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Artificial Intelligence: Misunderstood and Underappreciated

July 12, 2017


Artificial intelligence (AI) is a term that frightens many people but excites others. For most people, AI conjures up images drawn from scary Hollywood blockbusters. Business executives, government officials, and scientists have another, more benign, view of AI. It shouldn’t be surprising that AI is so misunderstood. Timo Elliott (@timoelliott), an Innovation Evangelist for SAP, explains, “The field of artificial intelligence research dates back until 1956, but the term has never referred to a specific type of technology. Rather, it’s a ‘sociotechnical construct’ — a term we use to indicate machine capabilities that can solve complex tasks that were until recently only possible by humans. So AI is an umbrella term that encompasses a lot of different technologies.”[1]


Artificial Intelligence and Business


“It wasn’t too long ago that AI belonged to the realm of science fiction, whereas many have come to view it as a business imperative today,” writes Don Schuerman (@donpega), Chief Technology Officer at Pegasystems. “Now, consumer applications like Alexa and Siri hog the headlines, and people are falling over themselves to tell you how AI will forever change the way we work.”[2] Because artificial intelligence is the new buzzword in business circles, Schuerman believes it is overhyped. Nevertheless, in cases where AI has proven to have real business value, he believes it is underappreciated. He writes, “AI has been proven to deliver meaningful business value for leading organizations around the world.” Both Elliott and Schuerman assert machine learning is the technology most often referred to as AI. Elliott writes, “Most of the current interest in AI involves machine learning — algorithms that can learn on their own from data sets without having to be explicitly programmed.”


Schuerman is not as much interested in the AI technology being used as he in the outcomes it produces. He uses a term coined by Forrester — pragmatic AI — to describe business-friendly technologies. He explains, “[Pragmatic AI] manages to cut through the AI hype to provide meaningful impacts for businesses in the here and now. … While it can be easy to get sidetracked by the latest shiny tech, businesses have to consider whether or not the technology is available to help them to extract business value. Of course, this value can come in numerous ways: one company could use pragmatic AI to retain existing customers, while another could use it to maximize resources by automating specific repetitive processes. … The fact remains that the technology itself is irrelevant because it’s only a means to an end, a tool that enables you to reach a business outcome.” Sam Francis reports a global survey of C-suite and human capital leaders conducted by Randstad Sourceright concluded that AI and robotics can help increase a company’s bottom line. “[The survey] finds that 36 percent of US companies have increased the use of artificial intelligence and robotics over the last 12 months, up from 18 percent during the fourth quarter of 2016. Over the same period, the number of respondents indicating that they expect significant growth in the next 12 months soared from 10 percent to 28 percent.”[3] Ralph Tkatchuk (@TkatchukRalph) suggests there are five areas where companies should seriously be considering leveraging AI capabilities.[7] They are:


1. Business intelligence. “Due to the intense competition in today’s business environments, enterprises should always be on top of issues before these become major problems. Thanks to the sophistication of analytics tools available today, decisions are now driven by data. This way, decision makers can avoid the pitfalls of biases and relying solely on intuition. As such, there is a constant need to monitor and collect business information from which insights are to be derived. Managing the data becomes a major effort due to the sheer amount of it coming from a multitude of sources. Traditional business intelligence (BI) methods and tools struggle to cope with such volume and variety. This is where AI comes in. Advanced algorithms are now used to crunch massive amounts of data and generate reports.”


2. Chatbots. “Another interesting development in AI is chatbots. Developments in natural language processing has enabled systems to be able to process many conversational prompts. … For businesses, chatbots can provide a level of automation and free up resources used to manage functions account management and routine support. Other applications of chatbots even include ecommerce and online shopping. Users can simply ask the bot about certain products or provide descriptions of what they want, such as ‘Show me all your red shirts size small,’ and the bot will respond with recommendations all within the chat window.”


3. Localization. “Localization or providing a user experience unique to a particular market has become a major consideration for today’s ecommerce. Previously, only those engaged in digital goods enjoyed an easier time participating in cross-border ecommerce. However, logistics and payment services have become more reliable that even businesses dealing with physical goods can now easily consider going cross-border. Merchant services have made pricing, taxation and shipping easier, but language continues to be a barrier to cross-border ecommerce. Imagine having to translate all your product descriptions into at least 10 languages. To address this, translation APIs can be used to handle the translation.”


4. Personalization. “Aside from localization, another way for businesses to provide a more engaging customer experience is through personalization. Using AI, personalization can now go beyond keeping one’s browsing settings and preferences. Ecommerce can now provide recommendations based on a user’s browsing and buying history.”


5. Automation. “Businesses that rely on manufacturing and logistics can further improve their supply-chain management through AI by effectively managing inventory and streamlining operations. AI can also track supply and demand in the regions a business serves so that it can automatically adjust inventories, moving stocks from low demand markets to high demand markets. AI can also adjust pricing given data. Even the actual transportation of goods can be improved by AI. AI is used by logistics companies to plot the most efficient routes to physically move inventory.”


Once AI systems are in use, companies will find numerous ways to leverage their capabilities.


Artificial Intelligence and the Future


If you still need convincing that artificial intelligence represents the future of business, consider this: Google, IBM, Microsoft, Baidu, Alibaba, Amazon, Facebook and Google (all of which are considered AI-intensive companies) are combined investing more in research and development than many entire economies.[4] Tom Ball (@TomontheBall) reports research from Accenture concludes, “Companies with optimal Artificial Intelligence innovation strategies generate greater shareholder value.”[5] Despite that fact, the study also found “only one fifth of leading companies that leverage Artificial Intelligence have achieved this performance in recent years. These companies, according to the report, have demonstrated high ‘AIQ’ by combining strong in-house innovation and external collaboration.” Ball continues, “The research, however, only placed 17% of companies in the high performing bracket of collaboration and innovation, with a much larger 57% recognized as ‘Observers’ and taking little action to collaborate and innovate in the AI space. Companies that are collaborative innovators in terms of AI have seen a 4.2% increase in their enterprise value since 2013, with the larger percentage of those included in the observers category gaining only 2.3%.”


What these figures tell me is that companies willing to experiment with AI (i.e., are willing to look for practical AI business applications) are going to be the businesses that thrive in years ahead. Paul Daugherty, Accenture’s Chief Technology and Innovation Officer, stated, “Artificial intelligence is one of the most powerful technology innovations we have ever seen – transforming the way we work and live. … Many companies are ready to go beyond the experimental phase of AI, leveraging it to improve productivity and create entirely new revenue opportunities. To become a high performer, they will need to both develop their own technology, data and people capabilities as well as become deeply involved in the broader AI ecosystem.”[6]




Elliott concludes it doesn’t matter how you define AI or what AI technology you use as long it benefits the bottom line. He writes, “Precise definitions should never get in the way of the primary goal of getting more value from your data. You have business needs, and there are now new technologies available that can help.” Schuerman adds, “AI is ready to add value to your business today, and the truth is that many organizations have been using it for years without even realizing it. So do yourself a favor and jump in.”


[1] Timo Elliott, “What is Artificial Intelligence Called?!Digital Business & Business Analytics, 19 June 2017.
[2] Don Schuerman, “Artificial Intelligence: Overhyped and Underappreciated,” CMS Wire, 20 June 2017.
[3] Sam Francis, “Increased use of AI and robotics linked to brighter outlook for US business growth,” Robotics & Automation News, 20 May 2017.
[4] Christopher Matthews, “How AI is taking over the global economy in one chart,” Axios, 18 June 2017.
[5] Tom Ball, “Artificial Intelligence unlocks greater shareholder value – Accenture report,” Computer Business Review, 20 June 2017.
[6] Ibid.
[7] Ralph Tkatchuk, “5 ways companies should use AI,” Network World, 19 May 2017.

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