this year, up 2% from last year, according to 2018 estimates. IBISWorlda research company.

The work that consultants are recruited to do varies from one company to another. Some consulting firms are advising companies on regulatory compliance as regions such as the European Union pass laws regulating artificial intelligence. Other companies are developing plans for AI-based customer support systems or developing guardrails to prevent AI systems from making mistakes.

For companies, the results have been mixed. Generative AI tends to give people incorrect, irrelevant, or meaningless information, known as hallucinations. It is difficult to ensure that they provide accurate information. They can also be slower to respond in person, which can confuse customers as to whether their questions will be answered.

IBM, which has a $20 billion consulting business, faced some of these problems during its work with McDonald’s. The companies have developed an AI-powered voice system to take orders from the car. But after customers reported that the system made errors, such as adding Nine custom-made iced teas instead of one Diet Coke I ordered McDonald’s He finished the project.

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McDonald’s said it remains committed to the future of digital ordering and will evaluate alternative systems. IBM said it is working with McDonald’s on other projects and is in discussions with other restaurant chains about using voice-activated artificial intelligence.

Other programs from IBM showed more promise. The company worked with Dun & Bradstreet, a business data provider, to develop a generative AI system to analyze suppliers and advise on their selection. The tool, called Ask Procurement, will allow employees to conduct detailed searches using specific parameters. For example, it can find minority-owned memory chip suppliers and automatically generate an RFP for them.

Gary Kotowitz, Dun & Bradstreet’s chief data and analytics officer, said his 30-person team needed IBM’s help building the system. To reassure customers that the answers provided by Ask Procurement are accurate, I insist that customers can trace each answer back to an original source.

“Hallucinations are a real concern, and in some cases a tangible concern,” Mr. Kotovitz said. “You have to overcome both and convince the client that it is not a hallucination.”

Over the course of 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.

Bahadur Yilmaz, chief analytics officer at ING, said the feasibility of the chatbot was uncertain and because McKinsey had limited experience with the relatively new technology, the company conducted the work as a “joint pilot” under its contract with ING. The bank paid McKinsey for the work, but Mr. Yilmaz said many consultants were willing to do speculative work with generative AI without pay because they wanted to show what they could do with the new technology.

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The project was labor-intensive. When ING’s chatbot gave incorrect information during development, McKinsey and ING had to figure out why. They attributed the problem to issues like outdated websites, said Rodney Zemel, a senior McKinsey partner who works on technology.

The chatbot now handles 200 out of 5,000 customer inquiries daily. ING asks people to review each conversation to ensure the system is not using discriminatory, harmful or hallucinatory language.

“The difference between ChatGPT and our chatbot is that our chatbot cannot be wrong,” Mr. Yilmaz said. “We have to be safe with the system we’re building, but we’re close.”

Over the course of four months this year, Reckitt worked with Boston Consulting Group to develop an AI platform that can create native ads in different languages ​​and formats. With the push of a button, the system can convert a commercial about Finish dishwashing detergent from English to Spanish.

Becky Verano, vice president of global creative and capabilities at Reckitt, said Reckitt’s AI marketing system, which is being tested, could make developing native ads 30 percent faster, saving the company time and saving it some of the tedious work.

Because the technology is so new, the team is learning and adjusting its work as new technology companies release updates to their image and language models, Ms. Verano said. She credited Boston Consulting Group with organizing the chaos.

“You always have to go to the latest trends, to the latest results, and learn every time how the tools respond,” she said. “There’s no exact science to it.”