According to research by the MIT Sloan Management Review and Boston Consulting Group (BCG)Agent-based artificial intelligence (AI) applications will lead to significant management challenges. This is because technology procurement has traditionally been viewed as either a replacement or complement to human workers. Technology automates or augments, so it can be viewed as either a tool or a worker.
The fact that agent-based AI can act both as a tool and as a colleague disrupts traditional control logic, the authors say. The Emerging Agency Enterprise: How Leaders Will Need to Navigate the New Age of Artificial Intelligence inform, warn. The report examines how organizations are now faced with the unprecedented challenge of managing a single system, which requires both a human resource management approach and asset management practices.
For example, the report notes that IT leaders are looking for predictable, scalable systems with clear technical specifications. Finance leaders need investment models with measurable returns and amortization schedules, while HR leaders need performance management systems and oversight protocols.
Sylvain Duranton, global head of BCG X, the technology arm of the consulting firm, predicted that more money is likely to be spent on technology than on people. “When you look at the company of the future, it is likely that the relative share of technology costs and personnel costs will change, with a higher share going to technology costs.”
The report from BCG and the MIT Sloan Management Review warns that existing management principles are incompatible with the way agent-based AI is used both as a tool and as a worker. Tools scale predictably and workers adapt dynamically. The report's authors note that the ability of agent-based AI to perform both tasks simultaneously requires new principles of organizational design.
Duranton noted that human resource management typically involves a variety of factors, such as social engineering and union negotiations. “The same thing will happen with relationships with technology suppliers“, he predicted.
Another change in guidance is that business leaders need to evaluate the right time to invest in agent systems and how those investments are made. According to BCG and MIT Sloan Management Review, business leaders face the challenge of balancing long-term capacity building with short-term profitability.
As the report's authors note, traditional instruments require higher upfront costs but provide predictable returns due to established amortization schedules. Human workers, on the other hand, are a fixed variable cost, but as the MIT Sloan Management Review notes, their value increases with experience and training.
The report warns that agent-based AI poses a challenge to both models, requiring significant upfront development costs and ongoing variable costs such as training models on new data. While many technology systems require constant maintenance, agent-based AI systems are both devalued by model drift and valued by fine-tuning and new capabilities.
Dutanton urged CEOs and IT leaders to rethink their approach supplier relationship management. He said: “I think it's time for a lot of CIOs, and even CEOs and senior management, to develop a strategy for managing their portfolio of technology providers because those costs are going to increase over time.”
The fact that agent AI evolves and evolves over time means that value calculations fail because the most valuable applications have not yet been developed. According to the report's authors, traditional synchronization models that use conventional replacement schedules risk rapidly falling in value as systems lag behind the technology curve. This is because the traditional approach to technology upgrading does not take into account the speed of technological evolution.
Even if an AI system is able to deliver efficiency from the start, over time it may lead to wider deployment, which will impact operating costs. Dutanton recommended that IT and business leaders evaluate the goals and intent of their technology strategy, as well as the portfolio of IT providers and products they use, to understand how dependent the strategy is on external technology providers, which can dictate the pace of innovation and future costs.
