AI Adoption Challenges, Rising Energy Costs for Small Businesses, and New Innovations in AI Tools

[00:00:02] It's Tuesday, December 3rd, 2024, and I'm Dave Sobel. Three things to know today. Businesses struggle with AI adoption, training gaps, board doubts, and workforce concerns.

[00:00:12] AI-driven energy demands threaten small business survival amid rising electricity costs. And Anthropic and a Paris startup age expand AI horizons with new features and targeted models. This is the Business of Tech.

[00:00:29] Cisco's latest AI Readiness Index reveals a widening gap between the urgency for organizations to implement artificial intelligence and their actual capabilities.

[00:00:39] The annual survey, which included nearly 8,000 senior business leaders across 30 markets, found that only 13% of companies are fully prepared to leverage AI, a slight decline from 14% last year.

[00:00:54] A staggering 98% of respondents reported increased pressure to deploy AI, with 85% believing they have less than 18 months to show results.

[00:01:05] However, only 21% of companies possess the necessary graphics processing units to manage current and future AI workloads.

[00:01:12] Furthermore, the receptiveness of boards to AI has decreased significantly, with only 66% expressing moderate to high receptiveness, down from 82% the previous year.

[00:01:25] Despite these challenges, businesses remain optimistic, expecting AI-related spending to account for 30% of IT budgets in the next five years, nearly double where it stands today.

[00:01:35] A recent report from Lucid Software highlights that while 60% of firms claim to utilize artificial intelligence tools, 34% of workers use these tools less than once a month.

[00:01:47] Over half of the surveyed workers believe AI will see only moderate adoption within their workplaces over the next five years.

[00:01:54] Despite recognizing the potential benefits of AI, such as time savings and improved job satisfaction, many employees cite concerns over data security and job displacement as barriers to adoption.

[00:02:07] Notably, 49% of workers express worries about data security, while 43% fear AI could replace their roles.

[00:02:15] The report also reveals that only 27% of workers receive training on AI tools from their employers, with many relying on self-education instead.

[00:02:24] A recent survey conducted by Sivanta for WSP reveals that just under a third of UK employees believe the impact of artificial intelligence in the workplace is minor.

[00:02:35] While 84% suspect that AI will significantly impact the future, only 13% describe its current influence as substantial.

[00:02:44] The survey, which questioned over 4,000 employees, indicates that discussions around AI often outpace actual change,

[00:02:52] with 4 in 10 employees noting more talk about implementation than tangible results.

[00:02:58] Concerns about job displacement are prevalent, with 28% expecting job losses and 32% feeling their roles are at risk due to AI advancements.

[00:03:09] Despite these anxieties, 72% of respondents reported that their employers provide resources to help them adapt to new technologies.

[00:03:17] Nonetheless, less than half are comfortable using AI tools, highlighting the need for further education and support to realize the potential benefits of AI in the workplace.

[00:03:29] Why do we care?

[00:03:30] The drop in board-level enthusiasm for AI, 66% down from 82%, signals a potential trust and understanding gap.

[00:03:39] CIOs and IT leaders should focus on delivering clear, measurable AI use cases to rebuild confidence among stakeholders.

[00:03:48] Only 27% of workers receive employer-provided training on tools, with many relying on that self-education.

[00:03:55] Businesses that invest in structured training programs could gain a competitive advantage by fostering confidence and competence among employees.

[00:04:03] And without addressing readiness gaps, businesses risk wasting significant portions of these expanded budgets.

[00:04:11] Consulting and managed services can play a critical role in ensuring efficient and impactful AI deployment.

[00:04:17] All of which are areas to focus on, and why we care.

[00:04:24] Today's episode is supported by CoreView.

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[00:05:14] Small businesses in the United States could see their electricity bills rise by as much as 70% due to surging energy demands from data centers,

[00:05:23] according to new research co-authored by the Jack Kemp Foundation and Capital Policy Analytics.

[00:05:29] This increase in energy costs could force smaller firms to scale back operations or even shut down entirely.

[00:05:35] The average household may pay over $1,000 more annually for electricity by 2030 if these energy issues are not addressed.

[00:05:44] The research indicates that the rapid expansion of artificial intelligence is driving this trend,

[00:05:49] with nearly 40% of data centers expected to face power supply constraints by 2027.

[00:05:55] In Europe, energy demands for data centers are projected to triple by 2030, rising from 62 terawatt hours to over 150 terawatt hours.

[00:06:06] And Kindrel, the managed infrastructure services company spun out from IBM, has reported a forecasted revenue decline of 2 to 4% for the fiscal year 2025,

[00:06:17] potentially resulting in annual revenues between $15.2 and $15.5 billion.

[00:06:22] Despite an anticipated positive revenue growth in the fourth quarter of fiscal year 2025,

[00:06:29] former employees expressed skepticism regarding the company's ability to secure new business, citing layoffs and a lack of new IT service contracts.

[00:06:38] Concerns have been raised about Kindrel's reliance on legacy contracts inherited from IBM, which are often unprofitable.

[00:06:46] As Kindrel attempts to pivot towards a consulting-led business model, former employees claim that the company is merely reclassifying existing managed services revenues as consulting work.

[00:06:57] Currently, Kindrel's workforce stands at around $80,000, with ongoing efforts to reduce headcount as part of a cost-cutting strategy.

[00:07:06] Why do we care?

[00:07:07] The explosive growth in AI workloads is creating unprecedented demands on data center power supplies, directly impacting energy prices.

[00:07:15] Small businesses, which lack the economies of scale employed by large enterprises, may struggle to absorb these increases.

[00:07:23] IT firms can position themselves as partners to small businesses by offering solutions like energy-efficient IT hardware,

[00:07:30] cloud migrations to greener data centers, and cost optimization tools.

[00:07:35] Kindrel's dependence on unprofitable IBM contracts underscores a common challenge for legacy IT service firms,

[00:07:42] maintaining profitability while transitioning business models.

[00:07:46] Kindrel's dependence is the issue.

[00:07:49] It's a word of warning as you consider changing your business.

[00:07:54] Anthropic has launched a significant upgrade to its Clawed AI chatbot,

[00:07:59] allowing users to select from three distinct writing styles – concise, explanatory, and formal.

[00:08:05] This feature aims to tailor the chatbot's responses to match individual user preferences,

[00:08:10] providing clearer and more polished communication or more direct answers as desired.

[00:08:15] Users can also create custom writing styles by uploading examples of their own writing.

[00:08:20] Currently, the feature is only available on the web version of Clawed and is not yet accessible on mobile applications.

[00:08:26] H, a Paris-based AI startup founded by former Google employees, has launched its first product, RunnerH,

[00:08:34] after raising $220 million in a seed round earlier this year.

[00:08:39] Despite losing three of its five co-founders due to operational disagreements,

[00:08:44] the company has developed RunnerH as an agentic AI designed for businesses,

[00:08:49] focusing on quality assurance and process automation.

[00:08:51] With a proprietary model based on just $2 billion parameters,

[00:08:56] Age aims to provide efficient solutions in areas like robotic process automation and business process outsourcing.

[00:09:02] The company is also raising a Series A funding round,

[00:09:06] emphasizing the capital-intensive nature of AI development.

[00:09:09] Age claims its model outperforms competitors, including Anthropic and Meta,

[00:09:14] in efficiency and operational costs.

[00:09:16] A new study from the Tau Center has raised alarms about OpenAI's ChatGPT misrepresenting and misattributing content from publishers,

[00:09:25] including those in licensing agreement.

[00:09:28] Researchers tested ChatGPT's search tool with 20 publishers

[00:09:32] and found that the chatbot frequently provides inaccurate citations, misquoting content,

[00:09:37] or failing to acknowledge its inability to provide correct citations.

[00:09:42] This inconsistency could harm publishers' visibility and potentially encourage plagiarism.

[00:09:48] OpenAI responded by labeling the study as atypical, highlighting their commitment to improving citation accuracy while serving a user base of 250 million weekly.

[00:09:58] Why do we care?

[00:10:00] For businesses and IT providers, the key takeaway is the need to balance adoption of AI capabilities with a strong focus on reliability, transparency, and ethical considerations.

[00:10:10] Businesses should prioritize tools that align closely with operational needs while remaining user-friendly and secure.

[00:10:17] Smaller, targeted models like RunnerAge may offer a cost-effective path for specific use cases,

[00:10:24] but should be scrutinized for scalability and robustness.

[00:10:27] Trust will remain a cornerstone of AI adoption.

[00:10:31] Providers should actively monitor and address the limitation of tools to ensure long-term value for their clients.

[00:10:39] Today's episode is supported by Huntress.

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[00:11:31] Thanks for listening.

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