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MAKING AI WORK FOR YOUR INDUSTRY
Straight Talk about Ai and Big Data:What is Real? What is Marketing Hype? April, 2018
© CognitiveScale 2017. All Right Reserved. | Confidential | Do Not Use Without Permission
Manoj Saxena
Executive Chairman, CognitiveScaleFormer GM, IBM Watson
Agenda
1. What is happening with AI and Blockchain? Why is it important?
2. How much of this is real? How much is marketing hype?
3. Where are some of the real life, high value deployments?
4. How should one go about exploiting these opportunities?
© CognitiveScale. All Right Reserved. | Confidential 2
New ParadigmCusp of a dramatically different world
brought on by intelligent machines
New Leaders, Many Walking DeadWinners will focus on practical and responsible
outcomes with AI, not mere tech or algos
Exponential OpportunityA “Digital Renaissance” is underway and will create significant change in order of things
Three key takeaways
© CognitiveScale. All Right Reserved. | Confidential 3
Definition: What is Artificial Intelligence?
© CognitiveScale. All Right Reserved. | Confidential 4
“AI is the science and
engineering of making intelligent
computer programs/machines
that learn from patterns”
AI & Machine Intelligence
Technologies
In 2017 AI became the new frontier for Digital Transformation
AI is already disrupting everything from coffee to cancer
© CognitiveScale 2017. All Rights Reserved | Confidential | Do Not Use Without Permission
What most people think of AI
© CognitiveScale 2017. All Rights Reserved | Confidential | Do Not Use Without Permission
What we think of AI
AI = Augmented Intelligence(Man + Machine and NOT Man vs Machine)
© CognitiveScale 2017. All Rights Reserved | Confidential | Do Not Use Without Permission
Highest value is gained when systems of engagement and systems of record together deliver insight
5
Augmentation is a much larger opportunity than automation
• Create entirely new experiences and business models for new revenues
• Augment capabilities of knowledge workers and create new revenues
• Replace knowledge labor and reduce overall costs
• Replace transactional labor and reduce overall costsEnterprise
Buyers ServiceProviders
Consultants/Advisors
© CognitiveScale. All Right Reserved. | Confidential 9
Agenda
1. What is happening with AI and Blockchain? Why is it important?
2. How much of this is real? How much is marketing hype?
3. Where are some of the real life, high value deployments?
4. How should one go about exploiting these opportunities?
© CognitiveScale. All Right Reserved. | Confidential 10
Where is AI implementation today in the Enterprise?
AI = Artificially Inflated
AI = Amazing Innovations
© CognitiveScale 2017. All Rights Reserved | Confidential | Do Not Use Without Permission
Hype: AI is very poorly understood and implemented
1. AI is going to take jobs away Opportunity for augmenting jobs is way larger than replacement of humans with AI. 8m vs 1.2 billion.
2. Big Data and Analytics are AI These are used in AI. Similar to senses. Sensing more does not automatically make you more intelligent.
3. NLP, Machine Learning and Deep Learning are AIThese are just tools for complex pattern recognition. Like equating a fuel pump to a car.
4. Robotic Process Automation (RPA) is AI RPA handles rule-based work and structured data inputs and not judgement-based work with unstructured data.
5. Data Science platforms alone can achieve great results “Dots vs Bubbles”. Large gap in bridging data science workflow with software devops workflows.
6. Enterprise AI can be an opaque Black box 99+% of AI startups operate AI as a Black box. Their AI is not explainable and not compliance ready
© CognitiveScale 2017. All Rights Reserved | Confidential | Do Not Use Without Permission
Imagine: AI powered Healthcare Care Management
13
Busin
ess V
alue
Prescriptive
Predictive
Deductive
What could happen next?
What is the best course of action?
Workflows that learn and act continuously?
DiagnosticWhat does that mean?
Descriptive
What happened? 90%
of B
usin
esse
sar
e fo
cuse
d he
reCO
GNI
TIVE
CLO
UD
OPP
ORT
UNIT
Y SP
ACE
Pollen.com Tweet Tue, 10:00 CT
Ragweed, 81832
5 Ragweed variants17 children at risk
3 admitted <90 days
4 will end up in ER1 w/o reimbursement
a) Parents reminderb) School Nursec) Mail Inhalerd) Parents Uber
Wed AM:How many affectedWhich option best?Update knowledge
* No dependence on IBM Watson. Watson APIs can be orchestrated using Cortex OS based on Ai requirements.
1. KNOW MEMy history, my
environment, goals.
2. ENGAGE MEContextual insights with
evidence.
3. LEARN FROM MEActions and outcomes, deeper profile of one.
AI Powered Care Delivery Process
© CognitiveScale 2017. All Rights Reserved | Confidential | Do Not Use Without Permission
Imagine: AI powered P&C Insurance Claims Process
14
Busin
ess V
alue
Prescriptive
Predictive
Deductive
What could happen next?
What is the best course of action?
How can we learn and act continuously?
Diagnostic
What does that mean?
Descriptive
What happened? 90%
of B
usin
esse
sar
e fo
cuse
d he
reCO
GNI
TIVE
CLO
UD
OPP
ORT
UNIT
Y SP
ACE
© CognitiveScale 2017. All Right Reserved. | Confidential | Do Not Use Without Permission
Weather.com update Fri, 4:30 CT
Category 4, 81832
2,239 homes at risk1,934 are customers Loss Ratio increase
853 level 4 damageContractor shortage12% Customer churn
a) Fly Drone, wire $b) On site adjustersc) Identify contractor
Sat AM:Drone/adjuster dataHow many affectedWhich option best?Update knowledge
* No dependence on IBM Watson. Watson APIs can be orchestrated using Cortex OS based on Ai requirements.
1. KNOW MEMy history, my
environment, goals.
2. ENGAGE MEContextual insights with
evidence.
3. LEARN FROM MEActions and outcomes, deeper profile of one.
InsuranceAI Powered Process
AI and digital are powering powerful business model disruption
• World’s largest taxi company has no taxis (Uber)
• Largest accommodation provider owns no real estate (Airbnb)
• Largest phone companies own no telco infra (Skype, WeChat)
• World’s most valuable retailer has no inventory (Alibaba)
• One of the largest banks holds no cash (Bitcoin)
• World’s largest movie house owns no cinemas (NetFlix)
These are ALL technology companies that engage customers brilliantly!
© CognitiveScale. All Right Reserved. | Confidential15
Disruption at work: Unbundling of Banks
29
HERE’S$WELLS$FARGO$UNDER$ATTACK
Source:%CB%Insights%P Disrupting%Banking:%The%FinTechStartups%That%Are%Unbundling%Wells%Fargo,%Citi%and%Bank%of%America
Cloud
Social
Mobile
Big Data
Analytics A.I.
MILLENNIALS
Source: CB Insights
© CognitiveScale. All Right Reserved. | Confidential 16
Disruption at work: Unbundling of Consumer Packaged Goods
28
AND$LOTS$OF$INCUMBENTS$LEFT$TO$UNBUNDLE.$THIS$IS$AN$EXAMPLE$OF$P&G.
Source:%CB%Insights%P Disrupting%Procter%&%Gamble:%The%Startups%Unbundling%P&G%and%the%Consumer%Packaged%Goods%Industry
Cloud
Social
Mobile
Big Data
Analytics A.I.
MILLENNIALS
© CognitiveScale. All Right Reserved. | Confidential 18
And it is occurring at an accelerated pace
Pokemon Go à 14 days
Agenda
1. What is happening with AI and Blockchain? Why is it important?
2. How much of this is real? How much is marketing hype?
3. Where are some of the real life, high value deployments?
4. How should one go about exploiting these opportunities?
© CognitiveScale. All Right Reserved. | Confidential 19
Our Case Studies: We have delivered compelling business outcomes
20
Data
stru
ctur
e
Five AI Entry Points
Natural Language Processing
Document Processing
Image Processing
Audio Processing
Video Processing
- 31 % Trouble Tickets
+23 % Conversion lift
Call Center Reg Compliance
+ 14x Super Bowl Video Ad Features
Text
Documents
Images
Audio
Video
$36M in new efficiencies
Data KnowledgeProcess Customer Product
Cortex 5
Cortex 2
Cortex 4
Source: CognitiveScale
Agenda
1. What is happening with AI and Blockchain? Why is it important?
2. How much of this is real? How much is marketing hype?
3. Where are some of the real life, high value deployments?
4. How should one go about exploiting these opportunities?
© CognitiveScale. All Right Reserved. | Confidential 21
Step 1: Improving understanding of AI as a Strategic Capability
• Business led discussions about potential outcomes• Demonstration days with internal and external booths• Discovery sessions for target use case generation
• Build target use case portfolio• Set Budgets ($300k-$500k/90 day sprints)• Engage, learn, and transfer skills
• COE to run parallel projects• Decide Build vs Buy vs Partner mix• On Prem vs On demand managed• Spin offs for new business lines?
EDUCATE SCALEACTIVATE
23
Step 2: Build an AI Heat Map for your business
© CognitiveScale 2017. All Rights Reserved | Confidential | Do Not Use Without Permission
Engagement/RetentionLeverage interactions across channels to deliver targeted,
contextually relevant messages to advisors, agents, & clients
Cross-Sell/Up-SellProfile-of-One Personalization
based on declared, observed, & inferred preferences
Product InnovationDetermine optimal adjustments to product
based on propensity to spend, demographics, regulations, & macro trends
Customer AcquisitionAI powered customer engagement
based on profile of one to drive personalized offers and onboarding experience, increasing conversion
Customer ExperienceTransform customer facing
experiences with AI-powered insights and guidance
1st Line SupportGenerate insights for
Advisors/Agents from customer interactions, with evidence to
speed issue resolution
CollectionsProactively identify potential bad debt,
generate early reasons-to-save the situation, increasing retention
ComplianceGain automated visibility into IT
assets and automated assurance of compliance across the firm
Sample AI Heat map
Source: CognitiveScale
© CognitiveScale. All Right Reserved. 2017 | Confidential
Step 3: Build an Al Portfolio aligned with Business and IT strategy
Prioritized AI Portfolio for Execution
Summary: How do I go about capitalizing on AI?
1. Start top down with business outcomes Focus on business outcomes around a targeted “heat map”, deliver incremental capabilities
2. Build a culture of “learn fast and pivot” Bad things absolutely will happen. Plan and build for that.
3. Pay for success vs Pray for successMake small bets that deliver in weeks, no big-bang deployments, doubt vendor marketing claims
4. Lay Your Company’s AI Business foundation Run three parallel tracks of Production, Innovation, Center of Excellence for Skills/Processes
5. Partner Smartly Build a AI ecosystem not just an IT platform. Partner with both nimbler and large companies
© CognitiveScale 2017. All Rights Reserved | Confidential | Do Not Use Without Permission
Summary: AI is your next competitive frontier
Source: IBV 2017 Study of 1,400 CEO, CFO, CMOs
19McKinsey Global Institute Artificial intelligence: The next digital frontier?
These forces will help determine the industries that AI is likely to transform the most. However, if current trends hold, variation of adoption within industries will be even larger than between industries. We expect that large companies with the most digital experience will be the first movers because they can leverage their technical skills, digital expertise, and data resources to develop and smoothly integrate the most appropriate AI solutions.
•••
After decades of false starts, artificial intelligence is on the verge of a breakthrough, with the latest progress propelled by machine learning. Tech giants and digital natives are investing in and deploying the technology at scale, but widespread adoption among less digitally mature sectors and companies is lagging. However, the current mismatch between AI investment and adoption has not stopped people from imagining a future where AI transforms businesses and entire industries. In the next chapter, we explore the four major ways in which AI can create value across the value chain in different sectors.
Exhibit 4
Sectors leading in AI adoption today also intend to grow their investment the most
SOURCE: McKinsey Global Institute AI adoption and use survey; McKinsey Global Institute analysis
10
13
5
2 84
10
146 12 16
11
6
8
18 24 30
12
200
2
4
22 28
9
26 32
3
7
1
0
Current AI adoption% of firms adopting one or more AI technology at scale
or in a core part of their business, weighted by firm size2
Automotiveand assembly
Energy and resources
Health care
Media and entertainment
Education
Retail
Travel and tourism
Future AI demand trajectory1
Average estimated % change in AI spending, next 3 years, weighted by firm size2
High tech andtelecommunications
Construction
Professional services
Transportation and logistics
Consumer packaged goods
Financial services
1 Based on the midpoint of the range selected by the survey respondent.2 Results are weighted by firm size. See Appendix B for an explanation of the weighting methodology.
Falling behind
Leading sectors
© CognitiveScale 2017. All Rights Reserved | Confidential | Do Not Use Without Permission
Thank you!
27© CognitiveScale. All Rights Reserved. 2017 | Confidential
ENGAGE. AMPLIFY. WIN.With our Industry Cognitive Clouds