Firms prefer ready-made AI software, with a few tweaks

Newswise — ITHACA, N.Y. – Artificial intelligence has fundamentally changed nearly every industry, from manufacturing and retail to construction and agriculture. And as AI becomes even more ubiquitous, firms are often opting for off-the-shelf technology that can be modified to meet their needs.

Chris Forman, professor at Cornell University, was part of a research team that examined firms’ decisions to adopt AI technology, and how that adoption was sourced: by purchasing ready-made software; by developing their own; or with a hybrid strategy, which the researchers say may reflect “complementarity” among sourcing approaches.

In an analysis of more than 3,000 European firms, they found that many – particularly in science, retail trade, finance, real estate and manufacturing – are increasingly opting for ready-made technology that can be tailored to the specific needs of the firm. While AI may seem to be threatening the human workforce, these findings indicate that workers with AI-related skills will still be needed.

“In the vast majority of industries, firms are doing both readymade and in-house development, and I think it’s an interesting question for future work to understand why that’s the case,” said Forman, co-author of the study which published in the Journal of Economics and Management Strategy.

“Ready-made software is important,” he said, “but for the vast majority of firms, it does not appear to be a substitute for in-house software, which suggests that it’s not, at least in the short run, going to eliminate the need for AI-related skills.”

The data in the study comprised firms in 10 industry sectors, with the largest share coming from manufacturing (19%), trade and retail (18%) and construction (12%). Industries with the smallest share of respondents included agriculture (4%) and utilities (3%).

Firms most commonly used AI for a few purposes: fraud or risk detection; process or equipment optimization; and process automation in warehouses or robotics.

Among the findings: The financial and scientific sectors – and to a lesser extent IT – preferred developing and customizing their own software while agriculture, construction and human health preferred ready-made solutions.

Forman said that in the past, as new technology spreads, the demand for different types of skills emerges. “Historically, the net effect has tended to be that, overall, labor demand goes up,” he said, “but it remains to be seen what happens in this case.”

Support for this work came from Belgium’s National Fund for Scientific Research.

For additional information see this Cornell Chronicle story.

Cornell University has dedicated television and audio studios available for media interviews.

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