and returns from AI/ML are playing a new game of hide-and-seek. They’re
still there, but not where they used to be. If you keep looking in the
old places…well, you know what’s going to happen.
A (VERY) BRIEF HISTORY OF THE AI INDUSTRY
the early 2000s, Marvin Minsky—a cognitive scientist and one of the
fathers of artificial intelligence—liked to say that we can make a
computer capable of beating the reigning genius of chess, but we can’t
make a robot capable of walking across the street as well as any normal
real world is not a strictly regulated closed system like a chess game.
Sensing moves on a virtual board and responding within agreed-upon
rules is one thing. Sensing and physically responding in actual
reality—where a huge number and type of unexpected events might
occur—is quite another.
fact, the entire AI industry has been through multiple attempts since
the 1980s to grow into a mature market. Each of these efforts collapsed
because the technology was unable to meet the unrealistic public and
investor expectations generated by non-real-world computing triumphs
like those of IBM’s Watson.
SMART SYSTEMS ARE REALLY ABOUT THE DATA MODELS
networks continue to invade the “physical” world, traditionally unique
components and interfaces between and among electronic as well as
electro-mechanical elements are becoming more standardized. Product and
service design is increasingly influenced by common components and
sub-systems. Vertically defined, stand-alone products and application
markets will increasingly become a part of a larger “horizontal” set of
standards for hardware, software, communications and data.
it becomes easier to design and develop smarter more adaptive systems,
competitive differentiation will shift away from unique product
features towards how the product is actually used, how the product
fosters interactions between and among users in a networked context,
and, most importantly, how the data from the product will inform these
data from cyber-physical systems of the real physical world can offer
extraordinary business advantages to the companies that understand how
to organize that data and model the behavior of the physical world. The
ability to develop models from sensor and machine datasets allows not
only data patterns but a much higher order of intelligence to emerge.
adoption of AI and machine learning systems is inevitable. But that
doesn’t mean that every participant will automatically be shaking a
money tree. Value and returns from AI/ML are playing a new game of
hide-and-seek. They’re still there, but not where they used to be. If
you keep looking in the old places…well, you know what’s going to
happen. We think that the economic impact of AI/ML developments will
recapitulate the tendency we’ve seen for decades in digital technology
generally—less and less physical value, and more and more metaphysical
IT’S STILL EARLY IN THE GAME
course, digital computing has radically transformed human affairs. But
so far that transformation has taken place entirely on the computer’s
terms. Note that even the most remarkable recent achievements of AI and
machine learning—autonomous driving, natural language processing, text
generation, facial recognition, algorithm design and vaccine discovery—have occurred in domains of our physical environment that are subject to rigid sets of rules and laws.
in the third decade of the 21st century, and the question still
remains, “How many engineers in white lab coats does it take to make AI
advancements in silicon, computing and networks are clearly forming the
foundations for AI and machine learning capabilities to advance. But
these systems, sophisticated as they are, are still in their early
stages, and many intended use cases for AI can still be accomplished
with more cost-effective traditional tools like basic regressions. It
seems clear that real business value from machine learning and AI will be realized unevenly across markets, applications and use cases.
NEW AI TOOLS MUST BE ALIGNED WITH INTENDED APPLICATIONS AND USE CASES
most important for the growth of AI is that multiple parallel
technology developments are now increasingly reinforcing and
accelerating one another. Cloud infrastructure resources are providing
unprecedented computing scale. Mobile computing devices are extending
the reach of computing. Embedded systems and IoT technology are
connecting and integrating a broad array of physical and digital
applications. And of course the signature achievement of the age of
“big data,” the ability to capture and process massive amounts of raw intelligence from the physical world, has the potential to inform many new and diverse capabilities.
of those technologies is powerful on its own, but creative combinations
of them are what is most exciting. Human-connected devices and
machine-connected IoT devices enable exponentially more data at the
edge. The scale of core, infrastructural (cloud) computational
capabilities enables us to capture and analyze all that information.
And this in turn sets the stage for AI and machine learning tools to
analyze and capture new insights.
new chapter is motivating tech developers and users to apply advanced
neural nets and deep learning tools to their most intractable problems.
Most companies believe that implementing advanced AI solutions will
lead to significant efficiencies, growth and competitive
differentiation. However, matching new tools to high value applications
and use cases will challenge many industry participants.
all know that AI tools are trained on large data sets, but most people
do not grasp that AI applications require thousands or even hundreds of
thousands times more data than a human would need to solve an
equivalent problem. If you examine applications where machine learning
is successful, it quickly becomes apparent that they are in domains
where acquiring lots of data is relatively easy—think facial or speech
recognition, where technology developers have vast troves of data they
apps are the core value creation mechanisms within the Smart Systems
and the IoT. But the B2B world that comprises so much of the IoT
doesn’t have the same unified sources or monolithic usage tracking and
analytics that the consumer world utilizes to make money. Based on our
consulting work, we estimate that B2B development projects lack as much
as half the data needed to inform new application values and fulfill on
artificial intelligence and machine learning opportunities.
additional challenge is the fact that most machine learning systems
today run “narrow purpose” applications that can do only a single type
of learning. Current neural networks cannot be trained to run multiple
parallel applications, such as identifying images and playing video
games, or predictively diagnosing machine failures and listening to and
identifying music, all at the same time.
the impacts of new AI tools will be higher and more straightforward to
achieve where the user’s propensity to experiment with new tools and
methods is also higher.
WHERE TO LOOK FOR AI/ML ROI
and machine learning are being turbo charged. An explosion of AI/ML
tools is lowering the barrier to entry to high-end data science.
Historically, developing AI/ML applications and use cases involved data
teams doing much “heavy lifting” to design and deploy complex custom
models. Today, new data tools are gaining wider adoption. Standardized
schemas for data ingestion and transformation are setting the stage for
many more companies to incorporate AI/ML into their products.
Based on our research and consulting, we believe the most significant AI-related ROI will occur:
- Where users traditionally have understood the value of monitoring and collecting data
- In markets and opportunities that are typically more “mission critical” in nature
domains that contain diverse equipment and systems that have over many
years been subject to continuous and multiple measurements
- In domains where the capital cost of the equipment tends to be high and
- In domains where the economic impact of the equipment and systems “in-use” is high, and
- Where fractional improvements or cost optimization will yield significant business results
domains and applications where customer data is actively collected
allows those data sets to be combined with adjacent data to address new
opportunities such as customer prediction analytics. New opportunities
are emerging all over the economic landscape to fuse very large data
sets with new sensor readings and measurements. Logistics companies
will use external data to predict disruptions in their retail
customers’ supply chains. Smart city emergency response services will
get to accidents or disaster sites and on to hospitals as quickly as
possible leveraging imaging data, maps, traffic flow data and much
more. Combining weather forecasts and legacy weather models with
sensors mounted on vehicles that contribute real time road-condition
measurements will help large fleet owners optimize the use of their
order for developers to provide appropriate tools and services, and for
users to effectively justify the significant investment in AI/ML
capabilities, identifying and aligning the tools with the intended use
cases and applications will be critical.