AI in Business Management- How to Use AI to Make Smart Business Decisions

In a world where nearly 90% of all workplace accidents and operational delays are caused by human errors, there are better moves than relying on human intelligence, especially for progressive businesses. Such businesses need solutions that mimic human intelligence while keeping their operational pace faster and more accurately than humans. This brings us to AI development for businesses.  

Artificial intelligence in business management allows users to manage & automate key workflows, automate mundane business routines, ensure that business resources are allocated & utilized effectively, and find & fix performance bottlenecks. 

As AI solutions take care of low-risk jobs, managers are free to converse their focus on strategic planning, creating innovative solutions, and solving critical problems that are beyond the reach and efficiency of a machine. 

Scroll down to learn how to use AI in business management, the benefits that can you enjoy, and key areas where you use AI. 

Must Read: What are AI Agents? How to Build AI Agents for Your Businesses? 

Roles of AI in Business Management

Artificial intelligence (AI) is rapidly transforming the way businesses used to offer services and earn profits. Through the use of technologies such as machine learning, deep learning, NLP, and many others, AI allows businesses to vast amounts of data, extract valuable insights, and use them to improve their decision-making abilities across all the areas of an organization.  

Imagine a retail store that relies on human managers to track the inventory, count the stocks, enter the data in spreadsheets manually, and place orders based on past sales. Now, this traditional approach has multiple issues. For instance, the human manager can:

1. Miss out crucial data while entering it into the spreadsheets. 
2. It takes a lot of time to count a batch of stocks. 
3. Fail to understand the future demands and seasonal fluctuations and place the order without reviewing them, resulting in a stock shortage.

Now, the retail store owner has started using AI in business management. The inventory is streamlined through AI-powered inventory management solutions that the same human manager uses. This approach helps the managers to: 

1. Have real-time stock availability, product demands, and customers’ need data while placing stock orders. Analyze competitor pricing and customer behavior to adjust the prices based on demand. 
2. Shift its focus from data entry to production innovation as AI will automatically collect, store, and analyze data in spreadsheets or elsewhere. 
3. Automatically track the inventory levels after each sale and count the stock availability without any manual effort. 

This is how AI can transform business management. It brings data to the center stage, eliminates manual efforts, and allows businesses to execute tasks quickly and error-free. Forbes Advisory Survey also confirmed that: 

1. 53% of businesses are using AI to improve default production processes 
2. 51% of businesses are using AI for process automation 
3. 38% of organizations use AI to reduce risks 
4. 42% businesses prefer using Ai to avoid crucial mistakes 

The core of this is that AI in business management is helping make things better, accurate, result-driven, profitable, and affordable than ever before.

Benefits of AI in Business Management 

From reducing operational costs to increasing insights into key business operations, artificial intelligence in business management is doing a commendable job and brings a wide range of benefits to the table. Let’s have a look at the key benefits of using AI for streamlining business management tasks.

Dynamic Pricing 

For hotels, e-commerce, retail, and every other industry, dynamic pricing is crucial to have a perfected pricing strategy that allows businesses to earn money in the long run. In fact, 85% of business management believes that dynamic pricing is crucial. 

Using advanced AI algorithms, it’s easy for businesses to track the demand and supply of a service/product in the real-time and adjust the pricing accordingly. In real-world, giants such as Uber and Amazon have already adopted this approach. They are using AI to track ever-evolving demands and modify retail prices in a profit-earning manner. 

Interesting Fact: Amazon is adjusting its price every 10 minutes and about 2.5 million times a day using AI. 

Customized Recommendations 

78% of customers prefer repurchasing from brands offering personalized recommendations. AI algorithms can understand customers’ existing and future needs, based on their past purchases and searches, and make 100% customized recommendations. Netflix is the ideal example of using AI and earn massive profits and increase viewer ships by personalized recommendations. 

Automated Workflows 

An average of 68% of workers are overloaded due to manual and low-risk jobs, resulting in dissatisfaction.  AI can automate a wide range of business management tasks such as data management, marketing planning, inventory optimization, recruitment, and finance. 

Improved Business-Customer Communication 

Through the use of AI agents and chatbots, businesses can save up to 2.5 billion work hours per year while increasing customer satisfaction by 20%. This is because AI-powered business-customer communication can be highly personalized, remain readily available, and provide instant responses. 

Learn About: AI Agents in Customer Service 

Better Data Security and Reduce Cyber Threats 

The cost is a cyberattack and its aftermath is huge, between $250,000 and $500,000. AI can reduce the likelihood of data leaks and cyber attacks by detecting anomalies and potential threats before they are brought into action. 
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How AI Influence the Principles of Business Management?

Key principles that form the foundation of businesses are planning, organizing, staffing, leading, and controlling. Effective implementation of AI can influence all these principles positively.

AI in Business Planning  

Harved says that 60-90% of strategic plans are never implemented because managers are slow, don’t have enough insights, and can’t predict unforeseen business risks. By leveraging AI abilities, businesses can automate planning, include data, and gain a competitive edge.  

Here is how you can use AI in business planning with some real-world examples. 

Must Read: 15 Use Cases of AI Agents in Businesses 

Demand Forecasting 

AI algorithms can analyze vast datasets, including social media sentiment, competitor pricing, and weather patterns, to predict demand with greater accuracy. This allows businesses to plan their inventory levels, productions, delivery schedules, and resources accordingly. 

Amazon is using AI to forecast demand for millions of products and optimize its inventory across the delivery channels, avoiding stockouts. Mckinsey Digital confirmed that  AI-powered reduced errors by 30-50 %, improved accuracy by 65%, and reduced warehousing costs by 10-40%. 

Risk Management and Mitigation

Planning strategies to overcome evident business risks such as economic downturns, supply chain disruptions, and cyber threats are crucial. Artificial technologies like machine learning algorithms can analyze historical data and identify potential risks in real-time. 

The best real-world example of AI is business risk management is Darktrace-a company that managed to stop over 300,000 cyber threats and plan responsive threat responses using AI. 

Market Research and Customer Insights Planning 

Have ample of business data yet failed to conduct effective market research? It is time to deploy AI technologies to gain insights into customer preferences and plan service/product offerings accordingly. 

AI can collect and analyze vast data from social media platforms, online reviews, and surveys to identify customer preferences, buying habits, and emerging trends. Through this data, it's easy for business to plan their service delivery in a way that aligns with customer needs. 

A recent Deloitte research confirmed that the use of AI in market research increases insight delivery by 19% and accuracy by 17%. 

Product Development and Innovation Planning 

Imagine a product development process where you can review customer feedback, competitor products, and current market trends at the core of everything without much of brainstorming. This is the power of AI in product planning. 

AI technologies enable businesses to automate ideation, designing, and every other stage of product development and empower the process with relevant data. PepsiCo is using AI at a large scale to connect different data sources and gain better customer insights.

Financial Planning and Resource Allocation  

AI algorithms eliminate the sluggishness and inaccuracies of traditional financial planning by having a hold over past, contemporary, and futuristic market trends at lightning speed. This allows businesses to make better decisions regarding resource allocation, budgeting, and investment strategies.

JP Morgan Chase is an early adopter of AI in financial planning and managed to increase its revenue forecasting accuracy by 20-30%. 

AI in Business Organizing 

Organizing structure, resources, and communication is the second most crucial business principle and AI technologies are doing wonders in the respective domains. 

Automated Data Management

Bad data management is already consuming $14 million per year and 30% of workhours. However, AI-powered data management is effective, collaborative, swift, and accurate. AI systems can collect business data from emails, reports, presentations, business audio conversations, and even from video conferencing without human intervention. 

An interesting comparison between with and without AI data management confirmed that AI takes 10 minutes against the 35 minutes of manual data handling to perform a multi-source data analysis to manage a project. Similarly, post-meeting housekeeping can be done in just 2 minutes with the help of AI. 

Intelligent Task Management and Scheduling

AI-powered task management systems enable managers to avoid spending their crucial work hours on menial and low-skill jobs such as assigning tasks, scheduling meetings, assigning tasks to teammates, tracking the progress in real time, etc. 

They can set up an automatic project tracking system for each project and even change the deadlines, everything over a single click. 

Predictive Maintenance and Resource Allocation

Managers of the manufacturing industry face dire situations and even lose up to $1 trillion annually because of equipment failure. Financial penalties and idle staff are other challenges. AI for the manufacturing industry facilitates production managers to anticipate future failure and have a preventive maintenance strategy. 

A recent study by Deloitte confirmed that AI-based predictive maintenance can help businesses improve asset utilization by 20% and reduce downtime by 50%. 

Enhanced Communication and Collaboration 

The cost of poor communication within an organization has already reached $62.4 million per company. Communication breakdowns and information silos can impede collaboration and slow down decision-making. 

With the help of an AI-powered communication system, managers and team leaders can bypass the language barriers as NLP will translate the text and audio communication instantly. In addition, AI systems can understand the communication patterns of different individuals and personalize the entire communication cycle. 
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AI in Staffing 

When the cost of a bad hire is between 30-150%, businesses need a proactive approach to hiring, training, and deploying the right talent to ensure full skill utilization. AI is transforming staffing principles by all means possible. 

Sourcing and Screening Candidates

Manual resume sifting is time-consuming and inefficient whereas AI-powered resume scanning is swift and error-free. AI-driven ATS can scan resumes, extract relevant skills and experience, and match them to job descriptions. 44.2% of organizations have already experienced massive acceleration in their default hiring process using AI. 

Building Talent Pools

Identifying passive candidates and assigning them the right job role is a great challenge for businesses and AI is of great help in this regard as well. It can analyze social media profiles, online activity, and job boards to identify individuals with relevant skills and experience, even if they aren't actively applying for jobs.

Personalized Candidate Engagement

In an era of personalization, mass emails fail to be impersonal and ineffective whereas AI-powered candidate communications are highly personalized. AI can analyze the candidate’s skills and send personalized messages to candidates based on their skills and experience, highlighting how their qualifications align with the job requirements.

Onboarding and Training

Businesses can cut down the overall time and expenses involved in training newly hired candidates through the help of AI. AI-powered chatbots can answer new hires’ queries, guide them through the policies, conduct mock training, and even provide real-time feedback. 

Interesting Fact: AI in employee training and hiring is helping businesses to save up to 30% of training costs. 

AI in Leading 

Poor leadership, with no data-driven insight and slow processes, is eating away 7% of the annual sales of businesses. Leading is a key pillar of business management and AI-powered business management systems to streamline this principle in multiple ways. 

1. AI systems can assess leadership qualities, track their performance in real-time, and provide personalized development plans, resulting in better performance. 51% of US companies are using emotional AI to track the mental state of their employees. 
2. Businesses can develop AI agents to analyze facial expressions, tone of voice, and even word choice to detect emotions in managers and stakeholders. By leveraging computer vision, speech recognition, and natural language processing, these AI agents can identify subtle cues that humans often miss. This is crucial for understanding the emotional dynamics at play and making necessary changes. 
3. ML algorithms can analyze massive datasets of past cases, social impact reports, and other relevant information to support responsible decision-making. 
4. Through the use of computer vision, AR, and virtual reality, AI systems can create real-life crisis scenarios and improve the outcome of leadership training.

AI in Controlling

AI-powered business management tools can transform controlling principles by automating strategic thinking, complaint, and many other aspects. 

1. Manual quality control can miss 20-30% of defects whereas AI in quality control helps businesses to decrease defect rates by 30%. DL algorithms can analyze complex data sets to identify the root cause of quality issues, allowing for targeted solutions whereas ML algorithms can analyze historical data to predict potential quality issues before they occur. 
2. AI in compliance monitoring can reduce false positives in frauds, flag high-risk transactions, and automate compliance monitoring, saving time and effort. 
3. AI-based risk control for businesses leads to better capturing of non-linear relationships and provides more accurate forecasts compared to traditional regression models, streamlining the feature engineering process, and continuously monitoring data to instantly verify that actual values match predicted outcomes, creating a proactive control verification system.

How Does AI in Business Management Work?

AI-powered business management systems rely on Large Language Models (LLMs) and machine learning technologies to learn from past data to make future predictions. They combine traditional business management practices with these advanced AI technologies so that business management automates, streamlines, and becomes progressive. This form of AI integration into business management is also known as Retrieval-augmented Generation (RAG) and here is its breakdown. 

Must Read: What is RAG and Why It’s a Hot Topic? 

1. Data Collection- Various type of data is collected from a wide range of documents and resources including emails, customer logs, market trends, spreadsheets, product manuals, and internal reports. 
2. Data Preparation-Collected data is then sorted, categorized, and labeled so that the RAG system can process it effectively.  
3. Exploratory Data Analysis (EDA)- This technique involves knowing the data’s structure and identifying the missing values. Later, it involves breaking down large datasets into smaller and easy-to-manage topic-based chunks for higher retrieval accuracy. 
4. Data embeddings & storage- Extracted data from different business resources are then turned into vectors and stored in different types of vector databases such as Pinecone or Weaviate. 

Also Read: Why Vector Databases are Important for LLMs? 

1. User Interaction- Using an interface, users or businesses can interact with these RAGs and give them a command related to a specific knowledge base. 
2. Semantic Search- The RAGs understand user intent using AI and NLP and try to retrieve information from the vector database. 
3. LLM models- Based upon the specific needs, AI-based business management systems can use different types of LLM models such as GPT-4, Gemini, Mistral, or Llama 3 to process retrieved data chunks effectively.
4. Output Generation-  These LLMs use the chunks to create a text-based response. This text is shared with the user through an API. 

Challenges of AI in Business Management

Before you plan to integrate AI into business management, you must have your hands on key challenges that can make the road ahead for you a little difficult. 

1. AI systems bank upon the mammoth of data to establish a functional understanding of a given data and extract dependable insights. Businesses struggling with data silos,  inconsistent formats, or lack of relevant historical data will have difficulties in designing a powerful AI system for business management. 
2. Incorporating AI into legacy systems can be a complex and costly affair for most of the businesses. Many struggle with compatibility issues that require significant modifications to existing infrastructure.
3. While AI implementation in business management can reduce operational costs, ROI is not immediate and demands substantial upfront investment in acquiring technology and talent.
4. AI systems often handle sensitive data, raising concerns about data protection. If strong security measures are not in place, all your crucial business data can be at huge risk. 
5. AI must comply with various regulations, which can be challenging as laws often lag behind technological advancements.
6. AI systems require ongoing maintenance, updates, and retraining to remain effective. This makes using AI technologies a resource-intensive affair. 
7. Overreliance on AI leads to over-automating processes that lead to the loss of human insights, which can be risky. 
8. If quality data and proper integration are not in place, AI systems are likely to produce unexpected results in complex, real-world scenarios. 
9. Effective implementation of AI in business management demands immediate and effective addressing of these challenges with a personalized approach. 

How Ampcome can help you Unlock Intelligent Business Management? 

AI is transforming business management by streamlining operations, speeding up decisions, and freeing up valuable human time. However, building such AI business management applications requires a deeper understanding of LLM models, NLP,  machine learning, vector databases, and other AI technologies. 

Ampcome AI development brings 7+ years of excellence, quality developers, and an in-depth understanding of AI technologies that businesses operating across industries can use to build 100% customized AI solutions. We leverage cutting-edge AI technologies like LLMs, NLP, and machine learning to create intelligent systems with unmatched contextual awareness.

Our AI-powered business management systems can analyze vast amounts of data to reveal valuable trends and automate repetitive tasks, freeing up your team for strategic thinking. 

So, don't get left behind. Let Ampcome leverage AI for your benefit. 

Book a free consultation today to see how AI can help you save time, effort, and operational costs.