Value Assessment of AI Products and Applications
The advent of artificial intelligence (AI) presents companies with both unique opportunities and – as practitioners’ experience has shown – unique challenges. In this whitepaper and the accompanying comprehensive valuation tool (see below), appliedAI, in cooperation with its technology and industry partners, offers a lifeline to those who are confronted with one particularly vexing challenge of AI: Namely, how to best quantify and measure the value contribution of AI initiatives during the course of a company’s journey to AI maturity.
The authors present a comprehensive framework for the value assessment of AI use cases and a transparent ‘Return on AI (ROAI)’ calculation based on five core internal and external return drivers each. Regarding investment expenditures, the most relevant cost categories along the ML life cycle have been evaluated.
Ultimately, they advise the adoption of a strategic perspective that seeks to capture the short-term value pools while simultaneously preparing to seize the full long-term value potential of AI by reinvesting resources that were freed up in the short to medium term and by leveraging the capital and experience gained so as to increase overall AI maturity. Finally, given the time and scale required to generate significant returns from AI, they recommended a portfolio approach to ROAI and a five-step, value-based operative process for the management of this AI portfolio based on appliedAI partner companies’ best practices.
The Value Assessment Tool
This tool is designed for making a rough financial evaluation of potential data-based use cases so as to facilitate an understanding of the financial benefits of these use cases. Based on the inputs, different potential use cases can be compared in terms of their profitability and investment costs. This tool is designed to help you structure your thoughts and make underlying assumptions for data-based use cases. Towards the end of the tool, we present a range of financial indicators that might be achievable with the respective use cases. Please remember that the underlying assumptions made will often be rough estimates and that the resulting numbers reflect only possible, not certain, future financial returns.
Download the blank tool to get started. Additionally below you can also download a sample version of a pre filled out tool to see an example.
The AI use case assessment tool and this report are the result of appliedAI’s ‘Value Assessment of AI Use Cases’ Working Group. We have drawn on the experience of the following leading experts from appliedAI partner companies and are grateful for their contributions:
- Matthias Neuenhofer (BayWa AG)
- Helfried Binder, Christian Funke, Olaf Niebisch, Daniela Rittmeier (BMW AG)
- Philipp Stähle (EnBW Energie Baden-Württemberg AG) Anant Nawalgaria (Google LLC)
- Simon-Pierre Genot, Nico Kelling (Infineon Technologies AG)
- Matthias Weber (Sandoz Deutschland / Hexal AG)
- Jannik Seger, Senior AI Strategist at appliedAI
- Dr. Philipp Hartmann, Director of AI Strategy at appliedAI
- Dr. Andreas Liebl, Managing Director at appliedAI
The authors would like to thank Clara Laufenberg, Clara Mehler, and Christian Wender for their invaluable contributions in writing this report and in the development of the associated tool, as well as Henrike Noack for designing this publication.