Artificial intelligence needs human design

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Artificial intelligence (AI) technologies continue to progress, with vendors increasingly embedding machine learning capabilities into enterprise applications and consumers coming to expect a level of personalized, yet automated, interaction that only AI can deliver at scale. Discussions around the potential hazards of AI to brand reputations, personal data protection, constitutional freedoms and society at large have become commonplace, but this has not slowed the pace of technological advancement. While AI technology vendors continue to lead and engage in these discussions (especially when their own reputations and research investments are at risk), ultimately, organizations that incorporate AI tools into business decisions and automated processes will be responsible for the impacts of those technologies.

If the 2018 O’Reilly Artificial Intelligence Conference made anything clear, it was that as AI adoption grows, so does the technology’s complexity, particularly at the intersection points between humans and machines and between regulatory policy and technological innovation. This should sustain professional services opportunities for vendors that can stay on top of AI technology developments while maintaining a broader perspective on the impact of AI on clients’ business processes and HR strategies. Still, many questions remain unanswered, including how to manage security and governance over the massive autonomous systems that will be coming online in the next several years; whether the approach taken by the European Union with its General Data Protection Regulation (GDPR) will become the global standard; and what the long-term impact on human intelligence and skills will be as machines take over more tasks. It is unlikely these issues will be resolved by the 2019, or even 2020, O’Reilly Artificial Intelligence Conference, but vendors can start to address some of these questions with clients through consulting and solution design engagements tied to broader digital transformation initiatives.

Event overview

TBR attended business and technology learning content company O’Reilly Media’s third O’Reilly Artificial Intelligence Conference, an event centered on a variety of AI topics, including enterprise use cases, implementation, business and societal impacts, product design, and machine learning methodologies, over two days in New York. The conference’s theme, “Putting AI to Work,” mirrored that of last year, but sessions and discussions reflected growing maturity in how enterprises and researchers approach, develop and apply AI technologies. Keynote speakers represented AI technology vendors such as Intel AI (the conference’s co-presenter, as announced last year), Google, IBM Watson, Microsoft (Nasdaq: MSFT), Amazon Web Services, SAS, Digitate and Uber, as well as research institutions such as MIT, Princeton and Carnegie Mellon. In addition to tactical sessions around specific AI use cases designed for data scientists and software engineers that were abundant last year, new in 2018 was the AI Business Summit track tailored for executives, business leaders and strategists (and for TBR’s lead analyst covering professional services related to AI, analytics and digital transformation). TBR also interacted one-on-one with founders, product leads and marketing executives from AI-related startups such as Alegion, Kinetica, Clusterone and Dataiku throughout the conference.

Atos is executing strategy to scale digital transformation activities

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TBR perspective

TBR expects Atos will sustain its growth momentum and achieve organic revenue growth at a CAGR of between 2% and 3% from 2017 through 2019. Over the past year, Atos has been shifting its portfolio mix to next-generation solutions, building digital skills and competencies through digital certifications of employees, and attracting digitally versed graduates from leading universities. Now the company is executing on its strategy to have 40% of its revenues in 2019 generated from its Digital Transformation Factory (DTF) solutions portfolio. Emphasizing the message around execution will resonate well with clients, especially Atos’ key accounts, as they move beyond the initial digital transformation hype to actually implementing and scaling their transformational initiatives.

Due to Atos’ less developed consulting expertise in North America compared to Europe, TBR believes the company has chosen not to follow the consulting-led digital transformation trend among peers in the region and is instead focusing on execution, something Atos does well. While leading with technology and vertical industry expertise will likely work as Atos builds relationships with key accounts and cross-sells solutions across its portfolio, TBR’s research shows that both business and IT consulting matter, especially for new clients and new solutions.

Overall, Atos is persistently keeping in line with its three-year growth ambitions for 2017 through 2019, and focusing on its strengths. This is exemplified by the company’s emphasis on the Internet of Things (IoT), as Atos combines its expertise and proven track record in IT services, security and industry solutions with the operations technology (OT) and industry expertise of its global strategic alliance partner Siemens to integrate IT and OT for clients and capture opportunities in IoT.

For the third consecutive year Atos held its annual Global Analyst Conference in Boston, underscoring its persistent emphasis on expanding in North America and diversifying its global revenue base, as well as highlighting its desire to be closer to the U.S.-based IT industry analyst community. The conference was hosted by Patrick Adiba, Atos’ new North America CEO, and featured plenary and breakout sessions as well as individual meetings with TBR analysts. During the event Atos presented its strategic direction through 2019; collaboration activities with global strategic alliance partners such as Dell EMC, Siemens and SAP (NYSE: SAP); and case studies that showed Atos in action delivering measurable business results for clients.

The Business of One era requires new business planning and management practices

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A new generation of incredibly powerful, flexible and responsive businesses is reshaping markets. Their ability to serve single customers at scale is what TBR terms the “Business of One.” The environmental forces triggering this shift are vast. Information velocity accelerates globally; digital information expands exponentially; competitive advantage windows compress rapidly; task work automates; acute labor shortages persist in new skill work; and new business risks pressure public policy. In the aggregate this confluence of technology-enabled business factors disrupts traditional business, education and public policy best practices. Technology vendor and enterprise business models must evolve, as evidenced by the market capitalizations of relatively new businesses such as Facebook, Amazon, Apple, Netflix and Google (FAANG) while more established firms have languished. In the Business of One era, success will rest upon rapid iterations rather than deliberate cadences, ecosystem participation for assembling complementary assets rather than amassing scale advantage, subscription monetization cycles rather than transactional product sales, and highly automated processes and customer access points rather than labor-intensive task work and repetitive, overlapping paper trails to establish commercial trust.

Laundering money and funding terrorism cannot withstand analytics and AI

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Despite banks’ substantial investments in technology, people and processes to meet regulations, they currently lack effective and efficient systems for tackling financial crimes such as money laundering and terrorist financing. Regulators cannot keep pace with change, and the time and investment to overhaul banks’ legacy systems are too great given the complexity of global organizations and inevitable disruption to operations. But the three elements — technology, people and process — match EY’s strengths in technology consulting, especially when paired with deep financial services industry and risk and compliance expertise. EY continues to invest and evolve its financial crime (FinCrime) practice as it listens to financial institutions’ demands for services that embed regulatory compliance expertise and technology innovation, offered at scale on an outcomes-based pricing model. EY’s FinCrime practice collaborates across the firm to combine legacy capabilities and emerging technologies to differentiate from competitors’ portfolios in the market and provide, in TBR’s current analysis, industry-leading offerings.

EY’s connected approach to disrupting financial crime: Technology disruption, industry collaboration and process innovation

Over the course of EY’s two-day Financial Crime Analyst Summit, the firm’s leaders and banking sector clients spoke with TBR about the challenges financial institutions face, including high operating costs, stifled revenue growth, and demands to undergo business transformation while maintaining compliance with evolving regulations. Many industries contend with the first two challenges, but this last one — transforming while complying — fits well with EY’s strengths: industry expertise, emerging tech capabilities, and a deep understanding of the regulators in the U.S. and globally. In applying those strengths, EY’s financial crime practice relies on three pillars — technology disruption, industry collaboration and process innovation — in other words, meet demand for services and solutions that are backed by regulation credibility, infused with technology innovation and offered with tiered pricing to successfully disrupt FinCrime.

Before getting to the specific ways that EY addresses FinCrime, one key aspect of the financial services market as a whole deserves extra attention: trust. In the consulting and technology spaces, trust has come to mean delivering on promises and securing data. In the banking space, with the additional weight of money and regulators, trust becomes the single most important factor in determining the extent of a provider-client relationship. With a heritage as a trusted auditor, a reputation for delivering consulting services, and a position between clients and regulators, EY has built up enough trust capital to take on industrywide challenges.

A wave of health IT innovations still struggling to crack entrenched industry roadblocks

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Lack of ubiquitous interoperability a lingering vexation in the healthcare sector

TBR believes the pace of health IT innovations will continue, and even accelerate, especially as value-based care takes hold of the healthcare sector. However, full realization of the benefits of new healthcare technologies will continue to be deferred until we have, according to the Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma in her conference remarks, “a healthcare ecosystem where data flows freely.” In the same forum at HIMSS18, White House Senior Advisor Jared Kushner added that “even with the most advanced military on Earth, the U.S. still struggles to exchange records between the DoD [Department of Defense] and VA [Department of Veterans Affairs].”

Dr. Jon White, deputy national coordinator for Health Information at the U.S. Department of Health and Human Services (HHS) Office of the National Coordinator (ONC), highlighted the challenges of enforcing regulatory rules designed to prevent data blocking during the HIMSS18 Compliance Symposium. While healthcare organizations that do not share patient information as required may face fiduciary penalties, White acknowledged that his agency has yet to comprehensively define what constitutes information or data blocking. He also described other complications stemming from fees associated with connecting health IT infrastructures and the proper reading of Health Insurance Portability and Accountability Act of 1996 (HIPAA) regulations. Even beyond these challenges, White noted that some healthcare organizations as “an out-and-out business practice,” still refuse to share data, despite the risks of fines or other consequences.

Also during the HIMSS18 Compliance Symposium, Ken Mortensen, data protection officer for InterSystems, made a tacit admission that healthcare organizations may continue to block data sharing with impunity, provided they can sufficiently “explain the rationale behind their actions” if and when they are accused of information blocking and subsequently audited by the Office of the Inspector General (OIG). TBR believes this sets a troubling precedent that may shift the focus of healthcare organizations in favor of governance versus care delivery, at least in terms of crafting satisfactory practices, policies and accounts of internal activities to indemnify against potential audits.

 

 

The 2018 Healthcare Information and Management Systems Society Annual Conference & Exhibition (HIMSS18) took place at The Sands Expo Convention Center in Las Vegas. The 2018 event was the largest yet, with nearly 44,000 attendees, over 300 educational sessions, and over 1,350 vendors demonstrating their healthcare IT solutions.

Aggregated lateral movement and more: EY’s latest SOC serves the GCC

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Covering the evolution of digital transformation centers over the last few years, we’ve frequently noted that new ways of working have infected many traditionally structured and operated organizations, often through nontypical talent and specially designed workspaces (yes, we’re talking about “funky chairs”). The latest development may be the most surprising as it comes from EY, a long-established and traditional firm in one of the most conservative services lines. EY’s newest security operation center (SOC), which services the Gulf Cooperation Council (GCC) countries, opened its doors in Oman at the end of 2017 and serves local and regional clients with cybersecurity and analytics offerings. According to EY, the center was designed to attract and retain talent, while also reinforcing EY’s strengths around industry expertise and creating opportunities for new EY clients, with layers of activity that call to mind the aggregated lateral movement of security threats (but in a good way).

Constant challenges: Managing talent and clients while delivering security

To tackle the challenge of attracting and retaining talent in the GCC, EY has relied on a staff that is a mix of local nationals and expatriates, acknowledging that increasing the local talent pool will remain a strategic priority over the next decade. While local governments and universities have invested in science, technology, engineering and mathematics (STEM) studies and even cybersecurity specifically, the number of graduates needed to meet local demand will not reach scale for four to five more years, with maturity in security talent coming another five years after that. An additional way EY has addressed this shortfall has been to make the local security work as appealing as possible — the Level One employee staring at a screen identifying false positives has been replaced with analytics and automation in a mixture heavily reliant on EY’s developing security capabilities and enhanced by analytical models, rather than use cases. In the GCC SOC, the entry-level talent begins at Level Two and is investigating all the time, according to EY’s local leadership. Notably, for a region not known for its gender-diverse workforce, roughly half the professional security staff is women in some GCC locations, proving the local governments’ STEM investments are paying off.

While solving for the talent problem, EY must also address client needs, specifically around an operating model that accommodates regional legal structures and plays to EY’s industry expertise strengths. Not surprisingly, Oman as a generally neutral, trusted and respected member of the GCC provides a solid base for a regional security center. Also not surprisingly, EY’s current SOC clients come from government entities, oil and gas companies, and the financial services industry. Quite surprising to TBR was EY’s ability to draw new clients to its new SOC. Typically consultancies have sold security services to existing clients, and almost all clients brought through the new digital transformation centers have already had well-established relationships, making this GCC SOC doubly unique.

9 floors of innovation, intelligence and industry

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Nine floors filled with experts, emerging technologies, partners and clients, all centered on a simple formula: innovation, intelligence and industry, plus rotation to the new while developing new skills.

Counting down to today; investing in tomorrow

A bit of history: Five years ago, Accenture dedicated its Bangalore assets to delivery, focusing on quality, productivity and lowering clients’ (and Accenture’s) costs. Four years ago, the company announced a “rotation to the new,” partially in response to a confusing world of emerging technologies. Three years ago, Accenture’s expectations for the future included everything becoming liquid, intelligent and connected. Last summer, the Bangalore Innovation Hub became an advanced technology center, focused on innovation, intelligence and industry. According to Accenture Technology Group Chief Executive Bhaskar Ghosh, expectations have become reality as Accenture, under one roof, combines those three elements with emerging technologies and a newly skilled workforce. The company invested more than $3 billion in fiscal year 2017 — in training, acquisitions and assets/IP — and will continue to invest this year to build further, cementing its market leader position.

One notable exception to nearly every innovation/experience/collaboration center TBR has visited over the last two years: Accenture has devoted two floors in Bangalore to technology partners, with dedicated professionals and space marked specifically for SAP, Oracle and Microsoft, three partners TBR highlighted in its October 2017 coverage of Accenture: “As Accenture strives to generate a vast majority of its sales from in ‘the new,’ a profitable relationship with the Big Three will be critical to success.” While unmistakably an Accenture facility — no client could be confused about where they are, even when seeing SAP- or Oracle-centric solutions — the investment in resources and physical space to technology partners may be unique across Accenture’s peers. One floor houses just Avanade, the company’s joint venture with Microsoft. TBR has argued for years that consultancies maintaining technology vendor agnosticism should still recognize their clients’ core IT systems will still be there even after the client spends a day being amazed by emerging technologies and all that digital transformation can do. Highlighting, or at least including, these technology partners should be part of any client workshop or design-thinking day. Combined with the “Business Groups” created with SAP, Oracle and, recently Pivotal, Accenture has taken a giant leap forward and literally built separate floors dedicated to these partners.

 

 

On Jan. 24, 2018, TBR attended Accenture Technology’s Analyst Day at the recently opened Innovation Hub in Bangalore, India. The event included technology demonstrations around specific industries and partners, as well as extensive discussions with Accenture executives.

The impending Digital Dust Bowl: Mitigation, survival and interdependence

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Acts of nature helped create the Dust Bowl; AI-enabled acts of man will stir up the Digital Dust Bowl

Myriad developments such as inexperience with newly automated methods of farming, topsoil shifts, and periods of drought and high winds triggered the Dust Bowl of the 1930s, which exacerbated the ongoing decline of the U.S. economy. Today, the high affordability and rapidly spreading use of analytics and machine learning software reduce the amount of labor necessary to perform complex tasks. In short, we are farming our labor pool in different ways and destabilizing our labor markets in a manner similar to the way automated machinery destabilized our topsoil and helped trigger the Dust Bowl, a calamity with far-reaching economic consequences that compounded the troubles of a country suffering through the Great Depression, cemented in history in the John Steinbeck classic “The Grapes of Wrath.”

We are, in essence, creating a Digital Dust Bowl of displaced manufacturing, clerical and middle-management workers whose jobs will be replaced by automated machines and different methods of establishing trust in a wide range of economic transactions. Technology executives and strategists comprehend this better than most other business and political leaders as we have lived in this world for decades. Ways to mitigate the disruptive economic and social impacts to these accelerations have yet to gain broad-based consensus within the policy making institutions as evidenced by the current political climate at the national level. It is this lack of consensus that hinders our ability to mitigate the impending economic impacts of the accelerating rate of technological innovation.

Major economic shifts pressure the interdependencies between citizens, businesses and governments

Figure 1 outlines the main intersecting domains of people (laborers and consumers), businesses, and government and trust institutions tasked with regulating and certifying the activity between individuals and businesses as well as with “protecting the commons.”

Oracle guides its customers into IoT

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Oracle’s expanded IoT cloud

Oracle IoT Cloud focuses on offering easy integration with Oracle’s Business Intelligence Mobile Cloud and can be offered as both a SaaS application and a PaaS offering. Interestingly, Oracle did not highlight Amazon Web Services, Microsoft (Nasdaq: MSFT) or Google as partners, indicating the company prefers to keep data inside its own cloud. Oracle also announced, through the combination of Oracle IoT Cloud and its enterprise applications, the creation of new industry-focused solutions, such as digital field service, smart connected factories and digital fleet management. Oracle’s examples of areas where the company is currently seeing the most demand through its customer base include:

  • Digital Field Service: Showcases intelligent remote monitoring, failure prediction, over-the-air repair and dynamic technician dispatch. The solution features IoT Asset Monitoring Cloud, CX Service Cloud, CX Engagement Cloud and CX Field Service Cloud, plus the use of AR for guided equipment repair.
  • Smart Connected Factory: Demonstrates how incident detection, root cause analysis and smart resolution are performed within minutes in a connected factory. The solution features IoT Production Monitoring Cloud, SCM Cloud and ERP Cloud, and the use of VR to navigate the manufacturing floor. It can also be used for remote worker training.
  • Digital Fleet Management: Showcases real-time shipment tracking, risk management and logistics synchronization. The solution features IoT Fleet Management Cloud and Oracle Logistics Cloud.

Powering the company’s cloud offerings, and the enterprise applications, is the new Oracle IoT Cloud Applications. The first round of these applications includes asset monitoring, connected workforce, fleet monitoring and production monitoring. Again, Oracle is focused on where it observes the most IoT activity when developing these applications. Oracle also introduced a number of capabilities to Oracle IoT Cloud:

  • Digital Twin for Supply Chain Management: For creating a digital representation of a physical asset to deliver enhanced analytics
  • Digital Thread for Supply Chain Management: A way to connect business process frameworks and create a “system of systems” to join traditionally siloed elements in real time through a digital supply chain
  • Artificial Intelligence and Machine Learning: These technologies are holistically integrated across Oracle’s IoT solution portfolio to assist digital twin and digital thread and produce overall insight from data.

These features show that Oracle has the capability to shepherd its customers though the more common vertical use cases at this time. TBR would not be surprised if Oracle were to release new industry-focused solutions and applications at a regular half-year cadence as it monitors the market and listens to its customers’ requests.

Successful companies will organize for continual IoT innovation

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In the Internet of Things (IoT) era, successful companies will innovate constantly, at all levels of the organization. The most successful of these companies will change their culture and processes to foster this innovation. For many companies, IoT will trigger organizational change, which, in turn, will drive innovation in other areas as well as IoT. TBR believes that IoT is not a technology revolution, but rather a business revolution that will change how companies operate and evolve.

Innovation will occur at every level of the organization, and IoT and IoT-related solutions will proliferate. To prevent sprawl and consequent security and efficiency implications, IT will set standards and provide standard resources where practicable. At the same time, IT will facilitate innovation by being responsive, and by providing and supporting horizontal IoT tools. Successful IT vendors will serve the needs of IT departments supporting distributed IoT innovation. Dell EMC’s concept of “IT transformation,” which is one of supporting innovation, describes this model very well.

IoT everywhere

IoT and IoT-related solutions will proliferate because IoT offers many valuable potential solutions for many business processes, particularly as additional lower-cost solutions become available. Despite its long history, IoT is immature. The near future will bring many more prepackaged solutions, easy-to-use components and more efficient data utilization. These changes will lower costs, improve ROIs and make many more solutions feasible. Many new solutions will require no new data, but will integrate or analyze IoT-generated data to deliver more value.

IoT’s value potential is not confined to companywide transformative projects. There are opportunities for valuable solutions at every scale and in many different business units and departments within each company. Therefore, successful companies will enable the development and refinement of new IoT solutions throughout the organization, not just in designated departments or groups.