All of our current systems are currently designed keeping in mind the restrictions of costs and human working speed. What if we remove those friction using software, The remaning friction will be all due to physical reality. Then humanity's focus will shift in removing friction in physical domain. Currently it takes some time for a support person to triage a bug request, what if that flow takes seconds now.

Think about the analogy of transaction speed of money transfer vs actual delivery of good. With AI, we would make all digital tasks instantaneous, but the physical world will hum along at its own speed unless we speed it up with dark factories and what not.

Indeed. Without friction you can't steer.