What is Machine Learning ?

There is a lot of confusion about what machine learning is in the Big Data ecosystem. Many
software vendors claim they do predictive analytics, deep learning, prescriptive analytics, and
machine learning. Its time we defined these terms, so that vendors and buyers know what to
expect from a given software solution and where its value lies.

Why Machie Learning Matters Now ?

Machine learning systems have been around since the 1950s, so why are we suddenly seeing
breakthroughs in so many diverse areas? Three factors are at play: enormously increased data,
significantly improved algorithms, and substantially more-powerful computer hardware
1) Data
Music CDs, movie DVDs, and web pages have been adding to the worlds stock of digitally
encoded information for decades, but over the past few years the rate of creation has exploded.
Signals from sensors in smartphones and industrial equipment, digital photos and videos, a
nonstop global torrent of social media, and many other sources combine to put us in a totally
unprecedented era of data abundance. Ninety percent of the digital data in the world today has
been created in the past two years alone. With the burgeoning internet of things (IoT) promising
to connect billions of new devices and their data streams, its a sure bet well have far more
digital data to work with in the coming decade.

2) Algorithms.
The data deluge is important not only because it makes existing algorithms more effective, but
also because it encourages, supports, and accelerates the development of better algorithms. The
algorithms and approaches that now dominate the discipline such as deep supervised
learning and reinforcement learning share a vital basic property: Their results improve as
the amount of training data theyre given increases. The performance of an algorithm usually
levels off at some point, after which feeding it more data has little or no effect. But that does
not yet appear to be the case for many of the algorithms being widely used today. At the same
time, new algorithms are transferring the learning from one application to another, making it
possible to learn from fewer and fewer examples.
 3) Computer hardware.
Moores Law that integrated circuit capability steadily doubles every 18 to 24 months
celebrated its 50th anniversary in 2015, at which time it was still going strong. Some have
commented recently that its running up against the limits of physics and so will slow down in
the years to come; and indeed, clockspeed for standard microprocessors has leveled off. But by
a fortuitous coincidence, a related type of computer chip, called a graphic processing unit, or
GPU, turns out to be very effective when applied to the types of calculations needed for neural
nets. In fact, speedups of 10X are not uncommon when neural nets are moved from traditional
central processing units to GPUs. GPUs were initially developed to rapidly display graphics for
applications such as computer gaming, which provided scale economies and drove down unit
costs, but an increasing number of them are now used for neural nets. As neural net applications
become even more common, several companies have developed specialized chips optimized
for this application, including Googles tensor processing unit, or TPU. According to Shane
Legg, a cofounder of Google DeepMind, a training run that takes one day on a single TPU
device would have taken a quarter of a million years on an 80486 from 1990. This can generate
about another 10-fold improvement.

Why Machine Learning Adoption Is Accelerating ?

Machine learning's ability to scale across the broad spectrum of contract management, customer
service, finance, legal, sales, quote-to-cash, quality, pricing and production challenges
enterprises face is attributable to its ability to continually learn and improve. Machine learning
algorithms are iterative in nature, constantly learning and seeking to optimize outcomes. Every
time a miscalculation is made, machine learning algorithms correct the error and begin another
iteration of the data analysis. These calculations happen in milliseconds which makes machine
learning exceptionally efficient at optimizing decisions and predicting outcomes.

The economics of cloud computing, cloud storage, the proliferation of sensors driving Internet
of Things (IoT) connected devices growth, pervasive use of mobile devices that consume
gigabytes of data in minutes are a few of the several factors accelerating machine learning
adoption. Add to these the many challenges of creating context in search engines and the
complicated problems companies face in optimizing operations while predicting most likely
outcomes, and the perfect conditions exist for machine learning to proliferate.

According to angel.co, there are 2,200+ Artificial Intelligence start-ups, and well over 50%
have emerged in just the last two years. Machine Learning-based Applications and Deep
Learning Neural Networks are experiencing the largest and widest amount of investment
attention in the enterprise.

Machine Learning is predicted to generate the most revenue and is attracting the most
venture capital investment in all areas of AI.
Automation of repetitive tasks (68%), making complex decisions (54%) and recognizing
data patterns (40%) are the top three most important capabilities CIOs of machine
learning CIOs are most interested in. Establishing links between events and supervised
learning (both 32%), making predictions (31%) and assisting in making basic decisions (18%)
are additional capabilities CIOs are looking for machine learning to accelerate.
Current Situation
Figure 1 provides an overview of machine learning applications by industry.
These and other findings are from the McKinsey Global Institute Study, and discussion paper,
Artificial Intelligence, The Next Digital Frontier (80 pp., PDF, free, no opt-in) published last
month. McKinsey Global Institute published an article summarizing the findings titled How
Artificial Intelligence Can Deliver Real Value To Companies. McKinsey interviewed more than
3,000 senior executives on the use of AI technologies, their companies prospects for further
deployment, and AIs impact on markets, governments, and individuals. McKinsey Analytics
was also utilized in the development of this study and discussion paper.
Healthcare, financial services, and professional services are seeing the greatest increase in their
profit margins as a result of AI adoption. McKinsey found that companies who benefit from
senior management support for AI initiatives have invested in infrastructure to support its scale
and have clear business goals achieve 3 to 15% percentage point higher profit margin. Of the
over 3,000 business leaders who were interviewed as part of the survey, the majority expect
margins to increase by up to 5% points in the next year.
APAC is the global leader in driving AI revenue from Product Innovation and R&D by a
wide margin (65% versus 49% for Europe). North America is the global leader in using AI
technologies to drive greater sales (40%), and Europe is the global leader in using AI to
streamline supply chains and operations (47%). Different regions have significantly different
revenue drivers related to their AI investments, with APAC also being the global leader in
driving AI revenue from Customer Service (54%), Marketing (50%), and Asset and Capital
Management (46%).
These and many other insights are from the recently published study, Global CIO Point of
View. The entire report is downloadable here (PDF, 24 pp., no opt-in). ServiceNow and Oxford
Economics collaborated on this survey of 500 CIOs in 11 countries on three continents,
spanning 25 industries.

89% of CIOs are either planning to use or using machine learning in their organizations
today. The majority, 40%, are in the research and planning phases of deployment, with an
additional 26% piloting machine learning. 20% are using machine learning in some areas of
their business, and 3% have successfully deployed enterprise-wide. The following graphic
shows the percentage of respondents by stage of their machine learning journey.

In financial services, machine learning apps are reviewing loan documents, sorting applications
to broad parameters, and approving loans faster than had been possible before.

81% of IT leaders are currently investing in or planning to invest in Artificial Intelligence (AI)

Cowen predicts AI will drive user productivity to materially higher levels, with
Microsoft at the forefront.

Digital Marketing/Marketing Automation, Salesforce Automation (CRM) and

Data Analytics are the top three areas ripe for AI/ML adoption. Customer self-
 service, Enterprise Resource Planning (ERP), Human Resource Management
(HRM) and E-Commerce are additional areas that have upside potential for
AI/ML adoption. The following graphic provides an overview of the areas in
software that Cowen found the greater potential for AI/ML
investment.According to angel.co, there are 2,200+ Artificial Intelligence start-
ups, and well over 50% have emerged in just the last two years.

Cowen sees Salesforce ($CRM), Adobe ($ADBE) and ServiceNow ($NOW) as

well-positioned to deliver and monetize new AI-based application services.

These and many other fascinating insights are from the Cowen and Company Multi-Sector
Equity Research study, Artificial Intelligence: Entering A Golden Age For Data Science

Machine learnings greatest potential across industries includes improving

forecasting and predictive analytics. McKinsey analyzed the 120 use cases
their research found as most significant in machine learning and then weighted
them based on respondents mention of each. The result is a heat map of machine
 learnings greatest potential impact across industries and use case types. Please
see the report for detailed scorecards of each industrys use case ranked by
impact and data richness.

Enabling autonomous vehicles and personalizing advertising are two of the

highest opportunity use cases for machine learning today. Additional use
cases with high potential include optimizing pricing, routing, and scheduling
based on real-time data in travel and logistics; predicting personalized health
outcomes, and optimizing merchandising strategy in retail. McKinsey identified
120 potential use cases of machine learning in 12 industries and surveyed more
than 600 industry experts on their potential impact. They found an extraordinary
breadth of potential applications for machine learning. Each of the use cases
was identified as being one of the top three in an industry by at least one expert
in that industry. McKinsey plotted the top 120 use cases below, with the y-axis
shows the volume of available data (encompassing its breadth and frequency),
while the x-axis shows the potential impact, based on surveys of more than 600
industry experts. The size of the bubble reflects the diversity of the available
data sources.
Future Prospect

Market forecasts vary, but all consistently predict explosive growth. IDC predicts that the
Cognitive Systems and AI market (including hardware & services) will grow from $8B in 2016
to $47B in 2020, attaining a Compound Annual Growth Rate (CAGR) of 55%. This forecast
includes $18B in software applications, $5B in software platforms, and $24B in services and
hardware. IBM claims that Cognitive Computing is a $2T market, including $200B in
healthcare/life sciences alone. Tractica forecasts direct and indirect applications of AI software
to grow from $1.4B in 2016 to $59.8B by 2025, a 52% CAGR.
Accenture leverages machine learning in 40% of active Analytics engagements, and nearly 80%
of proposed Analytics opportunities today. Cowen found that Accentures view is that they are
in the early stages of AI technology adoption with their enterprise clients. Accenture sees the
AI market growing exponentially, reaching $400B in spending by 2020. Their customers have
moved on from piloting and testing AI to reinventing their business strategies and models.

Today Accenture Research and Frontier Economics published How AI Boosts Industry Profits
and Innovation. The report is downloadable here
By 2035 AI technologies have the potential to increase productivity 40% or more.

l increase economic growth an average of 1.7% across 16 industries by 2035. Accenture

Research found that the Information and Communication industry has the greatest potential for
economic growth from AI. Integrating AI into legacy information and communications systems
will deliver significant cost, time and process-related savings quickly. Accenture predicts the
time, cost and labor savings will generate up to $4.7T in GVA value in 2035. High growth areas
within this industry are cloud, network, and systems security including defining enterprise-wide
cloud security strategies.

AI will most increase profitability in Education, Accommodation and Food Services and
Construction industries in 2035
By 2035 AI technologies could increase labor productivity 40% or more, doubling economic
growth in 12 developed nations. Accenture finds that AIs immediate impact on profitability is
improving individual efficiency and productivity. The economies of the U.S. and Finland are
projected to see the greatest economic gains from AI through 2035, with each attaining 2%
higher GVA growth.The following graphic compares the 12 nations included in the first phase
of the research.
Labor