close
Share with your friends

Realistic timeframes and greater usage

Artificial intelligence (AI) is one of the most promising advanced technologies, with an impact on the organization and on the decision making by the CEO personally.

Spotlight on AI

In building a resilient organization, technology is a double whammy: It is a top driver of disruption and a top risk. No wonder then that technology is a big part of today’s CEOs’ agendas, with 89 percent feeling personally responsible for leading technology strategies in their organizations. Artificial intelligence (AI) is one of the most promising advanced technologies, with an impact on the organization and on the decision making by the CEO personally. This year the CEOs’ thinking about AI has yielded some seemingly contradictory findings—CEOs do not seem to believe that their companies have made that much progress in terms of AI implementation since last year, and they do not expect AI projects to yield results as fast as they did in 2018. At the same time, however, they are now more likely to use AI in their decision making.

 

Which of the following best describes your organization’s application of AI in the automation of its processes today?

  

AI implementation

Over what time do you expect to see significant return on investment from AI?

  

AI implementation return

Brad Fisher, KPMG U.S. Leader of Data & Analytics and Artificial Intelligence, explains that these results illustrate the increased complexity and scope of AI implementations, and not that progress is stalling. “The majority of companies are somewhere in the middle of their AI implementation journey. As they complete initial use cases, they are identifying additional areas that AI can impact. They are not moving slower but expanding the uses of AI,” he says.

And while the returns may take time, “the value in terms of being able to streamline or automate your business, or derive insights that you didn’t have before or create entirely new business models means that AI is worth the wait,” says Fisher.

AI enablement

William Amelio, CEO of Avnet, recognized the need to transform the company’s business model from a technology distributor to a technology solutions provider to support projects leveraging Internet of Things and AI. “Today we are able to guide our customers from idea through prototyping to finished product faster with less cost and complexity,” he says.

In effect, what is being revealed during the implementation is that becoming truly AI-enabled is a multi-step process, which involves technology, data, rethinking business processes and workforce elements, as well as all the risk and compliance issues.

KPMG’s Fisher defines four key steps, starting with the experimentation and the prototyping before proceeding to a repeatable value stage, where companies are creating and utilizing data-driven insights. The third stage is about integrating AI into operations, much like a technology application, with AI running within a system. It is only at this stage that companies can start to think holistically about enterprise transformation. “AI is something that you build in a multi-step process, and not something you buy and install,” he adds.

Despite the realization of the scope and complexity of AI, CEOs are more accepting of it as it relates to their own decision making than they were last year. Sixty-six percent of CEOs told us that over the last three years, they overlooked insights provided by computer-driven data analysis because they were contrary to their experience and intuition when making critical decisions, compared with 78 percent in 2018. They have thus shown that they are more inclined to incorporate data in their decision making, even though CEO-level decisions have been traditionally made using intuition and personal experience.

The ability of people to synthesize and understand data quickly—and react to it—is probably the differentiating factor that will define those who are successful and those who are not.

James Bracken
CEO
Fortitude Re

Frank Casal, Audit Vice Chair at KPMG US, points out that investment in advanced technologies can provide CEOs with a deeper understanding of their business, their industry and the risks they face.

Artificial intelligence, robotic process automation, data and analytics capabilities, workflow automation, cognitive technologies, natural language processing and other emerging technologies can streamline business transactions and replace labor-intensive, tedious and time-consuming tasks across the enterprise. Auditors—both inside the company and the external auditor—can also leverage these technologies and their output.

In the reinsurance industry, data-driven insight is critical, with reinsurers having to weigh up risk exposure, make accurate decisions at speed and respond to a fast-changing marketplace. For James Bracken, CEO of reinsurer Fortitude Re, the exponential growth of data—and the increasing connectivity of the world—is demanding new skills of CEOs. “The velocity of information flowing through the system today is significantly greater,” he says. “Therefore, the ability of people to synthesize and understand that data quickly—and react to it—is probably the differentiating factor that will define those who are successful and those who are not.”

While it is understandable that as AI implementations grow in scope their deadlines and returns are getting extended, the importance of being an early mover cannot be overstated. “Early movers who implement AI proactively are going to be in a much better position to expand their business, and thereby create jobs,” says Fisher.

Ultimately, technology resilience needs to be viewed in a broad, societal context. “We are living at a crucial time in history where the impact of technology on every part of our daily life and work and every aspect of our society and economy is more acute than ever before. What the world needs is technology that benefits people and society more broadly and is trusted,” said Satya Nadella, CEO, Microsoft.1

 

[1] Microsoft Annual Report 2018