AI Impact on Business Operations
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Nov 24, 2024
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AI Impact on Business Operations: Cons Student’s First Name, Middle Initial (s), Last Name
Institution Affiliation
Course Number and Name
Instructor’s Name and Title
Assignment Due Date AI Impact on Business Operations: Cons
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There is no doubt that artificial intelligence (AI), now one of the most discussed
technologies, has become transformative for operations in contemporary business entities and
promises more efficient procedures, lower costs, and better decision making. Yet, it has a deep
influence that far exceeds benefits. Recognizing the negative implications of AI as its
implementation becomes more widespread across different sectors of the economy. AI has
transformed into the foundation of contemporary companies, enabling them to perform menial
jobs, as well as interpreting colossal databases in search of useful findings. It presents various
challenges that include increased employee productivity and the enhancement of competitive
advantages despite the numerous benefits it offers. The present paper seeks to investigate how
artificial intelligence (AI) interferes with traditionally practiced occupations, creates worries
concerning information confidentiality and security, influences client service, and triggers the
overdependence of people on machines, and explore ethical concerns. The Disruption of Traditional Jobs
With the onset of AI, significant changes have occurred including what tasks constitute
roles and how these jobs are accomplished. There can be no doubt that AI enables automated
repetitive and rule-based work. The positive side of automation is clear; however, it prompts
questions regarding the replacement of conventional positions. With advanced AI driven
systems, there might be a real possibility that some human roles are replaced (Mariani & Borghi,
2023). It triggers insecurity on many jobs, unemployment and decreased rates incomes for many
employees. Mariani and Borghi (2023) further document that such consequences are not limited
to people but also affect entire communities and industries as well. Additionally, moving towards
automation will aggravate income disparity since in the first case, high-skills professionals who
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develop, operate and supervise smart systems will win while the other low-skilled workers are
facing uncertain employment. The influence of artificial intelligence on conventional employment is currently evident
across various sectors. Take, for instance, the manufacturing industry, where robots have
assumed the roles previously held by human workers, such as assembly and quality assurance. In
fields like e-commerce, customer service chatbots have gained prominence, progressively
diminishing the demand for human customer service agents (Beerepoot et al., 2023).
Furthermore, the financial sector has witnessed algorithmic trading systems surpassing human
traders in transaction execution. These instances highlight the extensive impact of AI on job
displacement, emphasizing the need for a forward-thinking strategy to tackle the possible
repercussions for individuals and societies. Data Privacy and Security Concerns
AI plays a crucial role in the gathering and analysis of extensive data. Its capacity to
handle and interpret data on a scale and with a speed far surpassing human capabilities is both a
benefit and a source of worry. AI-driven systems consistently amass data from diverse origins,
such as social media, IoT devices, and business activities, to derive valuable insights and support
decision-making (Beerepoot et al., 2023). While this data-driven approach can optimize business
operations, it also gives rise to concerns regarding privacy and security. One of the primary
apprehensions arising from AI's integration into business activities is the protection of data
privacy. The collection, storage, and analysis of massive datasets inherently carry the risk of
encroaching upon individuals' privacy (Mariani & Borghi, 2023). Companies frequently possess
access to sensitive personal and financial data, and if not managed with the utmost care, the
information can be susceptible to misuse or breaches.
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Striking a balance between extracting valuable insights from data and safeguarding
individuals' privacy presents a multifaceted challenge. Martin and Waldman (2023) assert that
regulations on data privacy, like the General Data Protection Regulation (GDPR) in Europe, are
emerging to tackle these concerns and hold businesses accountable for their data management
practices. In addition to data privacy, the security of AI systems themselves is a significant
concern. AI algorithms, designed to learn and adapt, can be exposed to manipulation and attacks.
Companies heavily reliant on AI for their operations face the risk of cyber threats, which can
lead to data breaches, financial harm, and damage to their reputation (Beerepoot et al., 2023). As
AI systems become more sophisticated, they become more enticing targets for cybercriminals.
Ensuring the safety of AI infrastructure and data is an ongoing challenge that necessitates
perpetual vigilance and investment in cybersecurity measures.
The mounting unease about data privacy and security within the realm of AI has
prompted the introduction of diverse regulatory and ethical frameworks. Governments and
international organizations are formulating laws and rules to govern the responsible use of AI
and safeguard data privacy (Shaik, 2023). Since AI has the capacity to reinforce prejudice,
discrimination, or unethical behavior, ethical considerations are equally crucial. Businesses must
negotiate this terrain while adhering to changing legislation and maintaining ethical standards to
ensure that AI is used in a way that is consistent with ethical principles and cultural norms
(Pallathadka et al., 2023). The ethical and regulatory facets of AI in business activities require
careful attention to avert unintended consequences and preserve trust with customers and
stakeholders. Lack of Human Touch and Customer Experience
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The introduction of AI into business operations has introduced a nuanced issue: the
decline of human connection in customer interactions. AI-powered systems, while effective,
often struggle to replicate the warmth, empathy, and personalized service that human customer
service agents offer (Martin & Waldman, 2023). Customers frequently engage with chatbots,
automated phone systems, or virtual assistants, which, despite their usefulness, lack the
emotional understanding and adaptability of human beings. The absence of a human touch can
lead to impersonal and frustrating customer experiences (Mariani & Borghi, 2023). For example,
in the realm of customer service, customers may face challenges in expressing nuanced concerns
or receiving empathetic responses. The rigid and pre-programmed nature of AI can result in
unsatisfactory outcomes, leaving customers dissatisfied with the interaction and their overall
experience. It is crucial to find the right balance between the efficiency provided by AI and
preserving the human touch in customer service because businesses risk alienating their customer
base if they prioritize automation over genuine, empathetic engagement. Overreliance on AI and Potential Failures
As artificial intelligence continues to play an increasingly significant role in business
operations, there is a growing concern about becoming overly dependent on these systems.
Businesses are increasingly turning to AI to streamline processes, improve decision-making, and
even forecast future trends (Perifanis & Kitsios, 2023). However, this heavy reliance on AI can
create vulnerabilities. If AI systems encounter problems, experience malfunctions, or struggle to
adapt to new situations, businesses may find themselves unprepared to manage operations
without the assistance of these systems (Pallathadka et al., 2023). Over-dependence can result in
a situation where human skills and expertise in traditional problem solving and decision-making
diminish, rendering businesses more susceptible to disruptions related to AI.
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Failures in AI systems can carry substantial consequences for businesses. These failures
can stem from various factors, including technical glitches, biased algorithms, or unforeseen
circumstances that AI systems are ill-equipped to handle (Martin & Waldman, 2023). When AI
systems fail, they can disrupt operations, lead to financial losses, harm a company's reputation,
and erode customer and stakeholder trust. For instance, an AI-driven trading algorithm might
cause a significant financial loss due to unexpected market behavior. AI chatbots may provide
incorrect information or display biased behavior, resulting in customer dissatisfaction (Martin &
Waldman, 2023). The outcomes of such failures underscore the paramount importance of having
contingency plans and human oversight in place to mitigate the risks associated with an
excessive reliance on AI systems in business operations. Ethical Concerns
The widespread adoption of AI in business operations has brought forth significant
ethical quandaries. AI systems, often constructed upon extensive datasets and intricate
algorithms, have the potential to perpetuate bias, discrimination, and issues related to fairness.
According to Perifanis and Kitsios (2023), the dilemmas arise from the data used to train AI
models, which may mirror existing societal prejudices and inequalities. The biases can become
evident in various areas, including hiring procedures, lending determinations, and customer
service interactions, giving rise to systemic discrimination. Recognizing the importance of
ethical considerations in the use of AI is of utmost importance, as these technologies hold
substantial influence over both individuals and society (Shaik, 2023). Striking a harmonious
balance between the benefits of AI-driven automation and the ethical obligation to mitigate
biases and ensure fairness presents a critical challenge for businesses that aim to uphold trust,
transparency, and integrity in their operations.
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Conclusion
The drawbacks associated with the impact of AI on business operations are multifaceted
and require thoughtful consideration. The research examined how AI disrupts conventional
employment, raises concerns about data privacy and security, reduces the personal aspect in
customer interactions, introduces the risk of overreliance and potential failures, and presents
ethical dilemmas. These disadvantages have the potential to hinder business growth, erode
customer trust, and result in consequences at the societal and individual levels. Nevertheless,
businesses have the opportunity to navigate these challenges by embracing responsible AI usage,
investing in employee training, ensuring the security of data, and striking a balance between AI-
driven automation and maintaining the human touch in customer service. By acknowledging and
addressing these downsides, businesses can harness the advantages of AI while upholding their
integrity and resilience in an increasingly automated environment
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References
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Martin, K., & Waldman, A. (2023). Are algorithmic decisions legitimate? The effect of process
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