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Posts tagged ‘Boston Consulting Group (BCG)’

How Artificial Intelligence Is Revolutionizing Business In 2017

  • 84% of respondents say AI will enable them to obtain or sustain a competitive advantage.
  • 83% believe AI is a strategic priority for their businesses today.
  • 75% state that AI will allow them to move into new businesses and ventures.

These and many other fascinating insights are from the Boston Consulting Group and MIT Sloan Management Review study published this week, Reshaping Business With Artificial Intelligence. An online summary of the report is available here. The survey is based on interviews with more than 3,000 business executives, managers, and analysts in 112 countries and 21 industries. For additional details regarding the methodology, please see page 4.

The research found significant gaps between companies who have already adopted and understand Artificial Intelligence (AI) and those lagging. AI early adopters invest heavily in analytics expertise and ensuring the quality of algorithms and data can scale across their enterprise-wide information and knowledge needs. The leading companies who excel at using AI to plan new businesses and streamline existing processes all have solid senior management support for each AI initiative.

Key takeaways include the following:

  • 72% of respondents in the technology, media, and telecommunications industry expect AI to have a significant impact on product offerings in the next five years. The technology, media and telecommunications industry has the highest expectations for AI to accelerate new product and service offerings of all industries tracked in the study, projecting a 52% point increase in the next five years. AI-based improvements are expected to deliver Business Process Outsourcing (BPO) gains in the Financial Services and Professional Services industries as well. The following graphic compares expectations for AI’s expected contributions to business offerings and process improvements over the next five years by industry.

  • Customer-facing activities including marketing automation, support, and service in addition to IT and supply chain management are predicted to be the most affected areas by AI in the next five years. Demand management, supply chain optimization, more efficient distributed order management systems, and Enterprise Resource Planning (ERP) systems that can scale to support new business models are a few of the many areas AI will make contributions to the in the next five years. The following graphic provides an overview of operations, IT, customer-facing, and corporate center functions where AI is predicted to contribute.

  • 84% of respondents say AI will enable them to obtain or sustain a competitive advantage. 75% state that AI will allow them to move into new businesses and ventures. The research shows that AI will be the catalyst of entirely new business models and change the competitive landscape of entire industries in the next five years. 69% of respondents expect incumbent competitors in their industry to use AI to gain an advantage. 63% believe the pressure to reduce costs will require their organizations to use AI in the next five years.

  • Despite high expectations for AI, only 23% of respondents have incorporated it into processes and product and service offerings today. An additional 23% have one or more pilots in progress, and 54% have no adoption plans in progress, 22% of which have no current plans. The following graphic provides insights into the current adoption of AI with survey respondents.

  • By completing a cluster analysis of survey respondents based on AI understanding and adoption questions, four distinct maturity groups emerged including Pioneers, Investigators, Experimenters, and Passives. 19% of the respondent base is Pioneers or those organizations who understand and are adopting AI. The study says that “these organizations are on the leading edge of incorporating AI into both their organization’s offerings and internal processes.” Investigators (32%) are organizations that understand AI but are not deploying it beyond the pilot stage. Experimenters (13%) are organizations that are piloting or adopting AI without deep understanding. Passives (36%) are organizations with no adoption or much knowledge of AI.

  • Pioneers and Investigators are finding new ways to use AI to create entirely new sources of business value. Pioneers (91%) and Investigators (90%) are much more likely to report that their organization recognizes how AI affects business value than Experimenters (32%) and Passives (23%). One of the most differentiating aspects of the four maturity clusters is understanding the differences and value of investing in high-quality data and advanced AI algorithms. Compared to Passives, Pioneers are 12 times more likely to understand the process for training algorithms and ten times more likely to comprehend the development costs of AI-based products and services.

  • Organizations in the Pioneer cluster excel at analytics expertise versus competitors and have exceptional data governance processes in place, further accelerating their AI-driven growth. Pioneers are excellent at change management, citing their senior management’s vision and leadership as a foundational strength in accomplishing their AI-based initiative Early adopter Pioneers are also adept at product development, capable of changing existing products and services to take advantage of new technologies.

  • 61% of all organizations interviewed see developing an AI strategy as urgent, yet only 50% have one done today. The research found that regarding company size, the largest companies (those with more than 100K employees) are the most likely to have an AI strategy, but only half (56%) have one. The following graphic compares the percentage of respondents by maturity cluster who say developing a plan for Al is urgent for their organization relative to those that have a strategy in place today.

  • 70% of respondents are personally looking forward to delegating the more mundane, repetitive aspects of their jobs to AI. 84% believe employees will need to change their skill sets to excel at delivering AI-based initiatives and strategies. Taking this approach provides career growth and a chance to become more marketable for many whose jobs that are being increasingly automated. Cautious optimism regarding AI’s effects on employment dominates early adopter organizations, not dire fatalism. The bottom line is that AI is providing opportunities for career growth that will only accelerate in the future. Those that seize the chance to learn and earn more will end up having AI removing the mundane tasks from their jobs, leaving more time for the most challenging and rewarding work.
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BCG’s Value Creators Report Shows How Software Is Driving New Business Models

boston-300x211Boston Consulting Group (BCG) recently released their fifth annual technology, media and telecommunications (TMT) value report. The 2013 TMT Value Creators Report: The Great Software Transformation, How to Win as Technology Changes the World (free, opt-in required, 41 pgs).

The five trends that serve as the foundation of this report include the increasing pervasiveness of software, affordable small devices, ubiquitous broadband connectivity, big-data analytics and cloud computing.  BCG’s analysis illustrates how the majority of TMT companies that deliver the most value to shareholders are concentrating on the explosive growth of new markets, the rise of software-enabled digital metasystems, and for many, both.

The study is based on an analysis of 191 companies, 76 in the technology industry, 62 from media and 53 from telecom.  To review the methodology of this study please see page 28 of the report.

Here are the key takeaways from this years’ BCG TMT Value Creators Report:

  • BCG is predicting 1B smartphones will be sold in 2013, the first year their sales will have exceeded those of features phones.  By 2018, there will be more than 5B “post-PC” products (tablets & smartphones) in circulation. There are nearly as many mobile connections in the world as people (6.8B) according to the United Nation’s International Telecommunication Union (ITU).

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  • 27 terabytes of data is generated every second through the creation of video, images social networks, transactional and enterprise-based systems and networks.  90% of the data that is stored today didn’t exist two years ago, and the annual data growth rate in future years is projected to be 40% to 60% over current levels according to BCG’s analysis.

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  • The ascent of communications speeds is surpassing Moore’s Law as a structural driver of growth.  BCG completed the following analysis graphing the progression of microprocessor transition count (Moore’s Law) relative to Internet speed (bps) citing Butter’s Law of Photonics which states that the amount of data coming out of an optical fiber is doubling every nine months. BCG states that these dynamics are democratizing information technology and will lead to the cloud computing industry (software and services) reaching nearly $250B in 2017.
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  • BCG predicts that India will see a fivefold increase in digitally-influenced spending, ascending from $30B in 2012 to $150B in 2016, among the fastest of all nations globally according to their study. India will also see the value of online purchases increase from $8B in 2012 t5o $50B in 2016.

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  • 3D printing is forecast to become a $3.1B market by 2016, and will have an economic impact of $550B in 2025, fueling rapid price reductions in 3D printers through 2017.  BCG sees 3D printing, connected travel, genomics and smart grid technologies are central to their digital metasystem.   The following graphic illustrates the key trends in each of these areas along with research findings from BCG and other sources.

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  • Only 7% of customers are comfortable with their information being used outside of the purpose for which it was originally gathered.

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  • BCG reports that mobile infrastructure investments in Europe have fallen 67% from 2004 to 2014.  Less than 1% of mobile connections in Europe were 4B as of the end of 2012, compared to 11% in the U.S. and 28% in South Korea.   European operators have also been challenged to monetize mobile data as well, as the following figures illustrate.

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  • Big Data is attracting $19B in funding across five key areas according to BCG’s analysis.  These include consumer data and marketing, enterprise data, analytical tools, vertical markets and data platforms.  A graphical analysis of these investments is shown below.

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