How important is AI to the future of your business and industry?

Digital BusinessMaking AI Responsible – And EffectiveTo bring AI into the business mainstream, companies need to complement their technology advances with a focus on governance that drives ethics and trust. If they don’t, their AI efforts will fall short of their expectations and lag the business results delivered by competitors that responsibly embrace machine intelligence, our latest research findings suggest.October 2018

Making AI Responsible – And EffectiveDigital BusinessExecutive SummaryArtificial intelligence (AI) has migrated from science fiction to lab experiments and, now, to actual business operations. Most people already encounter these technologies as they read product recommendations on Amazon, receive automated fraud alerts from credit card companies or ask their Google Assistant to play a certain song. But AI is also at work in less visible ways, as well – scoring bank customers for creditworthiness, analyzing warranty claims to uncover upstream production problems, grading college essays and even helping courts determine how to sentence criminals. Nevertheless, businesses are in the early stages of AI adoption, and companies are still learning how to put the technology to work. The challenge today is less about understanding technical questions and technology capabilities, and more about crafting a strategy, determining the governance structures and practices needed for “responsible AI,” and accelerating the move from experiments to full-scale AI adoption. Earlier this year, we assessed the state of AI in business through the eyes of 975 executives across industries in the U.S. and Europe (see Methodology, page 22), asking them about their attitudes, expectations and plans. Key findings include:❙Executives are enthusiastic about the importance and potential benefits of AI. Roughly two-thirds of executives say that AI is extremely or very important to their companies today, and more than eight out of 10 expect this will be the case three years from now. About three-quarters foresee major or significant benefits from the technology, in terms of lower costs; increased revenues; and the ability to introduce new products or services, or to enter new businesses. ❙Faster-growing companies are more optimistic and aggressive when it comes to AI.

Executives at faster-growing companies are more likely than others to view AI as important, and more likely to expect major benefits in the coming years. Eighty-six percent of executives at these companies say AI is extremely or very important to their company’s success, compared with 57% of those at their slower-growing competitors. These industry leaders say they plan to use AI to drive further growth, solidifying their leading positions and pulling even further away from the pack.❙There is a major disconnect between executives’ optimism about AI and actual AI implementation. While two-thirds of executives said they knew about an AI project at their company, only 24% of that group – just 15% of all respondents – were aware of projects that were fully implemented., with the large majority of AI projects still in the early planning or pilot stages. This contrasts sharply with the fact that 84% of respondents believe AI will be critically important three years from now. ❙Many companies appear to lack a strategic focus for AI. When identifying the challenges they face in implementing AI and the technologies they’re targeting, executive responses were relatively undifferentiated in both areas – essentially adding up to “all of the above.” This suggests that companies have yet to hone their strategic plans for
Making AI Responsible – And Effective / 3Digital Businessintegrating AI into the business core. In addition, roughly 40% of respondents said that securing senior management commitment, buy-in by the business and even adequate budget were extremely or very challenging, indicating that many companies are not yet fully committed to AI’s central role in advancing business objectives.

Many companies are not addressing the ethical dimensions of AI. Only about half of the executives surveyed said their companies have policies and procedures in place to identify and address ethical considerations – either in the initial design of AI applications or in their behavior after the system is launched. We believe organizations need to focus on an ethics lens upfront in the strategy/value stream when deciding whether a problem/need has to be solved through AI.What’s more, about two-thirds of that group said the ethical governance structures they have in place are extremely or very effective. That view may be overly optimistic, and an indication that many executives are underestimating or unfamiliar with the challenging ethical questions likely to emerge as AI becomes more sophisticated and pervasive both in its development and use. Companies will need to take action on several fronts if they are to achieve significant business benefits with AI. The key agenda items include: ❙Formulate AI strategies. These should focus on opportunities that promise measurable value – not only reduced costs and increased revenue, but also benefits such as improved customer service, entry to new lines of business and enhanced employee experiences.

It’s especially critical that strategies take a human-centric view of AI, so that machines can work successfully alongside and for people. ❙Develop governance structures. Companies will need to work proactively to ensure that AI decision-making is transparent to those involved; that AI earns trust by avoiding errors and data-driven biases; and that AI is personalized and able to provide tailored, relevant and context-aware support as it interacts with humans. ❙Create and maintain responsible AI applications. Because of AI’s potential ubiquity and power, ethical concerns need to be interwoven into everything companies do with the technology. That means building AI systems ethically, and then providing oversight to ensure that those systems operate ethically over time, even as the AI applications learn and evolve. To be successful, companies will need to boost their ethics-related efforts upfront as AI touches more and more parts of business and society. In many ways, these non-technical considerations – regarding trust, transparency, ethics and human-centric approaches – are more critical and complex than those related to developing and running the technology itself.

But they are absolutely critical to the success of AI, because they will determine how well these technologies can be leveraged to advance business objectives. AI operates in the real world. Companies that do not find solutions in these areas could see their AI efforts fall short, or fail completely. This, in turn, has the potential to irritate customers, alienate employees, drive up R&D and deployment costs, and undermine brand reputation as well as business opportunities – causing businesses to fall behind competitors in the race to unleash the vast business potential of AI.
Making AI Responsible – And EffectiveDigital BusinessAI enthusiasm outstrips deploymentToday, AI is clearly top of mind for many executives. Our study intended to demonstrate how this mindshare translates into how and where companies are using the technology and the issues they face. Our findings provide insight into the role that AI is playing and will play in companies, and how organizations will manage and use the technology in the coming years. Our study found that (no surprise) executives are enthusiastic about AI. They see it as having a growing impact on their businesses, with 63% believing it is already extremely or very important to their company’s success, and 84% saying that will be true in three years, including 48% who expect it to be extremelyimportant. Business leaders also believe it can be applied throughout their organizations. Respondents reported on AI projects at their companies in a wide variety of functions, with customer service (30%), manufacturing/production (26%), operations (20%) and research and development (18%) cited most often.Moreover, executives have high expectations for AI. About three-quarters of respondents foresee significant or major benefits from the technology, with one-third saying they expect major benefits. In particular, 79% of respondents expect AI to introduce major or significant benefits in increased efficiency and lower costs over the next three years (see Quick Take, page 5); 74% in increased revenues; and 73% in improved ability to introduce new products and services, or enter new businesses. More than one-third expect to see major benefits in each of these areas (see Figure 1 ). Expected benefits of AI over next three years37% 35% 37% 42% 39% 36% 79% 74% 73% Increased eciency/lower costs Increased revenues Ability to introducenew products/services or enter new businessesMajor Benefit Significant Benefit Response base: 975 executives in Europe and the U.S.Source: CognizantFigure 1Executives have high expectations for AI. About three-quarters of respondents foresee significant or major benefits from the technology, with one-third saying they expect major benefits.

Reimagining Digital Content ServicesWe worked with a leading global K-12 publisher to accelerate its push toward digital content creation and distribution, using a modern digital platform. The publisher’s existing content operating model was distributed in silos globally, leading to long print cycles of 18 to 24 months.With increased competition from digitally-savvy players, the company’s operations team couldn’t keep pace with user demand for fresh content. Content reuse through multiple delivery platforms — print, web and mobile — was seen as a way to satisfy customers while reducing time to market.Meanwhile, the company needed to manage a global vendor network of 170 content producers, adding to the stress on operations and business competitiveness.

With content stored across 170 systems, it was difficult to derive optimal value from these assets through content reuse, and the organization was unable to take advantage of a greater collaborative opportunity to create content through enhanced workflows.By applying our observations of industry trends and a deep understanding of the business, we developed a solution premised on the following digital principles to produce and manage content:❙Content is currency, and must be managed like treasury operations.❙Exemplary customer experience is a non-negotiable prerequisite.>Personalization is a must-have.–Digitally-instrumented content operations can, and must, impact revenues.

Making AI Responsible – And EffectiveMaking AI Responsible – And Effective / 5Quick TakeDigital BusinessAccelerating fraud detection While AI is still relatively new in business, some companies are already finding ways to use it to increase efficiency and keep costs down. For example, in spite of a great deal of automation in check processing operations, large banks still employ hundreds of people to review computer images of scanned checks to spot signs of fraud. Not only is this process time-consuming and inaccurate; it’s also ineffective, with banks losing millions of dollars a year to counterfeiters. Working with us, one global financial services organization took steps to use AI to augment and streamline its fraud detection process. We developed a machine-learning solution that essentially teaches itself to identify counterfeit checks. It analyzes scanned images of handwritten checks, automatically comparing a variety of factors on the checks to a growing database of checks that have been previously identified as fraudulent. The system then flags potential counterfeits in near real-time while deposit transactions are in process, helping to catch fraud early on. When we tested our model on a historical portfolio of past transactions, it was able to process up to 20 million checks per day, delivering a fast, accurate confidence score for each check in less than 70 milliseconds. Fewer checks now require manual review, helping to keep processing costs low.

And the system is forecast to provide a $20 million reduction in fraud losses annually, based on current models.1Positive attitudes toward AI are particularly pronounced among respondents who said their companies are growing much faster than the average company in their industries. Executives at these faster-growing companies are more likely to view AI as important to their company’s success and more likely to expect major benefits. If these leaders can unleash the potential of AI, their current lead could widen further (see Quick Take, page 6).

Credit:cognizant