RESEARCH REPORT

AI in the Enterprise
Real Strategies for
Artificial Intelligence

JUNE 12, 2018

BY SUSAN ETLINGER


Table of Contents

2 Executive Summary
3 AI: Where We Are Now
5 Use Cases for Artificial Intelligence
8 Stripe Case Study: Improving Customer Experience While Preventing Fraud
14 DBS Case Study: AI Supporting Digital Transformation
17 Recommendations
20 Endnotes
22 Methodology
23 About Us
23 How to Work With Us

Executive Summary
For enterprise companies considering investing in AI and
implementing AI applications, the current landscape can
seem overwhelming. Companies like Amazon, Facebook,
Google, Apple, and Microsoft dominate the news, but
how applicable are their strategies to companies with
vastly different business models? This report examines
the real use cases, challenges, and opportunities of AI for
organizations. It includes interviews with executives from
large, well-known companies and start-up entrepreneurs
who are envisioning the many ways that machine
intelligence can fuel innovation and growth. Finally, the
report offers recommendations for companies thinking
about where to focus, how to build their partnership
ecosystem, and how to measure value in the short and
long term as AI becomes a critical driver of
digital transformation.

2
AI: Where We Are Now
Progress toward developing and utilizing Artificial Intelligence (AI) has been uneven
in the years since Alan Turing asked the question, “Can machines think?” But after
seven decades of research and sporadic progress, AI is finally coming into its own. The
availability of massive amounts of data, relatively inexpensive parallel processing, and
improved algorithms have sparked technology and market momentum that is different
from the critical yet discrete breakthroughs of the past.
Against this backdrop, investment in AI continues to escalate, with explosive growth
expected during the next several years. Industry research firm IDC expects global
spending on cognitive and AI solutions to achieve a Compound Annual Growth Rate
(CAGR) of 54.4% through 2020, when revenues will exceed $46 billion. Statista forecasts
that the global AI market will reach $59.75B by 2025.1
This combination of innovation, experience, and investments means that AI is poised to
gain momentum and become a core driver of growth in the enterprise.

3
DEFINING ARTIFICIAL INTELLIGENCE
Defining exactly which technologies comprise “AI” can be a contentious process. This
report defines AI in a business context as follows:

Artificial intelligence refers to a set of technologies that enable machines to reproduce

certain types of human capabilities; for example, the ability to see, listen, speak, move,
reason, decide, predict, act, and — most importantly — learn from past experience.

Today, AI is used in text messaging, search, eCommerce, social media, and in vertical
industries from heavy manufacturing to financial services, healthcare and retail.
Sometimes we are aware of its presence — as with Alexa or an autonomous car —
and other times we aren’t, because it’s working behind the scenes in websites, apps,
messaging, search, and a range of other tools and services.

RECENT TECHNOLOGY ADVANCEMENTS

Driven by research and experimentation in academia, startups, and large companies,
advancements in AI continue to accelerate in many notable ways, including the following:

• Language Understanding and Translation
In 2016, researchers at Microsoft announced that their speech
recognition technology had achieved human parity; that is, the ability
to transcribe speech about as well as a human. In March 2017, Microsoft
announced a similar breakthrough in Chinese-to-English translation.2 In
May 2018, Google demonstrated its “Duplex” technology, which enables
a voice agent to conduct a naturalistic conversation over the phone. AI-
based systems will eventually be able to recognize, translate, and speak
or chat in any language at any time on any device.
• Strategy and Decision-Making
DeepMind unveiled AlphaGo Zero, the first computer program to defeat
a world champion at the ancient Chinese game of Go.3
• Maturing Deep Learning Frameworks
Deep learning frameworks, such as TensorFlow, which enable developers
to build AI-enabled systems more quickly, consistently, and scalably, are
becoming more accessible and user-friendly. This lowers barriers to entry
for programmers to experiment with and use AI for a broader range of
business use cases.4

These advancements hint at the ways that AI will evolve further in the future. As part of
this evolution, it is important to understand the different types of AI and how they are
being implemented across industries globally.

4
Use Cases for Artificial Intelligence
Although artificial intelligence enables machines to reproduce certain types of human
capabilities or “intelligences,” it’s critical to remember how machines fundamentally differ
from human beings. Today, at least, machines excel at certain things (computation and
pattern matching, for example), but lack the attributes we think of as innately human
(feelings, context, values). To approximate these attributes in machines, we must “train”
them with massive amounts of data so they can recognize objects, languages, and
relationships and understand things that humans take for granted.

While some futurists believe in the idea of a “technological singularity” in which machines
will overtake the capabilities of humans, the question today is more pragmatic: How can
we use AI? What is it good for and not as good for? Where are the real opportunities and
use cases? What are the moon shots? How will it impact customers, employees,
and shareholders?

To assess the types of use cases that AI is best equipped to handle, it’s important to
think about how human intelligence and computer intelligence compare to each other.
“The Theory of Multiple Intelligences,” proposed in 1983 by developmental psychologist
Howard Gardner, offers a useful guide.

Rather than thinking of intelligence as a single attribute, it proposes nine specific types of
intelligence that humans possess:5

1. Logical-mathematical (number/reasoning smart) 6. Spatial (picture smart)

2. Naturalist (nature smart) 7. Interpersonal (people smart)

3. Musical (sound smart) 8. Intra-personal (self smart)

4. Bodily-kinesthetic (body smart) 9. Existential (life smart)

5. Linguistic (word smart)

5
What Gardner refers to as “logical-mathematical” intelligence is the first thing we think
of when we think about machine intelligence: the ability to classify data, process it,
draw inferences from it, and even make decisions. But machines can also “see” (using
computer vision); listen (using Natural Language Understanding [NLU] technologies);
walk, run, jump, and fly (using robotics); communicate (using audio and NLU); detect and
interpret environmental changes (using sensors and analytics); and a host of other things.
The key is to use these capabilities in a way that is valuable to people and businesses.

Shivon Zilis’ “Machine Intelligence 3.0” is an excellent framework for understanding the
AI technology landscape (see Figure 1).6 On the left are applications enabled by AI and, on
the right, the continuously evolving technology stack.

Figure 1: Machine Intelligence 3.0, by Shivon Zilis, Bloomberg BETA

As one would expect with such a new and dynamic market, these applications are
maturing and proving value in different ways and at different rates. From an enterprise
point of view, however, there are three primary areas that are broadly applicable to
enterprise-class companies today:7

Enterprise Intelligence: Computer Vision: Conversational AI:

AI that can classify, predict,
analyze, recommend, act, and
learn based on visual, audio,
sensor, internal (enterprise), and
market (macro) data.
AI that can “see” and, in
conjunction with enterprise
intelligence, be used to
interpret and extract insights
from images.
AI that can “listen,”
understand, and
communicate using
natural language.

6
 The following section describes these technologies and use cases in more detail.

ENTERPRISE INTELLIGENCE
One of the greatest challenges in the enterprise is the difficulty in bringing together
data from business systems—such as Business Intelligence (BI), Customer Relationship
Management (CRM), market research, web analytics, and even external sources—and
analyzing them in an integrated manner.

For example, while social media might be a leading indicator of product popularity, it
is difficult if not impossible to connect that insight with actual transactions, and harder
still to use that data to forecast impact to the supply chain, especially for companies
that sell through channels (e.g., not directly to customers). AI can also be used to make
predictions about products based on sensor data.

Enterprise intelligence looks at multiple datasets in context, using machine learning

algorithms to extract not only insights but predictions, recommendations, and actions
based on those findings. Most importantly, intelligence systems use the outcomes of
these actions to (re)train their algorithms.

Enterprise intelligence is used for a variety of functions, including marketing, security,

enterprise performance management, analytics, and information management (see
Figure 2).8 For example, Hewlett Packard uses vibration sensors that detect and evaluate
printer sounds and alert users if the machine is likely to run out of ink or fail within the
next two weeks.9

Figure 2: Use Cases for Enterprise Intelligence

Customer Experience and Service Employee Productivity

Identify Customer Service Issues Optimize Employee Onboarding
Predict Potential Churn Predict Potential Churn
Optimize Resource Planning
Sales and Marketing / eCommerce
Customer Acquisition Recruitment
Optimize Customer Onboarding Identify Qualified Candidates
Predict Campaign Performance
Identify Upsell and Cross-Sell Opportunities IT and Operations
Optimize Customer Lifetime Value Workflow Management
Optimize CRM Strategy Enterprise Performance Management
Optimize Shopping Cart Value Security
Optimize Customer Retention Information Management
Optimize Customer Loyalty Identify Potential Fraud
Optimize Data Management Processes
Advertising
Ad Targeting Manufacturing
Revenue Optimization Predict Maintenance Issues

Supply Chain
Optimize Demand Forecasting

CASE STUDY: ENTERPRISE INTELLIGENCE

Improving Customer Experience While Preventing Fraud

CASE STUDY: ENTERPRISE INTELLIGENCE

Improving Customer Experience While Preventing Fraud

For Stripe, an online payment platform that helps people run their business on the
Internet, machine learning is fundamental. Says Michael Manapat, Engineering Manager,
“One of the goals of Stripe is to make the economy accessible to more people. In the
same way Google AdWords made it possible for small companies to do advertising, we
make it possible for small business to take payments online.” But he says Stripe isn’t just
about accepting payments. “There are multiple elements to the product,” he says, “fraud
detection, analytics, revenue forecasting—a unified stack for running business online.”
One of the key challenges for customers is the efficient reduction of fraud without
compromising high acceptance rates. With machine learning, Stripe surfaces indications
of fraud to help customers automate decisions based on hundreds of billions of data
points from the Stripe network.

In addition to monitoring signups for fraudulent accounts, Manapat explains, Stripe also
provides businesses with indications about whether a charge is legitimate or potentially
fraudulent. To do this, the algorithm would consider metadata about the business and its
transactions, such as:

Data entry method

Did the customer paste a field into the payment form rather than type it? This could
indicate a fraudster or bot is testing hundreds or thousands of cards from a list

Customer and transaction location

Stripe looks at the percentage of business coming from the IP address and the country
of incorporation. Do most of the charges come from the country in which the business is
based, or from all over the world? For example, an auto repair shop is unlikely to have a
majority of overseas customers.

Purchase speed
Do people check out unusually quickly or do they take an unusually long time? Both are
indicative of potential fraud.

Stripe recently announced that their ML-powered tools prevented over $4 billion in
attempted fraud in 2017 and they are now making daily updates to their machine learning
models, so fraud defenses can adapt to new threats in real time.

9
 COMPUTER VISION

Computer vision, or visual AI, refers to technologies that enable machines to “see” and
interpret visual images. Combined with enterprise intelligence, computer vision can be
used to develop predictive models to forecast and act on emerging trends. According to
research firm Tractica, the market for computer vision hardware and software is expected
to reach $48.6B by 2022.10

While the most common examples of computer vision (facial recognition, photo tagging)
can be found in social media, image search, and medical imaging, other applications
extend across markets. It can be used to understand brand affinities and manage quality
issues (for example, a photograph of a damaged product), as well as for audience
segmentation and ad targeting among many other uses (see Figure 3).11

Figure 3: Use Cases for Computer Vision

Brand Management Commerce

Brand Storytelling Visual Search
Brand and Trademark Compliance Identifying Buying Triggers
Measuring Brand Lift Proof of Purchase
Understanding Brand Affinities Merchandising Strategy
Crisis and Issues Management Shoppable Images/Commerce Widgets
Marketing and Advertising
Strategy and Operations
Marketing and Advertising Visual Search and Asset Management
Market Research Fraud and Piracy Prevention
Competitive Benchmarking Security and Surveillance
Micro-Segmentation/Ad Franchise Management
Targeting Product Innovation/Ideation
Content Marketing/UGC Research
Content Performance Measurement
Flag NSFW Content Vertical Markets
Sponsorship Performance Healthcare
Influencer and Celebrity Marketing Automotive
Price Prediction Consumer
Consumer Entertainment
Customer Experience Agriculture
Accessibility for Visually Impaired
Quality Control

The increasingly visual nature of the Internet is what makes computer vision so
compelling. The spread of videos, photographs, and meme culture means that a great
deal of data that refers to a brand may be “invisible” to traditional analytical methods.

10
 Visual AI is not without its challenges, however. Like other AI applications, it requires
massive amounts of specific training data to enable it to accurately recognize objects,
attributes, and, importantly, context. It can misinterpret images in comic, awkward, or
offensive ways, as has been amply documented.12

But, given the right data, skilled researchers, and the proper tools, computer vision can
deliver demonstrable business value for brands.

CONVERSATIONAL AI

Conversational AI refers to technologies that enable machines to “listen,” understand,

and communicate using natural language. Conversational AI can take the form of voice
agents, such as Alexa and Siri, or chatbots, such as those found in Skype, Messenger,
and elsewhere.

What makes conversational AI much more than a novelty, however, is that our interaction
with technology is evolving — from browser-based interactions on computers or mobile
devices to conversational interactions on computers or mobile devices to conversational
interactions that can be conducted via voice, text, or even images and gestures.

We see this shift occurring with voice agents and chatbots today, although admittedly
many of the current use cases are primitive. But we shouldn’t mistake nascence for
lack of potential: As soon as 2020, 30% of total browsing will be done without a screen,
according to industry analyst firm Gartner.13

Of course, not every conversational method is created equal or is appropriate to every

situation (see Figure 4).

Figure 4: Using Voice vs. Chat

Voice is Optimal for: Chat is Optimal for:

• Situations when hands are occupied • A noisy/busy environment

(e.g., cooking or driving)
• Situations when discretion or privacy
• Private environments, such as a home or car is important

• People who are visually impaired or who • Visual cues (e.g., a map or photo) may
have limited mobility be needed

• People who have hearing loss

21. http://www.businessinsider.com/store-closures-in-2018-will-eclipse-2017-2018-1
11
22. http://www.businessinsider.com/store-closures-in-2018-will-eclipse-2017-2018-1
 VOICE AGENTS
Voice agents are spreading rapidly. A 2017 study conducted by Edison Research and NPR
found that 16% of U.S households own a smart speaker, meaning that the application
is “already outpacing the adoption rates of smartphones and tablets.” Gartner predicts
that 75% of U.S. households will have smart speakers by 2020.14 Use cases, while initially
confined to simple functions, such as listening to music, checking the weather, and
asking questions, are broadening and deepening as well (see Figure 5).

Figure 5: Use Cases for Smart Speakers 15

Top Use Cases for In-Home Smart Speakers

MUSIC 68

WEATHER 58

GENERAL QUESTION 52

NEWS 45

TIMERS/ALARMS 43

CHECK THE TIME 43

AM/FM MUSIC RADIO 38

CONTROL DEVICES 33

AM/FM/NEWS/TALK 32

ADD TO TO-DPO LIST 26

SPORTS UPDATE 26

ADD TO SHOPPING LIST 26

TRAFFIC 24

CHECK/ADD TO CALENDAR 23

Source: The Smart Audio Report, Spring/Summer 2017 from NPR and Edison Research

Campbell: Cooking in the Connected Kitchen

Campbell Soup Company, more than a century old, is an example of how heritage
companies can use voice to extend their digital and eCommerce capabilities.16 The
company has introduced a "skill” for both the Amazon Echo and Echo Show that helps
users navigate thousands of recipes and follow step-by-step instructions using just
their voice. The extension to the Echo Show integrates visual display with voice control,
displaying step-by-step instructions, similar recipes, and product information.

Alexa users can say, “Alexa, open Campbell’s Kitchen” to search, navigate, and follow
along with recipes; better understand ingredients, prep time, and effort needed; and
send recipes to themselves via email, among other things.

It also offers meal kits (through Chef’d) and an extensive personalized recipe site meant
to drive engagement and sales. Its Alexa skill not only acts as a hub for all this information
and is a key touchpoint for users to interact with the brand at the point where meal
decisions are made, but it is also a way to secure Campbell’s place in the
connected kitchen.
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 CHATBOTS

The global chatbot market is also expected to grow significantly, driven by the need to
improve service while reducing operating costs. Grand View research estimates that it
will reach $1.25B by 2025, a CAGR of 24.3%.17

While chatbot market growth is slower than the voice market, it’s important to realize
that Amazon, Apple, and other large technology companies are the main drivers of
voice agent development, while chatbots are by nature more discrete. That said, there
are many use cases for chatbots that are delivering significant value. Companies like
MasterCard, BBC, Domino’s, and others are using chatbots for everything from customer
service and customer education to entertainment and eCommerce (see Figure 6).

Figure 6: Use Cases for Chatbots

Experience and Service Personal Assistant

Handle customer service requests Respond to questions
Offer alerts and information Search for and deliver information
Manage account settings and preferences Purchase products or services
Communicate/respond in multiple languages Manage payments
Educate customers
Personal Finance
Commerce Receive timely alerts
Place orders, process payments Check balances
Handle shipping preferences Process transfers and payments
Respond to questions in store or elsewhere
Search items, concepts Smart Home Devices
Heating
Sales and Marketing Security
Deliver relevant campaigns and offers Home appliances
Make product and service recommendations Entertainment devices
Offer loyalty incentives Fitness devices
Deliver informational or marketing content Set medicine reminders

Employee Productivity Healthcare

Employee onboarding Deliver alerts on medicine, activity, safety of self
Calendar management or loved ones
Email management Communicate with physicians about
Search medications or conditions
Resource planning
Offer treatment for medical conditions
Education
Provide status on staffing, resources,
Recruitment and medications
Interact with candidates Patient education
Answer questions
Schedule meetings Transportation
IRetrieve information from and remotely
Government lock vehicles
Manage visa applications
Call ride share service
Resolve parking tickets

13


CASE STUDY: CONVERSATIONAL AI

AI supporting digital transformation

14


CASE STUDY: CONVERSATIONAL AI

AI supporting digital transformation

DBS Bank is a financial services group with over $425B in assets. The company is
headquartered and listed in Singapore and has 280 branches across 18 markets in Asia.
The company is in the midst of a digital transformation effort intended to scale financial
services across all branches and markets, delivering a signature experience for each
market while keeping costs down.

DBS has been recognized by financial analysts for its comprehensive and tangible digital
transformation results in three key areas:

1. Clear vision and tangible execution

“Tangible deliverables” and a “clear future roadmap.”

2. Commitment to digital transformation

Being “digital to the core” — “firm-wide pervasive change, not ‘digital lipstick.’” This
includes “business units, back office, employee culture, and formal scorecard KPIs.”

3. Measurement innovation
Its use of a “digital versus traditional P&L showing stronger income generation and lower
unit cost for a digital vs. traditional customer.18

To do this, DBS has focused on re-architecting technology infrastructure, adopting design

thinking methodologies, and strategic use of AI to enable, measure, and deliver on its goal
of becoming a digital organization.

Becoming a digital leader requires continuous learning — not only by people but by
systems as well, which is how artificial intelligence, and specifically conversational AI,
comes into play.

One example of this strategy in action is DBS digibank, a mobile-only bank DBS rolled
out in India, which offers its services entirely via digital channels, eliminating the need for
paper, physical signatures, and, most importantly, physical branches. In addition to other
services, the company offers a savings account and debit card, which customers can
activate at Café Coffee Day, a popular café with outlets throughout India, or by a visit to
the customer’s home.

DBS digibank conducts all customer service, including balance inquiries, customer
education, and payments, via a conversational AI platform provided by Kasisto (see Figure
7). The assistant handles 82% of customer requests and inquiries and helps more than
1.8 million digibank customers manage money, track expenses, analyze spending, and
improve financial literacy and well-being.

15


To do this, says Tom McCabe, Global Business Executive and Country Head, the team
built a list of more than 10,000 questions that customers could potentially ask. The goal
was to understand the customer’s intent — not just specifically what they asked — and
then enable them to fulfill requests however they wanted. If customers use words that
indicate frustration, the agent transfers the context of the conversation to a live agent
to resolve.

DBS also uses chatbots to answer banking questions for POSB digibank, the largest and
oldest bank in Singapore with more than 4 million customers, as well as in Indonesia,
where the chatbot converses with customers in Bahasa Indonesia.

None of this would have been possible without first looking outside their category
for inspiration, and then changing their organization to reward agile development
and decision-making. Says McCabe, “We have embraced the startup culture of agile,
experimental innovation as a highly effective path to success."

Figure 7: DBS Digibank: Using Chatbots to Scale Retail Financial Services

16
Recommendations
Until recently, AI was primarily the province of academics and a rarefied group of
technology companies, such as Facebook and Google. But that’s changing fast. And
although it isn’t a cure-all, AI offers enormous potential across a multitude of areas. As
business experience and understanding of AI continues to evolve, very much like the
Internet during the ’90s, progress within organizations can be hastened by building five
specific recommendations into enterprise plans for AI implementation.

1. EMPHASIZE CLEAN, INTEGRATED, HIGH-QUALITY DATA

AI has been around for decades, but it has only recently begun to develop from a set of
academic research projects to enterprise-class technology — one that can be operated
at scale and for the benefit of customers and shareholders. There are many criteria that
are necessary for businesses to derive value from AI, but one of the most important, says
Ashok Srivastava, SVP and Chief Data Officer at Intuit, is clean, quality data.

“Forming a data platform that can allow for servicing a myriad of use cases for AI is a
significant undertaking,” says Srivastava. “One of the most effective ways to reduce risks
for AI and machine learning products is to have a high-performing data platform.” And,
according to a recent article in the Harvard Business Review, the potential impact is
cumulative: “The risk is that a minor error at one step will cascade, causing more errors
and growing ever larger across an entire process.” Although Srivastava is encouraged by
the architectures and pipelines being built throughout the industry, he acknowledges that
“there is always more to be done.”

2. CHOOSE HIGH-IMPACT, CLEARLY DEFINED USE CASES

Choosing the right use case is a combination of art and science. The art is to choose a
problem that is clearly defined and will be seen as a win within the business. The science
is to choose a problem that is rich in data and that includes enough characteristics and
patterns that insight is possible.

17
“Most companies have been sold the promise of AI becoming the all-knowing oracle,”
says Matt Baker, Senior Vice President, DellEMC Strategy and Planning. “We’re definitely
not there.” Rather, he says, the analyst must supply the characteristics and patterns and
ideas that they would like to solve for, and data scientists then look for patterns in
the data.

The sweet spot, therefore, lies somewhere between confirming the obvious (the pitfall
of many early AI projects) and trying to solve for events of such low probability that they
would never emerge as a pattern. “It creates interesting and unique challenges,” Baker
says. “For example, a thousand-year flood in Japan wouldn’t emerge as a pattern because
it’s such a low probability event.”

At the same time, it is important to scenario-plan for the edge cases. Says Mike Curtis,
Airbnb, “Problems in the way algorithms are behaving can sneak up on you unless you
have things in place to catch them, so think through the edge cases and the unintended
implications. Don’t just let people only think through the business goal, or you might miss
something important.”

3. FOCUS TALENT AND TOOLS ON CLEAR PRIORITIES

Baker points to immature tools and tool sets as one of the biggest challenges to AI
adoption in the enterprise. “Today there aren’t a lot of data science workbenches that
are enterprise-ready,” he says, “which has the effect of constraining both innovation and
democratization of AI until they mature enough and are cost-effective enough to scale.”

There is also a scarcity of AI talent, at least for now. AI requires a number of skilled data
scientists and people with domain expertise. And, given the number of interrelated
technologies, that scarcity can be compounded by the immaturity of many tools and
platforms. Says Baker, “On the one hand, you have to find the talent, and the talent is
scarce, or you have to find the tools, and they’re scarce too.”

This isn’t to say that there aren’t talented data scientists in academia and start-ups, but
the exigencies of running an enterprise business — clear business value and scale being
two of the most notable priorities — mean that there is sometimes a gap between the
data scientists’ expectations and the reality of putting that expertise to use in a company
with thousands of employees and billions in revenue.

“Data science and AI technologies are growing up, and as part of that phase need to
stop being research projects and start producing results,” says Scott Clark, Co-Founder
and Chief Executive Officer, SigOpt. “A huge part of that is defining what success means
and what the project will affect. It’s one thing to try to replicate an academic paper in
TensorFlow, but, at the end of the day, your shareholders expect business value.”

Optimizing a machine-learning model to detect credit-card fraud provides a useful, if

somewhat counterintuitive, example of how the perfect is sometimes the enemy of the
good. Here’s how Clark thinks about it: “… If you optimize your model for accuracy, you
might let through a lot of very expensive fraud. If you can find 99% of the fraud, but the

18
remaining 1% are very expensive transactions, it’s not as good as one with 98% accuracy
and much less costly transactions. You really need to internalize the business results.” In
order to do this, alignment is key. “Every single business needs to define this differently,”
he says. “It’s a really hard problem, but if you can get everyone aligned and racing toward
the same goal, it’s amazing.”

4. THINK OF AI AS AUGMENTING RATHER THAN REPLACING EMPLOYEES

Some experts (notably the late Stephen Hawking) have argued that AI will replace
large sections of the workforce. Others, such as Susan Lund and James Manyika of the
McKinsey Global Institute, believe the net effect of AI will be job creation.19 The likely
outcome is that, as with many other technology shifts throughout history, some jobs
will disappear, many will change, and new ones will be created. For now, AI requires
an appropriate level of supervision and governance to be successful even in the most
sophisticated companies. Making the most of AI, then, requires rethinking the capabilities
and skills organizations need in the future and allocating human and technological
resources with that in mind.

5. UNDERSTAND THE CUSTOMER EXPERIENCE AND ETHICAL IMPLICATIONS OF AI

AI changes many of the norms that govern the interactions between people and
organizations. For example, voice agents and chatbots have created new and sometimes
challenging interaction models, while computer vision, such as facial recognition
technologies, alters our understanding of privacy.

In addition, AI introduces a level of information asymmetry between people and

organizations that is unprecedented. We may not consciously think of recommendation
engines or predictive text as being enabled by AI, but they are. In predictive algorithms,
we can see the inputs and the outputs, but in many cases what happens in the middle —
the decision-making process — is a “black box.”

Machine learning algorithms also encode bias. Common datasets, such as Word2Vec
(used to train language-based applications such as translation, predictive text,
recommendations, and a host of others) and ImageNet (used to train image-based
applications), have been shown to include intrinsic gender and racial biases (among
others) that require remediation. As a result, AI can have significant ethical implications,
as well as implications for the customer experience overall. For more on this, see "The
Customer Experience of AI: Five Principles to Foster Engagement, Innovation and Trust."20

While AI does represent a massive technology shift, the key is to start small and apply
AI to the right problems. Says Ken Durazzo, VP of Technology Research and Innovation,
DellEMC, “People can sell a pretty crazy vision, but, in reality, what you can do with the
knowledge you have is a different thing. Start modestly, and think about how you can take
baby steps to get used to it and get more knowledgeable. And, more than
anything, be pragmatic.”

19
Endnotes
1. “Revenues from the artificial intelligence (AI) market worldwide, from 2016 to
2025 (in million U.S. dollars).” Statista. September 2017 (https://www.statista.com/
statistics/607716/worldwide-artificial-intelligence-market-revenues/).

2. Sarah Perez. “Microsoft Announces Breakthrough in Chinese-to-English Machine

Translation.” Tech Crunch. March 14, 2018 (https://techcrunch.com/2018/03/14/microsoft-
announces-breakthrough-in-chinese-to-english-machine-translation/).

3. “AlphaGo Zero: Learning From Scratch.” DeepMind Technologies. 2018 (https://

deepmind.com/blog/alphago-zero-learning-scratch/).

4. See comments by Rachel Thomas, Founder, Fast.ai (https://www.kdnuggets.

com/2017/12/machine-learning-ai-main-developments-2017-key-trends-2018.html).

5. “The Components of MI.” MI Oasis (http://multipleintelligencesoasis.org/about/the-

components-of-mi/). Note that “metaphysical intelligence” is absent from this later model,
but instructive for the purposes of discussing machine versus human capabilities.

6. Shivon Zilis. “The Current State of Machine Intelligence 3.0.” Bloomberg BETA (http://
www.shivonzilis.com/).

7. While autonomous systems (e.g., AI that enables machines to interact with the
environment on their own) are being used across many types of business, they require a
substantially different type of engineering and investment than enterprise intelligence,
conversational AI, and visual AI (computer vision). As a result, they are out of scope for
this report.

8. For more on enterprise intelligence, see the excellent “The Competitive Landscape for
Machine Intelligence,” Harvard Business Review (https://hbr.org/2016/11/the-competitive-
landscape-for-machine-intelligence).

9. Andrew Bolwell, HP, quoted in “Everyday AI: How AI is Changing the Consumer
Experience,” January 24, 2018 (https://press.atairbnb.com/airbnb-holds-expert-discussion-
on-how-ai-humans-can-build-trust-values-and-economic-opport

10. “Computer Vision Hardware and Software Market to Reach $48.6 Billion by 2022.”
Tractica. June 20, 2016 (https://www.tractica.com/newsroom/press-releases/computer-
vision-hardware-and-software-market-to-reach-48-6-billion-by-2022/).

11. Susan Etlinger. “Image Intelligence: Making Visual Content Predictive.” Altimeter
July 18, 2016 (https://www.prophet.com/2016/07/image-intelligence-making-visual-
content-predictive/).

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12. In 2015, Flickr’s autotagging feature mistakenly identified a photograph of an iron gate
in front of a field as a “jungle gym.” In fact, it was a concentration camp. Alex Hern. “Flickr
Faces Complaints Over ‘Offensive’ Auto-Tagging for Photos.” The Guardian. May 20, 2015
(https://www.theguardian.com/technology/2015/may/20/flickr-complaints-offensive-auto-
tagging-photos).

13. Pemberton Levy, Heather. “Gartner Predicts a Virtual World of Exponential Change.”
Gartner. October 18, 2016 (https://www.gartner.com/smarterwithgartner/gartner-predicts-
a-virtual-world-of-exponential-change/).

14. “The Smart Audio Report.” NPR and Edison Research. 2017 (https://www.
nationalpublicmedia.com/smart-audio-report/).

15. “NPR And Edison Research Release 'The Smart Audio Report.’” NPR. June 22, 2017
(https://www.npr.org/2017/06/22/533980600/npr-and-edison-research-release-the-smart-
audio-report).

16. “Campbell Soup Updates Alexa Skill for Amazon Echo Show.” Campbell’s. July 10, 2017
(https://www.campbellsoupcompany.com/newsroom/press-releases/campbell-soup-
updates-alexa-skill-for-amazon-echo-show/).

17. “Chatbot Market Size To Reach $1.25 Billion By 2025 | CAGR: 24.3%” (https://www.
grandviewresearch.com/press-release/global-chatbot-market).

18. “Alert: Soundbites from DBS Digital Day 2017.” Citi. November 19, 2017.

19. McKinsey Global Institute. “Artificial Intelligence: The Next Digital Frontier?” (https://
www.mckinsey.com/~/media/McKinsey/Industries/Advanced%20Electronics/Our%20
Insights/How%20artificial%20intelligence%20can%20deliver%20real%20value%20to%20
companies/MGI-Artificial-Intelligence-Discussion-paper.ashx).

20. Susan Etlinger. “The Customer Experience of AI: Five Principles to Foster Engagement,
Innovation and Trust.” Altimeter. November 16, 2017 (https://www.prophet.com/2017/11/
the-customer-experience-of-ai/).

Disclaimer
ALTHOUGH THE INFORMATION AND DATA USED IN THIS REPORT HAVE BEEN PRODUCED AND PROCESSED ALTHOUGH
THE INFORMATION AND DATA USED IN THIS REPORT HAVE BEEN PRODUCED AND PROCESSED FROM SOURCES
BELIEVED TO BE RELIABLE, NO WARRANTY EXPRESSED OR IMPLIED IS MADE REGARDING THE COMPLETENESS,
ACCURACY, ADEQUACY, OR USE OF THE INFORMATION. THE AUTHORS AND CONTRIBUTORS OF THE INFORMATION
AND DATA SHALL HAVE NO LIABILITY FOR ERRORS OR OMISSIONS CONTAINED HEREIN OR FOR INTERPRETATIONS
THEREOF. REFERENCE HEREIN TO ANY SPECIFIC PRODUCT OR VENDOR BY TRADE NAME, TRADEMARK, OR
OTHERWISE DOES NOT CONSTITUTE OR IMPLY ITS ENDORSEMENT, RECOMMENDATION, OR FAVORING BY THE
AUTHORS OR CONTRIBUTORS AND SHALL NOT BE USED FOR ADVERTISING OR PRODUCT ENDORSEMENT PURPOSES.
THE OPINIONS EXPRESSED HEREIN ARE SUBJECT TO CHANGE WITHOUT NOTICE .

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Methodology
This document was developed based upon online and in-person conversations with 15
experts, market influencers, technology vendors, academics, brands, and others involved
in AI, customer experience, and ethics, as well as secondary research, including relevant
and timely books, articles, and news stories. Our deepest gratitude to the following:

BRANDS, TECHNOLOGY PROVIDERS, AND INDUSTRY EXPERTS (15)

Adeptmind, G Wu, Chief Executive Officer

Airbnb, Mike Curtis, Vice President Engineering, Tim Rathschmidt, Product, Technology and
Design Communications

Datorama, Jay Wilder, Director, Product Marketing, Leah Pope, Chief Marketing Officer,
Richard Posluszny, Marketing Manager,

DBS Bank, Tom McCabe, Global Business Executive and Country Head

DellEMC, Matt Baker, Senior Vice President, Dell EMC Strategy and Planning, Ken Durazzo,
Vice President of Technology Research and Innovation

Intuit, Ashok Srivastava, Chief Data Officer

Prophet Brand Strategy, Michael Welch, Senior Engagement Manager, Evan Millman, Senior
Associate Consultant

SigOpt, Scott Clark, Co-Founder and Chief Executive Officer, Pier Barattolo, Chief
Revenue Officer

Stripe, Michael Manapat, Engineering Manager

Acknowledgements
I would also like to convey my gratitude to my many colleagues, friends, and contacts
who have made this report possible, either by contributing ideas, introductions, design,
editing, research, scheduling, or moral support: Sharmeen Ahmed, Kalia Armbruster,
Jesse Berrett, Julia Dennison, Aubrey Littleton, Kelly O’Kane, Charlene Li and Jacqueline
Murphy. Your help and insights were invaluable and will enrich future research on this
topic. As always, any errors are mine alone.

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OPEN RESEARCH
This independent research report was 100% funded by Altimeter, a Prophet Company.
This report is published under the principle of Open Research and is intended to advance
the industry at no cost. It is intended for you to read, utilize, and share with others; if you
do so, please provide attribution to Altimeter, a Prophet Company.

PERMISSIONS
The Creative Commons License is Attribution-NoncommercialShareAlike 3.0 United
States, which can be found at https://creativecommons.org/licenses/by-nc-sa/3.0/us/.

ABOUT US
About Susan Etlinger, Industry Analyst
Susan Etlinger (@setlinger) is an industry analyst with Altimeter, a Prophet Company,
where she publishes research and works with clients on issues related to data strategy,
artificial intelligence, digital ethics and trust, and the impact of emerging technologies
on business and society. Etlinger was named a 2016 LinkedIn top Voice for Technology,
and her TED talk on Big Data has been viewed over 1 million times. She has been quoted
in media outlets such as The Wall Street Journal, The New York Times, and BBC.

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