CxO Essentials

Being a corporate leader in these times means confronting disruption and change in unprecedented volume. Learn about some of the biggest challenges facing CxOs.

6 Pieces




16 min

The intersection of automation and artificial intelligence

By Elli Hurst

The difference between automation and artificial intelligence

I get this question a lot – what’s the difference between automation and artificial intelligence?    With so many technologies and trends, it’s easy to get confused.   As with most technology topics, there are opinions – think of the great debate on how to pronounce GIF!  With that as a disclaimer, let me give you my take here.   In its simplest form, automation is creating an automatic process to complete a transaction or job. Think of an alarm on your watch or smart phone, or robots on an auto assembly line. With automation, humans are still involved in the front-end of the process to make decisions and inform the device or robot of what actions to take.

Now for artificial intelligence – Watson is IBM’s artificial intelligence or “cognitive computing” platform.  This technology can understand all forms of data — including unstructured text, images, audio and video.  It can reason, for example it can provide personalized recommendations by understanding a user’s personality, tone, and emotion.  It can learn — utilizing machine learning to grow subject matter expertise, and it can interact in natural language.

 

IBM’s Ira Allen receives the Blue Prism Innovation Award

IBM’s Ira Allen receives the Blue Prism Innovation Award

Cognitive Automation

IBM is integrating automation with artificial intelligence through IBM Automation with Watson.  It makes automation smarter and more efficient. Watson can assimilate massive amounts of information – more information than any human could possibly consume. It can ingest thousands of documents, understand the context of that knowledge and have a natural language dialogue with users – all of which make it hugely powerful. As for decision-making, Watson can take a corpus of knowledge that it has ingested and either advise an action for the end-user or offer a recommended action with a specified degree of certainty.

Cognitive Automation can determine the action that needs to be taken and then connect directly with an automation robot to actually take that action and improve and learn. The humans that adopt Automation with Watson are able to do more with less effort, to think beyond the status quo using information never before available and to innovate beyond their wildest dreams.

We’d be happy to discuss how we’re helping clients realize dramatic quality and productivity improvements at the intersection of automation and artificial intelligence. In fact, IBM was recently recognized for its IBM Automation with Watson technology at Blue Prism World on June 7 in New York where we received the Blue Prism Innovation Award from Blue Prism CEO, Alastair Bathgate. We’re very proud of the clients we’ve helped with this new approach to automation and honored to be recognized by a valued partner like Blue Prism. No debate about it.

For more on how IBM Automation with Watson is helping clients – www.ibm.com/automation

The future of hybrid cloud: Driving innovation, efficiency and growth

By Mike Fitzgerald

Where we were, where we’re going

In 2011, only a third of senior business leaders we queried1 said they had already adopted or planned to adopt the cloud. Fast-forward five years to 2016, and more than three-fourths of the executives described their cloud initiatives as already included in a coordinated program, or fully integrated with their overall strategic transformation.

Cloud computing is now a substantial part of new IT spending and expected to grow from USD 96.5 billion in 2016 to more than USD 195 billion by 20203 — more than doubling in the next four years. Last year, 60 percent of the growth in IT spending was estimated to come from cloud alone.

Here’s the exciting part: next year, expectations are that a full 100 percent of IT spending growth will be attributable to the cloud! 4 For most organizations, the cloud they’re choosing is a hybrid model.

 

What outcomes are businesses looking for?

Today, organizations want to contain their costs while differentiating themselves in terms of operational efficiency, customer satisfaction and innovation. The most compelling reasons are to:

  • Cut costs. More than half (54 percent) of executives surveyed cited the reduction of the total cost of technology ownership as the reason for implementing hybrid cloud.5
  • Improve operational efficiency. Operational efficiency was cited by 42 percent of respondents. In the realm of IT, cloud enables operational efficiencies by optimizing the latest infrastructure, middleware and apps, rather than making do with sub-par legacy systems.6
  • Enhance customer engagement. Cloud’s agile attributes enable faster time to market for new products and services that attract and delight customers. For example, retailers can use cloud to tempt consumers with tailored promotions that are customized to the customer’s unique buying behaviors.
  • Boost innovation. Cloud adoption fosters innovation because it can transcend geographic, industrial, organizational and operational barriers. Astoundingly, at least 90 percent of executives surveyed said their most successful cloud initiatives had already significantly or moderately achieved expansion into new industries, creation of new revenue streams and invention of new business models.7

 

We’re overcoming past worries about cloud adoption.

When cloud was first developed, some issues arose that justifiably caused some concern for executives. These included security, cost structure and operational disruption. As technology has advanced, these problems have become less of an issue.

  • Security. Security and compliance requirements have restricted certain categories of workload to be migrated to cloud. But this is often due to perception rather than reality. As Gartner puts it, “Many objections to cloud adoption are gradually becoming discredited. There is growing evidence that the security of business data in the cloud for most mainstream organizations equals or exceeds the levels achieved by mainstream IT on premises.”8
  • Cost structure considerations. Organizations need to understand the tradeoffs between capital expense (CapEx) and operating expense (OpEx) models, including the corresponding effects on their financial and business strategies. This movement away from basic in-house IT infrastructure then allows the IT organization to shift resources away from maintenance activities to achieving business objectives, repositioning IT as a business partner.
  • Risk of operational disruption. Potential operational disruption can dampen a company’s enthusiasm to replace less efficient IT functions with new cloud-based solutions. But, when business and IT priorities are combined, the advantages of vastly improved customer experiences, new sources of revenues, enhanced ecosystem collaboration, and an expanded product and services portfolio outweigh any temporary disorder that may be encountered to achieve cloud-enabled business model innovation.

By overcoming the challenges of cloud adoption, successful companies are delivering business value through hybrid cloud in three areas: operations, finance and innovation. Cloud isn’t just about improving operations or reducing costs. It’s overwhelmingly about innovation, too!  Fully 76 percent of surveyed executives said their most successful cloud initiative has significantly achieved expansion into new industries, created new revenue sources (71 percent) and led to new business models (69 percent).9

For real examples of enterprises who have successfully migrated to the cloud, view my webinar Beyond Agility: The CIO’s guide to enterprise transformation with cloud.

If you have any questions, I would like to hear from you. Feel free to leave a comment below or schedule time with me or someone on my team.

Sources:

1 IBM Institute of Business Value, “The Power of Cloud.” 2012. https://www.ibm.com/services/us/gbs/thoughtleadership/ibv-power-of-cloud.html

PDF: https://www.ibm.com/common/ssi/cgi-bin/ssialias?infotype=PM&subtype=XB&htmlfid=GBE03470USEN

2,5,6,7,9 IBM Institute for Business Value, “Tailoring Hybrid Cloud.” 2017. https://www.ibm.com/services/us/gbs/thoughtleadership/tailoredhybrid/

PDF: https://www-01.ibm.com/common/ssi/cgi-bin/ssialias?htmlfid=GBE03766USEN&

3 IDC, “Worldwide Semiannual Public Cloud Services Spending Guide.” 2017. https://www.idc.com/getdoc.jsp?containerId=IDC_P33214

4 TiernanRay, “2016 Will Be All About the Cloud.” Barron’s magazine. 2016. http://www.barrons.com/articles/tech-spending-growth-this-year-will-be-all-about-the-cloud-1451704687

8 Richard Dolan, “Gartner: Cloud Computing in 2017.” 2017. Datapipe blog. https://www.datapipe.com/blog/2017/01/09/gartner-cloud-computing-in-2017/

What does artificial intelligence mean for your business processes?

By Chitra Dorai, Ph.D.

Key Points: 

  • To deliver next generation business process services and support the digitally reinvented enterprise, businesses need to embrace intelligent automation
  • Artificial intelligence (AI) can now deliver personalized, end-to-end frictionless experiences that are outcome focused and easy to scale
  • Learn about three cognitive solutions from IBM that are transforming the way finance, HR and procurement services operate

Learn more

 

Welcome to the era of cognitive computing. It’s an era of artificial intelligence—systems that gather information, analyze, recommend, plan and more importantly, learn . In short, they help you make better decisions. Today’s data volumes are enormous and rich in variety —and now deep learning systems can ingest, analyze and reason across that data in all its forms. These cognitive systems are a huge leap forward leading to a “rethink” of the way people live, engage, and work.

 

How has this technology impacted Business Process Outsourcing (BPO) services?

Traditional BPO, with its focus on operational efficiency and cost savings has not matched the compelling experiences that digital-savvy enterprises—using mobile, social, cloud and analytics—create for their customers. The emergence of intelligent automation has sounded the death knell for traditional BPO services. For the next generation of business process services to keep pace, they’ll need to develop an entirely new set of capabilities, such as:

  • The ability to co-create – advise, design, implement and operate collaboratively with clients to achieve end-to-end outcomes
  • A design thinking-led approach that reimagines traditional work flows using robotics, analytics and AI
  • A pre-built set of reusable assets and solutions exposed via Application Programming Interfaces (APIs) on the cloud for seamless integration and rapid personalization

This will be a journey enabled by digital transformation, powered by analytics and augmented with AI that can disrupt, delight and create possibilities.

 

How can AI transform the way BPO services are delivered?

For starters:

  • Robotic process automation (RPA) lays the foundation for intelligent automation to enable autonomous decision making, deliver new insights through data discovery and provide contextualized support
  • Business processes become smarter and more accurate by extracting real-time information from work flows, context and environment at scale
  • Re-designed, frictionless user experiences delight customers by forging deeper human engagement through personalization

In my frequent interactions with clients around the globe, it is becoming clear that mature enterprises have already embarked on their analytics and AI journey. This was prompted by their need to establish a strong data foundation and generate actionable, real-time insights by embedding analytics into their existing business processes. Advancing the use of these capabilities by harnessing new value from unstructured data is a key step on the AI journey.

 

Analytics to cognitive journey for holistic, actionable insights

Artificial intelligence for business processes can deliver personalized, end-to-end, frictionless experiences that are outcome-focused and easy to scale. This is expressed in a graph that plots icons going from left to right, bottom to top, as follows: data foundations (optimized for scale), descriptive reporting, data exploration, predictive modeling, prescriptive modeling, cognitive computing (optimized for innovation).

At IBM, we have successfully incorporated AI with cognitive solutions developed using the IBM Watson Developer Cloud and its APIs into our BPO services. Here are a few examples of our cognitive solutions that transform the way finance, HR and procurement services operate:

  • The automated Language Translator in invoice processing in finance operations provides domain-specific language translation service to the off-shore team to improve their efficiency. The trainable cognitive application provides secure and domain-specific language translation service between multiple languages in scope. The translation service can also be integrated into the overall ERP (Enterprise Resource Planning) workflow to facilitate process automation.
  • The Procurement Assistant enables users to make intelligent buying decisions by using natural language processing to match their needs to relevant characteristics of goods and services. This represents a shift from the traditional “search and compare” method to an easier and faster “find and recommend” mode in user experience.
  • The Agent Assist solution provides guided call assistance for HR Service Center practitioners. It uses natural language understanding to provide question and answer support and rapidly enhances agent expertise through step by step guidance with complex topics, analysis of caller context and insights for specific actions. This helps to boost practitioner productivity and improve engagement with customers.

The next generation of service delivery is at the intersection of business process innovation and technological innovation, and it’s about to bring frictionless front to back office process re-imagination.

How are you using artificial intelligence to enhance your business processes?

How is cloud driving digital disruption across industries?

By Sanjay Rishi

Why did companies and people first start using the cloud? Typically, it was a tactical play to save IT organizations time, human resources and money — table stakes issues. But the platform has quickly evolved, with a new generation of software products leveraging the cloud to drive business agility, scalability to match demand and improved security. The cloud enables the decomposition of monolithic applications and the creation of new internal partnerships that drive new applications to support the business.

This cloud platform has driven digital disruption that impacted not only the IT department but virtually every department in the organization — in almost every industry, around the world, changing the business model and how organizations operate. Now, it’s no longer simply an economic advantage. There is a strategic imperative to leverage the cloud platform to support your business and facilitate its growth.

Simply put, the cloud platform has become a valuable competitive tool. Combined with cognitive computing, the Internet of Things (IoT) and innovative thinking, insightful organizations have transformed their cloud platform into a powerful analytical engine that enables consumer and business insights never before possible. This transformation has led to developments such as modern hybrid mobile apps and game-changing business applications that propelled forward-thinking organizations to greater success, and left others lagging behind.

Cloud technology has so quickly become prevalent in the business world that those who don’t quickly embrace it — and cognitive computing —risk the dire consequences of digital Darwinism; they will either evolve or become extinct. Imagine if you could take a 2017 auto factory back to 1920. What would be the competitive impact?

Making it real

This is what cloud native architectures have meant to organizations throughout the world: enabling new operating models that can respond at the speed of today’s business challenges. Cloud platforms are pervasive in almost every industry. Automotive, retail, consumer package goods (CPG) and financial service firms are all looking at how to fundamentally alter the way they develop game-changing applications and services. Industries are moving the needle on customer engagement, supply chains, product quality and safety, and of course, profitability.

Take American Airlines, for example. They operate in an extremely competitive industry where consumers demand better services while exhibiting extreme price sensitivity. The airline was burdened with end-of-life infrastructure in existing data centers that needed to be updated without disruption to service. To address both their architectural needs and their customers’ demands, they chose to migrate to an IBM cloud solution that reduced their infrastructure capital expenditure and enabled customer-engaging applications. The result was better control of their data, better cost management, and a superior, unified customer experience — experiences that lead to loyalty.

How does that work? I’ll tell you about my own experience. Like many of you, I spend a lot of time in airplanes. That means I also spend a lot of time selecting flights, purchasing tickets, checking in at the airport, and when things don’t go as planned, rebooking my flights. If the airline I’m flying hasn’t transitioned to the cloud where they can take advantage of its customer-centric capabilities, the entire process can be a painfully laborious one. Which means that I, as a demanding consumer with high expectations, might decide I won’t fly that airline again.

So, when an airline like American Airlines implements systems that make my life easier, they’re going to get — and keep — my business.

Transformation for all

IBM understands the importance of cloud-native architectures and their role in innovation. We’re absolutely convinced that it will define business and computing for the next quarter century. Dedicated teams of developers collaborate with some of the best minds in the industry to envision the eventual, and to forge a future where the benefits of cloud computing are available not only to Fortune 500 corporations, but to everyone. Through offerings such as cloud-as-a-service, IBM promotes the democratization of digital disruption, paving the way for everyone to participate in the new economy.

Whether you’re developing strategies for a nascent entrepreneurial endeavor or an established global enterprise with thousands of employees, you can take advantage of transformational technologies. With all the different implementation and pricing options now available, the future is within your grasp. With sound planning, new cloud technologies and enough imagination, you could become a market disruptor who changes the course of the future.

Please watch for my upcoming blog that discusses second thoughts CIOs are having about the cloud — and why you should have them, too.

To see how other companies have strategically used the cloud to drive digital transformation, take a look at this webinar: Beyond Agility: The CIO’s guide to enterprise transformation with cloud.

Digital transformation: New business models, new customer expectations

By Ragna Bell and Saul Berman

The new digital age.

Individuals and businesses alike are embracing the digital revolution. Social networks and digital devices are being used to engage government, businesses and civil society, as well as friends and family. People are using mobile, interactive tools to determine who to trust, where to go and what to buy. At the same time, businesses are undertaking their own digital transformations, rethinking what customers value most and creating operating models that take advantage of what’s newly possible for competitive differentiation. The challenge for business is how fast and how far to go on the path to digital transformation.

 

PDF cover art with IBM logo

Download the executive summary (809KB)

Download the executive summary about digital transformation in the automotive industry (883KB)

 

Study highlights

Companies with a cohesive strategy for integrating digital and physical elements can successfully transform their business models - and set new directions for entire industries.
Successful digital reinvention is two-fold: Reshaping customer value propositions and transforming operating models for greater customer interaction.
Businesses need a new portfolio of capabilities for flexibility and responsiveness in addressing fast-changing customer requirements.

Read related IBM executive reports

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Access our latest thought leadership, including C-suite studies and industry insights. Maintain a library, receive regular updates. Explore enhanced content.

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Business consulting

Digital Reinvention™: Are you ready?

Digital transformation: Reimagining your business

By Saul Berman, Peter J. Korsten and Anthony Marshall

Transcending disruption

Digital technologies have altered how people and businesses interact. Digital forces have created unprecedented levels of industry dislocation and are fundamentally changing business economics. To succeed in this disruptive environment, organizations will need to offer compelling new experiences, establish new focus, build new expertise and devise new ways of working. Business leaders will face a stark choice: Either digitally reinvent their enterprises, or watch as their businesses decompose around them. Successful Digital Reinvention™ will involve a fundamental reimagining of how an organization operates and how it engages with its environment.

Digital reinvention infographic

Download the study infographic (606KB)

Digital reinvention pdf cover

 

Study highlights

60 percent of Global CEOs are expecting more competition from outside their industry
81 percent of global CEOs want to use technology to develop stronger customer relationships
54 percent of global executives believe that customer buying behavior is shifting from products and services to experiences
The four district characteristics of the E2E economy
The first fours steps of digital reinvention, 1: Envision 2: Create 3: Deepen 4: Orchestrate
For successful digital reinvention, organizations need to pursue a new strategic focus, build new expertise and establish new ways of working.
Digital reinvention in action. What to do and how to make it happen
The most successful digitally reinvented businesses establish a platform of engagement for their customers, acting as enabler, conduit and partner.

Read related IBM executive reports

Digital Reinvention

Preparing for a very different tomorrow

The new age of ecosytems

Redefining partnering in an ecosystem environment

The digital overhaul

Redefining manufacturing in a digital age

Download the IBV App

Access our latest thought leadership, including C-suite studies and industry insights. Maintain a library, receive regular updates. Explore enhanced content.

Subscribe to the IdeaWatch Newsletter

Sign up to receive monthly e-mail updates on recent papers from the IBM Institute for Business Value.

Business consulting

Digital Reinvention™: Are you ready?