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Analysis of the Use of Artificial Intelligence Technology on Digital Startups in

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 International Journal of Advanced Science and Technology
Vol. 29, No. 3, (2020), pp. 750- 758

Analysis of the Use of Artificial Intelligence Technology on Digital

Startups in Indonesia
Erna Maulina 1*, Margo Purnomo2, Aulia Rizki Wicaksono 3, Muhamad Rizal4
1,2,3,4
Doctoral Program, Faculty of Social and Political Sciences - Business
Administration,
Padjajaran University, Jl. Raya Bandung Sumedang KM.21, Hegarmanah, Kec.
Jatinangor, Kabupaten Sumedang, Jawa Barat 45363
1
erna.maulina@unpad.ac.id, 2purnomo@unpad.ac.id, 3aulia18023@unpad.ac.id,
4
m.rizal@unpad.ac.id

Abstract
The application and adoption of Artificial Intelligence technology in Southeast
Asia in 2018 has reached the level of 14%. According to statistics and SAS Asia
Pacific research results in 2018 the spread of the application of AI technology in
Asia has reached several business sectors ranging from banking,
telecommunications, health, digital commerce, trade in goods and services. It is
known that 26.4% of Indonesia, 17.1% of Thailand, 9.9% of Singapore, 8.1% of
Malaysia has been able to adopt AI technology in their organizations. However, in
reality, Indonesia still occupies the lowest position on the Asian Index of Artificial
Intelligence (<0.2).
This study aims to examine the implementation of AI technology at startups in
Indonesia, what are the obstacles that affect the implementation of AI, and how to
overcome existing obstacles related to AI technology in Indonesia. The results of
this study indicate that the implementation of AI in the ranking of using AI
technology at startup which is most commonly found is Bukalapak with score is
87,771. Initial capital and investment regarding artificial intelligence
implementation as one of the indicators of financial criteria is the main barriers in
the implementation of Artificial Intelligence. Therefore a strategy is also needed to
overcome the barriers of each of these aspects.
Keywords: Technology, Startup, Artificial Intelligence, AI, Digital, Indonesia

1. INTRODUCTION
Authors are suggested The concept of Artificial Intelligence (AI) was first
introduced by John McCarthy in 1956. These concepts all arose from the idea and
the idea that a machine in the future could operate like a human. Some expert level
researchers in European countries at that time gave the thought that there was a
high possibility to create machines that could be operated like humans, or in other
words the machines could learn and make decisions based on learning from
recorded data [1]-[5]. One of the scientists and practitioners known as the
"founding fathers" of Computer Science and AI was Alan Turing in the 1940s.
Turing is a British scientist who specializes in mathematics, computers, logicians,

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cryptanalysts, philosopher, and biologists. In applying his knowledge, Turing first
introduced the concept of algorithm and computation on Turing machines. This
machine came to be known as the first cutting-edge machine to develop a general-
purpose computer model. This machine later became a phenomenal engine as one
of the main factors Ally's victory over Axis in the Second World War to break the
German encryption code-based communication using the Enigma engine [6].
The concept of AI refers to the creation of hardware and software that have
artificial intelligence, so that it can mimic human behavior. The device was made
in general for the purpose of being able to have the capacity to learn (learning
capability) and solve problems (problem solving). To facilitate our understanding
of AI technology, we can give examples of some science fiction films that tell
stories about how robots can behave like humans in various contexts. In reality
today, AI technology has been applied in everyday life as a machine capable of
completing various human tasks, from starting to drive a car, reacting to the
environment, becoming a virtual assistant, becoming a human partner in playing
games, etc. In the economic context, currently some AI technology that has been
installed into machines or robots has been used in a number of industries; even in
the next few years AI technology is projected to enter the global public
consumption market.
AI is actually a field of study that explains the ability of machine learning that
can think and act like humans. At present the use of AI technology has been
highly developed, especially in developed countries. Even some scientists and
technopreneurs have predicted that in 2020, about 85% of future customer
interactions will be managed without humans, but AI technology [7]. This means
that simple customer questions and requests will depend on computers and AI
technology [8]
The important role of AI technology in people's lives can include translating
languages, recognizing faces in photos, recognizing speech in audio clips, and
sensing distances of vehicles. The rapid increase in computing power and data,
and increasingly powerful analytics have accelerated machines’ ability to perform
increasingly more complex tasks with higher precision. A key development in the
AI field is machine learning, where computers construct algorithms that can find
patterns and make predictions from complex data without being explicitly
programmed or ―taught‖ by humans [9].
In some developed countries Artificial Intelligence (AI) has been implemented
as one of the businesses competitive advantages even the application of AI is now
included in the public sectors. Like China, according to data sourced from the
Asian Index of Artificial Intelligence (2017), China has been named as a superior
country and leading the development of AI technology. About US $ 1.2 Billion in
the form of funding has been done by Venture Capital companies in funding the
development of AI technology-based software & hardware products.
So is the case with Southeast Asia. The application and adoption of AI
technology in Southeast Asia in 2018 has reached the level of 14%. This is a sign
that some companies in the Southeast Asian region have gradually started to
implement and adopt AI technology in their organizations in several sectors.
According to statistics and SAS Asia Pacific research results in 2018 24.6%
Indonesia 17.1% Thailand 9.9% Singapore 8.1% Malaysia has adopted AI
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technology. The top use cases in Southeast Asia include algorithmic market
forecasting (17%), and automated asset and infrastructure management (11%)
[10].
Although leading the growth of adoption in ASEAN, unfortunately, Indonesia
also has the highest percentage (59 percent) related to the number of organizations
or companies that do not have plans to adopt AI technology in the next five years,
still from the same survey. This indicates that there are still traditional businesses
that are still hesitant to make a leap in their business operations. Sugiapranata as
Country Manager of SAS Indonesia, said the main challenges that need to be
overcome in the next few years related to technological developments and the
adoption of AI in Indonesia is how Indonesia can place AI as a differentiator in
doing business. In addition, access to talent, human resources can also be another
obstacle. The Indonesian government, he continued, can also help in some cases
encourage the adoption of AI in Indonesia in terms of regulation, primarily by
preparing a roadmap for the AI industry as has been done in the e-commerce
industry [11].
According to the results of research conducted by Microsoft and the
International Data Corporation (IDC) states that the application of AI is indeed
still a barrier in Indonesia, especially in terms of expertise and cost. In addition,
more than 50 percent of companies in Indonesia also do not plan to implement AI
in the next five years. Based on the survey results, as many as 23 percent of
respondents said that the application of AI in Southeast Asia was caused by a lack
of AI's ability and knowledge. In addition, the cost of implementing AI (23
percent) is also a barrier to implementing AI [12].
According to Izmee, President Director of Microsoft Indonesia revealed that
there are a number of challenges in the adoption of AI in Indonesia, namely first,
Leadership: lack of ideas from leaders and commitment of leaders to invest in AI
(30 percent). Second, Skills: lack of skills, resources and ongoing training
programs (23 percent). Third, Culture: separate organizations and organizational
resistance culture (13 percent), where the culture in question is: Empowerment,
Innovation, Going Beyond, and Collaboration. Indonesian employees surveyed
were more skeptical than business leaders about the readiness of their
organizational culture to adopt AI. [13].
Meanwhile, according to the results of research conducted by Snaplogic [14]
the top barriers in implementing AI include: lack of skill talent, lack of budget,
lack of access to the right technology and tools, lack of access to useful data, lack
of collaboration across teams. Likewise the World Economic Forum [15] stated
that some barriers to AI adoption in government are: Effective use of data, AI and
data management skills, AI environment, Legacy culture and Procurement
mechanisms.
Based on these conditions, the researchers are interested in knowing how the
implementation of artificial intelligence in startup companies in Indonesia by
considering the barriers that have been raised by several studies that have been
conducted by grouping each barriers into 4 main barriers consisting of
management barriers, financial barriers, policy barriers and infrastructure barriers
because Indonesia is the perfect market for AI to develop. The basis of AI and
analytics lies in the availability of data and Indonesia has the right volume and
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scale to justify investment in AI. So if in the long run, Indonesia does not begin to
recognize the concepts and aspects of the application of AI technology in the
private and public sectors, it can happen that Indonesia is increasingly left behind
and unable to compete in the face of a borderless global era.

2. RESEARCH METHOD
2.1 Method
In this study, researchers used descriptive methods, this method was chosen
because it is in accordance with the purpose of the research, which is to describe
the implementation of artificial intelligence of Startup Company in Indonesia and
the barriers that affect the implementation of the artificial intelligence obtained
from the literature as a research variable and a workable solution
2.2 Sampling Techniques
Researchers used sampling techniques in the form of simple random sampling
to be given to several startups who were technical (IT engineers) and non-
technical (non-IT engineers), in the form of founders (co-founders), leaders (chief
level), and engineers (engineer) in Indonesia, with the criteria that (i) the company
established must be a technology-based digital startup, and (ii) each member given
a questionnaire must be part of the startup.
2.3 Instrument
The instrument used in this study consisted of interviews by visiting the
founders concerned and guiding questions that had been prepared related to the
implementation of AI. Then the results of the interview were strengthened by a
questionnaire distributed related to obstacles in implementing AI in the Startups
companies in Indonesia. The data analysis method used is the Delphi method,
which is a method that verifies, clarifies and validates each variable measured by
an expert. Variables barriers to the implementation of the artificial intelligence
through validation or respondent opinion were then made into questionnaires
containing questions to respondents which were then analyzed by using
descriptive analysis methods using the SPSS statistical program. To get the
influence relationship between variables, the Interpretative Structural Modeling
method is used. Contextual relationships between obstacles are arranged in a
single structured interaction matrix or Structural Self Interaction Matrix (SSIM).

3. RESULT AND DISCUSSION

3.1. Implementation of artificial intelligence in Indonesia
Based on available data obtained from the Indonesian Information and
Communication Technology Creative Industries Society (MIKTI) that the number
of startups in Indonesia in 2018 reached 992 startups in Indonesia, with the
percentage of startups being concentrated in Jakarta, Bogor, Tangerang, Depok,
and Bekasi around 55%, around 12% are in Sumatra, 12% in East Java, 6% in the
Special Region of Yogyakarta, while the remaining 15% are scattered in the
regions of West Java, Bali & NTB, Kalimantan and Sulawesi.
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Vol. 29, No. 3, (2020), pp. 750- 758
From these data it is known that about 65% of startups were established from
2013-2018, and around 18% from 2007-2012, so that the average age of startups
was around 5-6 years. From the data search it is known that around 35.48% of
startups in the field of e-commerce, 5.34% in the field of financial technology,
5.54% in the field of gaming / entertainment. The remaining 53.63% is engaged in
other fields such as social media, agriculture, food and beverage, marketing,
vouchers. While startups engaged in the field of artificial intelligence are only
under 5%. Even so, some of Indonesia's leading startups are known to have
applied AI technology to improve the quality of their products and services. While
the implementation of AI can be seen from the ranking of the use of AI technology
for Indonesian startups whose data can be seen in the following figure:

Figure 1 Rank of Startup Company in Indonesia

Based on figure 1 can be seen Bukalapak ranks top startups in Indonesia with a
score of 87,711 according to Startup Ranking per June 2019. Globally, Bukalapak
occupies successfully penetrated position 18. Bukalapak which was established in
2010 has become Unicorns with valuations above US $ 10 billion. Now
Bukalapak has more than 100 thousand sellers and 700 thousand items. Position
then after Bukalapak which won by Bibli (23 global), Traveloka (37 global),
Zalora (75 global), Zenius Education (88 global) and Belanja.com (96 global).
Startups engaged in health and educations occupy positions 7 and 8, namely
Alodokter with 108 global rankings and Ruangguru with 111 global rankings.
Mojok.co became the first successful media startup occupies the top 10, ranking
9th in Indonesia and 123 globally. Gojek is a high-class startup for transportation
Online is ranked 16th in Indonesia and 256 in the world. Tokedia is ranked 3rd in
Indonesia and 18 in the world but not in the startup category, but has entered the
company rank. Ranking by Startup Ranking (SR) consists of SR Web which rates
startup rankings on the internet, and SR Social which rates startup rankings on
social media.

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Vol. 29, No. 3, (2020), pp. 750- 758
3.2. Barriers of artificial intelligence implementation
Based on the results of researchers' interviews with several participants it is
known that there are some startup obstacles in developing AI technology. The
most important thing is the factor (i) human resources that are still lacking. Then
(ii) from the interview results it is also known that because the founders' main goal
is to create a startup that is economic, most startup founders establish startups in
successful business fields such as e-commerce, financial technology, and other
business fields which is not related to AI technology. (iii) The application of AI
technology at startup also has constraints such as expensive costs to develop the
technology. (iv) Most startup founders don't understand how to commercialize the
technology. (v) In addition, there are those who answer that the risk of failure for
startups to implement AI technology is still very high, because the technology is
still very rare in Indonesia.
While based on the results of the analysis by the Delphi method, table below
shows the results of data processing related to barriers to the implementation of
artificial intelligence in Startup companies in Indonesia.
Table 1 Barrier in the Implementation of Artificial Intelligence
No Barriers
A Management Barriers
1 Lack of shared understanding of artificial intelligence
2 Lack of knowledge and skill about artificial intelegence
3 Lack of ideas and commitment of leaders to invest in AI
B Financial Barriers
4 Lack of initial capital and investment
5 Lack of fund for training
6 Lack of funds for storage, handling and monitoring system
C Policy Barriers
7 Lack of socialization about the artificial intelegence system and
criteria that have been implemented in Indonesia
8 There are no institutions that issue certificates or guideline in
implementing artificial intelligence for artificial intelligence
9 Lack of detailed rules regarding the implementation of artificial
intelligence in Indonesia
D Infrastructure Barriers
10 Lack of systems (hardware/software)
11 Lack of in-house facilities
12 Lack of coordination and collaboration

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Vol. 29, No. 3, (2020), pp. 750- 758
E Culture Barriers
13 Antipathy / Resistance in implementing artificial intelligence
14 Lack of awareness about the benefits of artificial intelligence
Table 2 above shown that barriers in the implementation of artificial
intelligence has a high rating. Furthermore, in the Phase III Delphi questionnaire,
respondents were asked to confirm the 14 variables selected in the second phase
questionnaire. This confirmation was conducted to validate 14 variables that had
been selected in the second phase questionnaire, whether it was really barriers in
the implementation of artificial intelligence in Indonesia.
From the Delphi analysis, 14 variables were found to be barriers in
implementing artificial intelligence. To get the influence relationship between the
14 variables, the Interpretative Structural Modeling method is used. Contextual
relationships between barriers are arranged in a single structured interaction
matrix or Structural Self Interaction Matrix (SSIM). Based on the results of the
Interpretative Structural Modeling analysis, there are 6 levels of resistance. Figure
2 shows that level 6, namely Initial investment and expensive maintenance
regarding artificial intelligence technology / equipment for startup is the main
barriers

Lack of Lack of Lack of Lack of in- Lack of

funds for socialization about systems house awareness
storage, the artificial (hardware/ facilities about the
handling intelegence system software) benefits of
Level and and criteria that artificial
I monitorin have been intelligence
g system implemented in
Indonesia

Antipathy / Resistance in
implementing artificial
Level intelligence
II
There are no institutions that issue Lack of
certificates or guideline in implementing coordination and
Level artificial intelligence for artificial collaboration
intelligence
III

Lack of detailed rules

regarding the implementation
of artificial intelligence in
Level Indonesia
IV

Lack of shared Lack of knowledge Lack of ideas and Lack of fund

Level understanding of and skill about commitment of for training
artificial artificial intelligence
V intelligence
leaders to invest in
AI

Level Lack of initial capital and

VI investment

Figure 2. Model Structural of Barriers in the Implementation of Artificial

intelligence
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Vol. 29, No. 3, (2020), pp. 750- 758
4.CONCLUSIONS AND SUGGESTIONS
4.1 Conclusions
Based on data collection and processing that has been done; conclusions can be
taken, among others:
1. The most dominant startup company that implemented artificial intelligence
is Bukalapak with score 87,771.
2. There are fourteen obstacles in the application of artificial intelligence, i.e.
Lack of shared understanding of artificial intelligence, Lack of knowledge
and skill about artificial intelligence, Lack of ideas and commitment of
leaders to invest in AI, Lack of initial capital and investment, Lack of fund
for training, Lack of funds for storage, handling and monitoring system,
Lack of socialization about the artificial intelligence system and criteria that
have been implemented in Indonesia, There are no institutions that issue
certificates or guideline in implementing artificial intelligence, Lack of
detailed rules regarding the implementation of artificial intelligence in
Indonesia, Lack of systems (hardware/software), Lack of in-house facilities,
Lack of coordination and collaboration, Antipathy / Resistance in
implementing artificial intelligence and Lack of awareness about the
benefits of artificial intelligence
3. Initial capital and investment regarding artificial intelligence technology as
one of indicator from financial criteria is the main barriers in
implementation of artificial intelligence
4.2 Suggestion
Based on the conclusions above, the authors have some useful suggestions in
implementing of artificial intelligence on of startup in the future, namely:
1. Give more attention to the application of artificial intelligence in startup and
also needs to do a strategic analysis to overcome the barriers to the
implementation of artificial intelligence by involving the parties involved in
a startup in Indonesia
2. Reducing the barriers that occur in implementing of artificial intelligence so
that stakeholders can increasingly apply the artificial intelligence criteria and
minimize impacts that occur due to the project being carried out. One of way
is prepare funds that can support the initial capital and investment related to
artificial intelligence for stakeholders.

Acknowledgments
Publication of this article is supported by the Padjajaran University.

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Vol. 29, No. 3, (2020), pp. 750- 758
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