Executives are looking to future-proof their organizations with key investments in emerging technologies.
As we begin 2019, Fortune 1000 companies are accelerating their investment in big data and artificial intelligence (AI) initiatives, with an astonishing 91.6% of the executives indicating that their companies are accelerating the pace of their big data and AI investments. This is a principal finding of the NewVantage Partners 2019 Big Data and AI Executive Survey, which includes 65 Fortune 1000 or industry-leading organizations. C-level executives comprise 97.5% of survey participants, representing companies including American Express, Capital One, Ford Motor Co., General Motors, Johnson & Johnson, Mastercard, and MetLife. When we look at the main drivers for this focus on AI and big data investment, one clearly leads the pack: the fear of disruption.
According to the 2019 survey, Fortune 1000 companies are now recognizing that they must become more adept at leveraging their data assets if they are to compete successfully against highly agile data-driven competitors. Over the past decade, exponential growth of data, coupled with access to much larger data volumes and data sources, has enabled rapid evolution of AI capabilities — with the result that organizations are now able to apply AI capabilities at scale to deliver business value.
Three-quarters of the executives surveyed in 2018 cited fear of disruption as the principal motivating business driver as they enter 2019. This fear has built an increasing sense of urgency across companies and industries — with 87.8% stating there is a greater urgency to invest in big data and AI initiatives now more than ever. In order to continue to compete in a turbulent landscape, an overwhelming majority (91.7%) of executives identified the need to transform their organizations to be nimbler and more data-driven in order to keep pace with competitors.
The dollar investments in big data and AI initiatives are also increasing. The percentage of companies reporting investments of greater than $500 million increased from 12.7% in 2018 to 21.1% in 2019. This increase highlights the momentum that AI investments are gaining in just the past 12 months. At the top end of the range, 8.7% of executives reported investments exceeding $1 billion.
AI as a Force for Disruption
AI is perceived by executives as being a highly disruptive capability at a time when companies are concerned about their own risk. When asked to identify the principle driver of investments in big data and AI, 91.7% of executives cited the need to transform their businesses and become increasingly nimble to face off against highly agile, data-driven competitors.
The survey confirms that there has been a steady increase in investments in AI and machine learning from 2017 (68.9%) through 2019 (96.4%), reinforcing the view that investment in AI has become nearly universal. Similarly, executives identified AI and machine learning as the most disruptive of emerging technologies when looking out across the horizon of the coming decade. Other potentially disruptive capabilities, including blockchain, cloud computing, and digital technologies such as mobile and sensor devices, lagged behind in the single digits respectively.
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Importantly, executives are reporting measurable returns from their investments in big data and AI, with 62.2% reporting favorable results. Areas of notable benefit include: advanced analytics (79.8%), which can help improve customer engagement; investment in customer service processes (57.1%) to help companies roll out products and services faster and create customer self-service capabilities; and the low-hanging fruit of expense reduction (59.5%), which encompasses automating processes and tasks.
Improving AI Business Adoption
Tom Davenport and I wrote last year about the problem with AI pilots and some of the challenges to business adoption that companies were facing. In the article, we noted that production implementations of AI technology remained relatively scarce, citing factors such as the changes required to existing business processes, as well as potential skills gaps. These impressions are reflected in the 2019 survey’s responses, as 77% of executives reported that business adoption of big data and AI initiatives remains a challenge for their organization. Survey results also reinforce the gap in business processes and human resource skills, with 95% of the executives citing people and business process issues as the primary obstacles to business adoption of these initiatives.
Factors that continue to plague business adoption efforts include lack of organizational alignment and agility (cited by 40.3% of executives), cultural resistance to the pace of change (named by 23.6% of executives), and a lack of understanding of data as a business asset (identified by 13.9% of executives). Companies need to begin to address the cultural obstacles to business adoption if they aspire to be successful. In short, it’s not technology that is proving a stumbling block for big data and AI adoption, but rather process and people issues.
The true test of ultimate business value will come in the months and years ahead as organizations leverage AI and data to transform their businesses to successfully compete with their data-driven counterparts.