Can you explain, precisely and exactly, what generative AI actually is? If not, don’t worry: The majority of professional service providers don’t know either.
This is according to a recent report by Koltin Consulting Group and Pointe Advisory of 151 professional services providers across a range of segments, which also found that less than half of survey respondents could demonstrate a basic definitional understanding of the differences between generative AI, deep learning, and machine learning. Overall just 41% were able to do so. The remaining 59%, the report suggested, lacked understanding of how generative AI is distinct from other types of AI applications and uses cases, as well as a lack of awareness that there are other types of AI beyond generative AI.
Those with the best understanding of the differences were those in IT consulting, but even then they remained a minority, with 55% still demonstrating a flawed understanding of what generative AI even is. Those in legal services fared even worse, with 63% not understanding, and those in accounting services fared worse still, with 70% lacking clarity on the nature of generative AI. While nonspecific by definition, whoever was in the “other” category did the worst, though, with 80% having a flawed understanding of generative AI.
The report found that the main way people learn about generative AI is through networking and industry events (and, presumably, networking at industry events), which the report suggested might serve to reinforce misunderstandings within industries.
This lack of understanding, however, has not dampened respondents’ plans to use more and spend more on generative AI. The survey found that 90% of firms have begun to incorporate AI into their strategic planning, particularly those in IT consulting and in larger organizations. Regarding accounting firms specifically, about half (give or take a few percentage points) are doing so through things like upskilling their workforce and investing in AI education, exploring partnerships with AI tech providers, collaborating with AI specialists and consultants, and developing a dedicated AI strategy team.
Professionals, including accountants, also believe that their use of generative AI will likely grow over time. While today only 7% use generative AI “extensively” (as in, for more than 75% of their day), survey respondents expected this proportion to grow to 40% in the long term, with a further 26% saying, in the long term, “quite a bit” of the day (51-75%) will be spent using generative AI.
Similarly, while most firms currently spend less than 5% of their revenue on AI products and services, the majority expects to significantly increase budgets over time. For slightly more than half, budgets are expected to rise by at least 10% over the long term, with some saying as much as 25% of their budgets will be devoted to AI in this time frame.
For accounting firms specifically, 28% expect to devote more than 5% of their budget on AI services in the short term, but 72% expect to do so in the long term. The survey also found that 23% of accounting firms expect to spend 25% or more of their budgets on AI costs in the long term.
Yet, the survey also found that accountants are the most concerned about generative AI, being more worried than any other professional about things such as impacts on data security, copyright issues, loss of that human touch, bias, and hallucinations, among other things. The only areas where accountants are not as worried as other professionals were costs and regulatory pushback; in both cases, accountants were a close second compared to IT consultants.
Regardless of hesitation, the main reason why professionals are looking into generative AI is that they expect it will bring productivity and efficiency gains across key workflows. As firms gain confidence and clarity regarding the operational and efficiency gains they can achieve, a greater percentage of budgets are expected to shift to technology, according to the report.
The respondents came from four professional services segments:
- Accounting services (including tax, assurance wealth management, and financial advisory);
- Business consulting (including strategy an operational consulting);
- IT consulting (including managed services); and,
- Legal services.
Pointe also interviewed 10 individuals that were responsible for their firm’s AI strategy to gain a deeper perspective beyond the survey data.
The full report is available here.
