More With Less: How AI and Automation Alleviate Recession Woes


“You are sacrificing the future if you opt out of AI completely,” Reid Hoffman, founder of LinkedIn


As difficult as it can be to get economists to agree on anything, the chorus of analysts that expect a recession this year or next is growing louder by the day. The Federal Reserve Bank of New York is continuing to use interest rate increases as a hammer to tamp down rising inflation, with a bump up to nearly 4% expected later this quarter. The onset of at least a mild recession grows more likely as those rates continue to climb, with the mantra “do more with less” sure to become popular and commonplace during challenging times for businesses.


New technologies including artificial intelligence (AI) and automation have become popular, effective options for corporate leaders willing to invest in promising advancements. With an expected slowdown in spending across multiple sectors of the economy, businesses of all types will seek ways to become more cash-conservative while curbing growth plans that had been much more aggressive at the start of 2022.


Smart investments in technology bring benefits from multiple directions by strengthening the bottom line and allowing companies that use AI to protect their existing resources and leave in place strategies to gain market share. That scenario sets the stage for those who make educated, well-reasoned use of AI tools to emerge from a recession in a stronger position while dodging the financial bullets that cause 75% of companies to lose revenue during a downturn.


After all, it’s much better to be among the 14% of category winners who grow their revenue while a recession thins the herd around them.


SparkCognition’s product portfolio aims to improve operations and profitability in any economic environment—enabling you to quickly capitalize on your data, use actionable insights based on real-time analysis, amplify your return on investment, and redefine best practices.  By leveraging solutions focused on visual AI, predictive maintenance, performance optimization, asset performance, etc., businesses discover new ways to do more with less and tap new value from existing systems.


For example, predictive maintenance tools have proven their ability to cut costs on maintenance and reliability programs, while in manufacturing settings, AI can reduce asset downtime, improve quality control, increase worker safety and productivity, and identify process improvements using existing resources.


Smart questions lead to effective AI investments

A recent survey from Bain & Company of 180 IT decision-makers across North America and Europe showed that 41% of respondents listed “building automation capabilities within business lines” as one of their most important IT priorities as the threat of a recession increases. And according to a CNBC Technology Executive Council survey, 75% of tech leaders expect their organizations to spend more on technology this year, with the remainder saying they expect to hold tech spending at their current levels.


And with AI technology moving into every segment and process of the business ecosystem, industries as unrelated as manufacturing, finance, energy, healthcare, and telecommunications are seeing the advantages of smart automation enabled by AI. That means any organization expecting harsh financial times ahead should start looking at the four key areas—data, people, processes, and technology—that come into play when AI is introduced or expanded across business lines.


A key lesson to remember is that business success has to be the top priority when AI is brought to use in a company, as opposed to a tech-driven initiative that can make the tools into bright shiny objects that don’t serve all departments. In a recent SparkCognition blog, we looked at the important steps organizations need to take when considering how to best integrate AI into their business processes, with these five questions as key guideposts:


  1. What are the desired outcomes?
  2. What does success mean, and how will it be measured?
  3. What will the output look like?
  4. Who will be the end user?
  5. How will the results impact customers, employees, and workflows?


The benefit of turning to AI to improve business resilience and stability is that as the technology becomes more familiar within a company, it becomes easier for everyone to use in their daily responsibilities. That increase in productivity is a perfect recession hedge that lowers unit labor costs. The financials in favor of AI will grow stronger in the coming years as training costs are expected to drop by 60% by 2030.


AI shows outstanding investment promise

From a purely financial standpoint, AI has other advantages that become increasingly attractive during times of economic instability. Companies that use technology and automation to stay competitive or grow during a recession will be more likely to become trusted names for investors who look for sure things during both up and down markets.


Historically through downturns, financial leaders have turned to so-called “defensive stocks”; proven companies or entire B2B or consumer sectors that tend to grow or stay close to level while others falter. The number of defensive stocks has declined in proportion to the total number of stocks traded on the S&P 500 for much of this century, which means AI-infused companies that continue to find new ways to make themselves stronger could reshape the entire idea of what constitutes a defensive stock.


And here’s one more detail for investors looking at their options during a time of market upheaval: according to ARK Invest, AI is the innovation platform with the greatest expected growth over the next 10 years, with a growth rate of 26% and total market capitalization of $108T, results that leave blockchain tech, robotics, gene sequencing, and battery technology far behind. As we enter a period of likely volatility, those who turn to AI for increased insights and productivity are more likely to emerge from a recession with more stability and flexibility that will set them up for success in the years ahead.

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