The last few months, I have spent plenty of time using AI to build applications, automate tasks and generally see what is possible… not leading edge, just helping out.

The experience has been enlightening and humbling.

What would previously have taken weeks can now be created in days… sometimes in an afternoon. It is like having a development team inside your laptop.

… and the faster and easier it is build… the more exciting it is… but, the less time you get to focus on what is really going on underneath.

Obviously this results in risk (and a whitepaper, more considered that my blog is a here), but here are some that really stood out

What did I just approve exactly?

AI is no longer just providing answers. It now runs code, installs software, opens files, calls APIs and can make changes on your computer.

That little approval box appears, ‘do you approve’. We click yes. Everything carries on.

But did we check the code, do we really understand what is it doing?

Probably not… honestly… of course not.

I mean do you want to spend 3 months coding, or bash an output out this afternoon to test the idea!

It is a risk, one that human psychology is making it hard to defend against.

Who else is in the room?

Most AI processes are not powered by just one system, they are models, an ecosystem of APIs, installed packages and skills.

It all feels seamless, but underneath what is happening to the data, which firms are touching the data, where, how? … and we are increasingly reliant on these models… what happens if we lose access, or in my case, the price goes up?

We are quickly stumbling further down the rabbit hole of extended (data) supply chains. Whilst this probably doesn’t matter much when we are building small, JavaScript, stand alone websites… okay I put the wrong bins out on Wednesday…. but, beyond this, into enterprise processes it is something we need to understand for sure, and fast.

A numbing effect?

I hear… ‘we managed the AI risk, by putting a human into the process’. Human oversight, human decision.

As a human, this is all very reassuring… but six months later you can foresee the problem.

After six months of approving nearly every decision, humans get bored… checks become cursory, a rubber stamp… and then the mistakes so to filter through (small in number but maybe consequential).

… how do we think about “the computer said yes… but the human says no” to customers. Something to consider.

The new legacy process?

This AI rollout is increasingly reminding me of the early days of spreadsheets.

Anyone could build something useful… nobody documented it.. then the person who built it and actually understood left. The spreadsheet continued running… for the next 15 years, and no one dared to go near it.

This pattern could easily repeat… but as it is AI… faster.

We have redesign and rebuild processes in an afternoon. But who owns it afterwards? Who supports it? Does the next person understand why it was built that way? Can we may changes?

Today’s automation may very quickly become tomorrows legacy system. A spaghetti diagram of legacy systems, connected by AI pipes, that no-one understands… locking us into vendors and providers long term. Something to avoid.

Downskilling?

You can already feel it. AI is changing skill-sets. Tasks, often mundane, I once completed manually are now delegated.. to my AI assistant. Yes, it has saved time… but also means I practice less often.

The same thing has already happened with my handwriting… I only really now type and my handwritten notes are, as a result, only remotely legible.

Of course new skills are coming in too, but staying up to date, and picking where to continue to practice existing skills (such as writing) is going to be important.

Lastly… sameness

It is me, or with the explosion in the use of AI, is everything is starting to look the same?

The same style. The same language. The same graphical format.

I know this is something I am guilty of too… everything looks really polished… but the question I always have is… does it stand out, especially when AI content is becoming increasingly easy to spot.

Being different matters, and if we are all creating content from the same handful of models and tools, it can relatively easily all look the same… no matter how good the content, it will not stand out.

Being human, we know what being human actually feels like… what is funny, on trend, irrational and those slightly odd ideas that do connect.

And, this is something we need to remember, in this blur of AI development, back in the office. For connecting with real customers… our humanness is in some ways our advantage.

READ THE WHITEPAPER HERE

For those of us bottom feeding on cheap(er) AI services, we got a shock this week. DeepSeek increase the pricing of their model APIs in some cases by 14x. This means, of course, bills of $5 a month jump to $25, and $25 to $125, with no real change in functionality, just a straight increase. And, this is on the back of the peak time pricing, introduced a few weeks ago too.

Now I am not begrudging DeepSeek an increase their prices. The price was already low and by all accounts they do seem to have been struggling with capacity (and also looking for funding, so more revenue no doubt helps).

Even with the price increase they are still amongst the cheapest in the market.

But, this is happening elsewhere too. X.AI, in May this year, pushed users away from their extremely well priced “Fast” models to Grok 4.3, a 5x increase. It all points to a wider trend around AI pricing… it is going up.

The API economy

In our daily lives, most of us are using AI models now. If nothing more it is a much more efficient way to search for information (is it better or more accurate, that we can argue about another time). However if you are mainly using the browser or app based chat interfaces, with bundled pricing, you may be unaware of the burgeoning economy and infrastructure that is being built underneath. I know I was.

Beneath the surface of AI services is typically a myriad of APIs and API calls. These APIs are simply agreed data exchange formats that service can use to exchange information, to call out to other programmes and services. Some you pay for, some are free, but they are intertwined in modern AI infrastructure.

LLM Model, Web-search, Image creation, Email, Calendar, Weather, Daily Joke of the day… all can be linked to APIs… even the FCA is getting in on the act with the release of an API to access their Handbook.

Each of these have price points, data security considerations and with this complexity comes a requirement for some sort of active management.

• Do I need to be using the most expensive and capable model for simply moving a document?
• Do I use a particular image model to create a visual summary?
• Which gives me more accurate and current, up to date, information when searching?
• What data am I exchanging and where is it going?

Of course, it may be worth paying the price for a premium model, that does all this for you. I feel sure many will, and large providers are adding functionality at pace (eg GrokBot, by SpaceX launched this week… a bit like OpenClaw (now owned by OpenAI)).

However for those of us without oodles of cash to burn (ie many businesses and certainly me!) we will be left managing this complexity. Managing it well can have a dramatic difference to the cost profile (I was able to reduce cost by 80% with some optimisation).

Yet if monthly costs are now going to routinely reach £40 a month (or even £100+… I seem to be spending even more when you add in all AI services) per user, it does feel like the sun is setting on the era of cheap AI… winter is coming and we need to be prepared!

Going Local

So it is at this post we should ask the question… when do we move away from server based models to highly capable local, open source, models on our own, local, server.

These models are competitive, advanced and this is already possible (Ollama is super easy, and easiest, to try if you have not). However I have found without very a high end PC, memory and graphics card, running the most capable models are still slow in comparison to online versions.(ish)… and for higher end services such as web-search, image and video creation, in some cases not possible on my existing (dedicated) hardware.

This is really only a question of processing power, typical consumer and business PCs are just not fast enough. To build or buy, one that is currently costs around £5,000. Pricey, yes… but vs a steeping monthly AI bill… it is getting there for the small user.

I wonder, with the likely price escalation, as firms recover investment costs, if this is a trend will see as people react and adjust.

Nothing new?

I suppose in some ways this is nothing new.

Already in business we use different employees with different skill-sets (and price points) for different tasks. We match the resource to the task to optimise the cost profile, we give them the tools to communicate and measure performance for jobs done well… and we also look at building in-house, locally, vs using third party managed services (or not).

And, this returns to a recurring theme.

Despite all the excitement around new tech and AI, in some ways not much has changed. Much of the toolset we need to manage it we already have…

AI is not making good management, structure and process go away, in many ways it is making it even more important.

Something to think about back in the office this week. Have a good week, everyone.

[A quick event plug. We will be talking about many of these issues, including governance, standards and risks at our live events in Oct/Nov… more info here, come along if you are free -> Event page]

Last week I spent time building the FCA Consumer Duty Lending Simulator, really as a bit of fun to promote our new refresher course around Consumer Duty essentials. Running through the detail, there was obviously plenty to consider around good customer outcomes… but also rally struck me was fair value assessments.

This was because, coincidently, and rather unfortunately for the firm involved, at the time I also received my contract renewal documentation. The letter informed me that my premium (it was insurance related) would go up by 20% this year… so I looking and vs 2023 it had consistently gone, in total by 72%.

Now, I am a year older, we all know about rising costs, but does this really justify the 70% over 3 years?

Insurance of course is notoriously tricky and some of this can be within the hidden or explained away within actuarial calculations of risk… however if am able to get a better price elsewhere this is an indication that the risk has not changed to that extent and whether this really offered Fair Value (this sits squarely in Financial Services).

… and for reference annual average inflation for the period is 7%, even going back to 2020 it was only 30%.

With my renewal rage over, this made me think of a series of discussions from my interview series…. exactly the weakening of the social contract we are seeing play out.

• In the debt advice sector, a breakdown in the contract between employers and employees, with stable employment in exchange for employee loyalty (discussion with Lee Healey and IncomeMax here)
  In the enforcement sector, increasing aggressive behaviour towards field agents, with a belief that obligations for payment of council tax or other contracts never have to be met. (watch for my discussion with Sarah Naylor, at Dukes, coming out soon)
• In the airline industry, where fees for cabin bags are being use to drive revenue, as much as protect the space for others on the plane.
• And in financial services, where premiums can rise by 70% in 3 years.

… and don’t get me started on the size of chocolate biscuit bars!

It feels like we are currently in a downward loop. Even in politics, this is happening. Popularism rising across all parties… resulting in reactions and policies squarely aimed at benefiting one group at the expense of another.

It is all short termism, a scrabbling over dwindling resources, with little balance. I fear the rush to the bottom will continue.

So where do we go from here. Well I think Fair Value offers us a sliver of light.

• Are we offering fair value for our customers, from our products.
• Are we acting in the best interests of our employees to treat them well and provide development.
• And, as customers, are we showing loyalty to firms that provide good service and a quality product at a fair price point.

Now I am not saying we should just give product away, never increase prices, or not complete to increase profitability. There will also still be a need to have difficult conversations and make adjustments in staffing, the world of business cannot stop…

However, I suppose this is an argument for us to be just fair in our approach, to ensure avoid seeing Customers, Employees and Firms as resources that can be exploited. It is trap, that in the long term does not make things better. By winning short term… we could in fact end up dead last.

… with AI, robotics, around the corner, and the potential for even greater societal change, this retaining our humanity, and staying in balance, could be just about to get even more important.

So, my thought for the week… have a good week everyone.

[on fair value… this weeks image is from a trip to the local cricket… £3 a ticket, it was value fair – yes, I got sunburnt!]