Point of View

The CIO Point of ViewEUROPEThe New Agenda for Transformative Leadership: Reimagine Business for Machine Learning

Point of View

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CIOs we surveyed in Europe (45 in Austria, 45 in France, 45 in Germany, 45 in the Netherlands, 46 in Spain, 46 in Sweden, and 46 in the UK) see machine learning as critical for driving digital transformation. They are strategically investing in digital technology to improve enterprise performance, customer relationships, processes, and products and services. Yet European CIOs lag those in North America and Asia Pacific in their rate of technology investment, automating tasks, and recognizing ways that machine learning could improve their business.

The level of machine-learning maturity differs in each country. CIOs in France and Germany say they have made the most significant investments in machine learning, while CIOs in Austria, the Netherlands, Spain, Sweden, and the UK are slower to commit. German and French companies also are more likely than others within the region to say their company is making organizational changes to optimize machine-driven business processes, while the Netherlands and Sweden are laggards in this area. These differences could be due, in part, to the larger share of respondent companies with more than $10 billion in revenue from France and Germany—as larger companies in general are ahead of the curve. Across Europe, many companies may also be slower to commit to machine learning due to a stricter regulatory climate.

Key InsightsGlobal Overview

Machine learning has arrived in the enterprise, and companies are eager to reap the competitive benefits the technology can provide. From automating processes that enable faster business operations to applying algorithms that improve accuracy, CIOs are adapting the technology for a wide variety of uses—and transforming the way we work.

To investigate the rise of machine learning, we worked with Oxford Economics to conduct a survey of 500 CIOs in 11 countries on three continents and across 25 industries, and conducted in-depth interviews with leaders in the field. We found that CIOs are increasing their investment in machine learning but must overcome several barriers to achieve their productivity, revenue, and innovation goals. Unless CIOs turn their attention to to updating not just technology but talent and business processes, the full value of machine learning cannot be realized.

Using machine learning means changing the mindset of the

business, saying there is a different and a new way of doing things. It is the transformation involved

in saying if we remove these old, complex systems, this is the direction and scope in which we

can empower the business. —Matt Potashnick, CIO at AXA UK

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Machine learning maturity in Europe

Machine learning is a strategic focus for me

Q: To what extent do you agree with the following statements about your role? “Agree” and “strongly agree” responses combined are shown here.

SPAIN UKFRANCE NETHERLANDS SWEDENAUSTRIA GERMANY

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CIOs are Adopting Machine Learning to Advance Digital TransformationAcross Europe, companies recognize the potential value of machine learning and have begun to build it into their plans. For instance, 90% of CIOs in the region, on par with global survey responses, have adopted or plan to adopt the technology in their organization. However, European respondents are somewhat less likely than their peers in North America to have fully deployed machine learning in some or all parts of the business (22% in Europe vs. 33% in North America). This lag may be connected to a gap in developing a clear strategy: About 51% of CIOs in Europe say machine learning is a strategic focus for them compared with 65% in North America.

European CIOs are increasing their investment in machine learning, with CIOs in Europe spending some on the technology set to nearly double over the next three years.

of CIOs in Europe have adopted or plan to adopt machine learning.

90%

37% SPAIN

49% GERMANY

LEA

DE

RS

LAG

GA

RD

S

47% FRANCE

26% UK

20% NETHERLANDS

35% SWEDEN

29% AUSTRIA

Machine learning investment

Q: To what extent are you investing in the following technologies today? “Some investment,” “substantial investment,” and “major investment” responses combined are shown for machine learning.

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CIOs Expect Machine Learning to Drive Business ValueA majority of CIOs in Europe consider machine learning an important driver of business value—although expectations are higher among CIOs in North America. The top-ranked benefits expected for their organizations are improved accuracy of machine-made decisions (85% of CIOs in Europe expect more accurate decisions vs. 98% in North America and 87% in Asia Pacific) and increased speed of decision-making (81% in Europe expect faster results with machines vs. 87% in North America and 87% in Asia Pacific). Respondents from France and Germany are even more likely to expect gains in accuracy and speed. Meanwhile, respondents from Spain (83%) and the UK (70%) are more likely to say decision automation will increase employee focus on strategic work (vs. 59% across Europe).

CIOs expect substantial value from machine learning

Q: To what extent do you expect decision automation to deliver value in the following areas over the next three years? “Substantial value” and “transformative value” responses combined are shown here.

Speed of decisions Accuracy of decisions

of CIOs in Europe expect machine learning to improve the accuracy of decisions.

85%

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Austria France Germany Netherlands Spain Sweden UK

Austria France Germany Netherlands Spain Sweden UK

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Austria France Germany Netherlands Spain Sweden UK

Austria France Germany Netherlands Spain Sweden UK

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Insu�cientdata quality

Outdatedprocesses

Lack of budgetfor new skills

CIOs Take on New ChallengesWhile machine learning promises to drive business value, CIOs in Europe identify several factors that are constraining its adoption. They include: insufficient quality of data (50% say it is a major roadblock vs. 46% in North America and 55% in Asia Pacific); outdated processes (46% vs. 46% in North America and 53% in Asia Pacific); and lack of budget for technology (49% vs. 20% in North America and 45% in Asia Pacific).

German respondents are far more likely than others in the region to view most of these as substantial barriers to adoption—a possible sign that they understand the work required to get machine learning right, since they lead the region in many ways (such as investment levels and preparedness for organizational change).

of CIOs in Europe say insufficient quality of data is a major roadblock to the adoption and maturation of automated decisions in their organization.

50%

Top challenges to machine learning adoption

Q: To what extent do the following factors interfere with the adoption and maturation of automated decisions at your organization? “A substantial barrier” and “a complete roadblock” responses combined are shown here.

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Machine Learning Demands New Jobs and New ProcessesSuccessfully automating tasks and decisions requires more than just the right technology. It requires skilled talent and updated business processes as well. Like many CIOs around the world, CIOs in Europe are slowly preparing their organizations for new approaches to workflows, talent, IT management, and risk management to address any potential mistakes that machines or humans make.

European companies understand the importance of redesigning business processes to support decision automation—94% of CIOs in the region are rethinking processes in some way compared with 96% in North America and 91% in Asia Pacific—but less than half have taken concrete steps to make changes. Nearly half (47%) of CIOs in Europe say their company has set up programs to expand employee skill sets (vs. 48% in North America

and 51% in Asia Pacific); 35% have developed contingency plans for the operational impact of mistakes by machines (vs. 37% in North America and 43% in Asia Pacific); and 37% have developed a roadmap for future process changes (vs. 46% in North America and 32% in Asia Pacific).

Failure to amend business processes could threaten the promise of machine learning and make it more difficult for European companies to compete with their peers in North America and Asia Pacific as they get faster, leaner, and more accurate. Already, CIOs in Europe are less confident that their organizations are moving from the automation of tasks to the automation of decisions (48% say this transition is happening vs. 65% in North America, and 56% in Asia Pacific).

CIOs making changes for machine learning

Q: Which changes, if any, has your organization made to accommodate digital labor? Respondents were asked to select all that apply.

Developed a road map for future process changes

Redefined job descriptions tofocus on work with machines

Set up programs toexpand employee skill sets

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ConclusionGetting value from machine learning investments will require substantial planning and disciplined follow-through—all while adjusting to rapid, ongoing changes in technology. As CIOs embark on the machine-learning journey, they should take the following five steps to maximize their investments.

1. Build the foundation and improve data quality. Consolidating redundant, legacy, on-premises IT tools into a single data model is a good first step.

2. Prioritize based on value realization. Focus on those services that are most commonly used, as automating these services will deliver the greatest business benefits.

3. Build an exceptional customer experience. When creating a road map to implement machine-learning capabilities, imagine the ideal customer experience and prioritize investment against those goals.

4. Attract new skills and double down on culture. CIOs must identify the roles of the future and anticipate how employees will engage with machines—and start hiring and training in advance.

5. Measure and report. CIOs must set expectations, develop success metrics prior to implementation, and build a sound business case in order to acquire and maintain the requisite funding. (Read more in The Global CIO Point of View.)

CIOs in France and Germany are among the most enthusiastic and prepared for machine learning and automated decision-making. CIOs in the Netherlands and Sweden are slower to commit to changes to advance this technology, undermining their ability to effectively compete for market share with peers.

CIOs in Europe see a bright future for machine learning—they expect the technology to mature rapidly and deliver measurable value across the business. However, successfully automating tasks and decisions will require companies in this region to continue to redesign business processes (such as preparing employees to work with machines and building contingency plans for dealing with machine-made mistakes) and create new jobs. European companies will face the added challenge of complex regulatory requirements (such as the European Union’s recent call for liability laws around robotics and artificial intelligence, published by The European Parliament). With European companies already starting behind most in other regions, there is much work ahead to catch up.

First Mover Advantage We isolated a group of respondents—we call them first movers—who are ahead of their peers in spending on machine learning, automating business processes, making organizational changes to support digital work, and updating business processes and talent strategy (see our Global Point of View for a full breakdown of the criteria). Their plans and actions provide a useful guide for CIOs to advance machine learning in their companies.

Companies are just beginning to adopt this technology, but some are further ahead than others: 10% of global CIOs and 8% of CIOs in Europe qualify as leaders in our analysis.

First movers demonstrate leadership in a number of areas: They are concentrating on innovation (70% vs. 54% of others), and say automating routine processes (50% vs. 33%) and digitizing business processes (46% vs. 27%) will be important to their organization’s success over the next three years.

Download the Global CIO Point of View:servicenow.com/cio

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