Self-assessment

Where does AI move your margin?

Twenty questions on where AI moves the margin first, and whether anyone has put a number on it.

For the chief executive or managing partner of a mid-market business. 20 questions about 6 minutes

Izam Ryan is a chartered accountant who builds with AI. He has spent years checking other people's figures on behalf of whoever was paying for the answer. More recently he has been putting AI to work on that same job and measuring what it changes. These twenty questions are how he would start to read a business for where AI moves the margin - not whether it should "do AI", but where the money moves first. A board, an investor or a buyer will ask most of them within two years.

It is a thinking tool, not advice, and not a view on your business, which Izam has not seen. Answer from memory, a few seconds each. Having to look something up is itself an answer.

The answers stay in this browser. Nothing is recorded anywhere unless the Send control at the foot of the read-out is pressed.

Section 1 of 4

What the business sells

What a customer pays for, and how much of it a machine now produces at a quality the customer would accept. The part a person stands behind is the part that holds its price.

01 Could a customer get the core of what you sell from an AI tool today, at a quality they would accept?

If the answer is yes, the price of that line is already set by the tool, whether or not a customer has said so.

02 Is there a part of what you sell that customers pay for because a person stands behind it - and can you name it?

The defended part of the revenue is the part to build on; if nobody can name it, the business is defending everything and nothing.

03 Do you know which revenue lines are priced on time spent rather than on the result?

Time-priced lines shrink when the time does; result-priced lines do not.

04 Has anyone written down what the business will sell in three years if machines do most of the production work?

Without it, every AI decision is a tooling decision, and the tooling decides the strategy.

05 Has a competitor or a new entrant offered an AI-built version of what you sell at a lower price in the last year?

The first such offer sets the customer's reference price; the second makes it the market's.

Section 2 of 4

Who holds the power

Who can push the price down now that AI is in the market: the customer, the customer's own staff with a tool, the company that supplies the model, and the rival built without the old cost base.

06 Has a customer asked for a lower price, or a faster turnaround, because "AI makes this quicker"?

The first time it is a negotiation; the fifth time it is the market telling you what the work is now worth.

07 Could a customer do in-house, with AI, work they currently buy from you?

The substitute is not another supplier; it is the customer's own junior with a tool.

08 Do you know what the AI tools your work now depends on cost, and what their suppliers could charge once you depend on them?

Supplier power moves to whoever owns the model you cannot work without.

09 Has an AI-native rival appeared in your market in the last year, and do you know what they charge?

A rival built without the old cost base prices from a different floor.

10 Do you know what share of your revenue comes from customers who are themselves adopting AI fast?

Those customers' expectations arrive first; their share tells you how fast the pressure comes.

Section 3 of 4

How the work gets done

AI moves margin task by task. These questions ask whether anyone knows which tasks take the paid hours, what a machine could take from them, and who checks what it produces.

11 Do you know which three tasks take the most paid hours in the business this quarter?

AI moves margin task by task; the biggest tasks are where the money moves first.

12 For those tasks, could you say what part a machine could do now and what part a person must still do?

A task split that exists only in people's heads cannot be planned, priced or defended.

13 If a machine produced the first draft of your core deliverable, is it clear who would check it, against what, and how long that would take?

The checking step is the new cost; if it is not designed, the saving is spent on it unnoticed.

14 Are the people who do the work involved in deciding what the machine takes over?

A plan the doers did not shape is a plan the doers will quietly route around.

15 When work gets quicker, do you know whether the time saved is resold, reinvested or simply absorbed?

Most AI savings vanish into the working day; the ones that reach the margin were measured first.

Section 4 of 4

What it does to the numbers

Where the exposure becomes a figure. A figure can be argued with and planned against; a feeling cannot.

16 Could you put a figure on the revenue at risk if your customers' AI expectations arrived next year?

A number can be argued with and planned against; "significant" cannot.

17 Could you say what a thirty per cent fall in production hours would do to the margin on your main line, once the checking is paid for?

The margin effect is not the hours saved; it is the hours saved less the hours now spent checking, at the new price.

18 Is there money set aside for AI, and does one named person own the return on it?

Money without an owner buys tools; money with an owner buys results.

19 Do you know what a buyer, lender or investor would ask about AI if the business were sold or refinanced within two years?

They will ask for the exposure number and the plan, and they will discount what is not evidenced.

20 If the plan existed, could you show in twelve months, in pounds, that it had worked?

A plan that cannot be evidenced cannot be repeated, defended or sold.

0 of 20 answered