“The number of 'AI-native companies' will continue to increase. It's a time when existing legacy companies need to be on alert.”

On the 25th of last month, Juhi McClelland, President of IBM Consulting APAC, explained the rapidly changing corporate environment following the emergence of OpenAI's AI chatbot, ChatGPT, at IBM's office in Yeongdeungpo-gu, Seoul. AI-native companies are those born based on AI technology, similar to the 'digital native' generation familiar with digital technology from birth.

She stated, “AI-native companies are entirely new concept companies that can establish new systems with AI without technical debt, enabling them to start and generate revenue in a short time,” adding, “Existing companies need to find competitiveness through a 'hybrid' approach.”

IBM Consulting is a 'technology-focused' consulting firm that supports companies in enhancing productivity by utilizing advanced technologies such as AI. It is the only consulting organization based on a technology company like IBM. It currently accounts for about one-third of IBM's business. It plays a role in providing technical solutions to solve complex problems for clients, with AI being the most utilized, but also proposing various advanced technologies such as cloud and quantum. Currently, about 90% of its clients are large corporations, but the proportion of smaller AI-native companies is gradually increasing. In Korea, there are several clients, including Doosan and LG Uplus.

There is Riyadh Air in Saudi Arabia, which succeeded in its first flight last October. It is one of the proud cases. Riyadh Air achieved its first flight two years after preparing for its establishment because AI was introduced in all processes. AI was utilized in all areas, from ticket pricing to flight scheduling, crew management, and customer service.
In terms of customer service, quality can be significantly improved. AI can analyze traffic conditions around the airport to anticipate delays and introduce services such as fast-track options. IBM Consulting actively collaborated with Riyadh Air for two years to provide such possibilities and technical solutions.



Existing companies are not small in scale, are they? Scale is more important than expected. The larger the scale, the greater the benefits that can be obtained when AI is introduced, and they possess vast amounts of data, making business expansion utilizing this data easier. Previously, starting a new business required significant costs and decision-making, but with AI, it has become much easier. This increases the potential for business expansion.

However, timing is crucial. Currently, 64% of the global budget invested in AI is focused on corporate AI transformation (AX). This indicates that many companies are actively adopting AI. It is now necessary to move beyond the proof of concept (POC) of AI adoption and demonstrate its contribution to actual revenue growth.

The background of the AI bubble theory is understandable. However, in the long term, AI will have much greater potential impact. How long has it been since the internet emerged? It's been decades, but not all banking operations are digitalized yet. There are still areas that need digitalization. Similarly, AI will continuously generate revenue and reduce costs over a long period.



IBM is now 114 years old. Over 400 defined IBM work processes exist. Among them, 70 have been selected to prioritize the introduction of AI-based workflows and have been completely revamped. As a result, $3.5 billion (approximately KRW 5.13 trillion) in costs have been saved over the past two years, and it is expected that $4.5 billion (approximately KRW 6.6 trillion) will be saved this year.

It is a market with great potential, possessing both innovation and scale. Korea is considered innovative because when meeting Korean clients, most executives are prepared to boldly abandon the past and adopt new methods.
However, adopting AI can be seen as democratic (in terms of optimizing the decision-making process). The culture of Asian countries, which values hierarchy, can hinder this. Therefore, when consulting, it is always emphasized that cultural change within the organization is important along with technology adoption.

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