North America, Asia and Europe are neck and neck when it comes to integrating Artificial Intelligence and machine learning into operations. We take a cross regional and industry snapshot on hot spots for growth.
By Viraj Desai
Both Gartner and International Data Corporation claims machine learning and AI will significant drive value creation, with Gartner pegging AI’s total business value add to USD 3.9 trillion by 2022, and IDC predicting worldwide costs on said tech to reach USD 77.6 billion by 2022.
Further estimates claim machine learning will add USD 2.6 trillion in Marketing and Sales and about USD 2 trillion in manufacturing and supply chain planning.
According to Gartner, the marketing category has witnessed an annual growth rate of almost 30% in the past ten years, and AI base digital security and mobility have also grown over 20% CAGR.
Cloud platform providers such Google Cloud, Amazon Web services, Microsoft Azure and IBM Cloud continue to file patents in AI and machine learning too. According to Gartner, automation systems that utilise AI to optimize business processes accounts for only 2 percent of the global AI-derived business value, which is expected to grow to 16 percent by 2022.
Smart products account for 18 percent of global AI-derived business value but may reduce in the near future. With cloud systems integrated into these products, they can learn from users and preferences to personalize experience and engagement. According to IDC, AI will be the most disruptive technology in the coming decade due to its computational power, volume and variety of data.
The latest IDC Spending Guide claims analysis on cognitive and AI systems by 2022 will be almost three times the levels than now; a growth rate of 37%. Software will continue to be the fastest growing technology with a CAGR of over 40%.
Some of the domains that will witness extensive AI usage and potentially, heavy investor interest, include pharmaceutical research and discovery, ‘expert shopping advisors’ and product recommendations, digital assistants for enterprise knowledge workers and intelligent processing automation.
The retail industry is expected to receive the lion’s share of investment of about USD 5.9 billion, particularly on ‘expert shopping advisors’ and automated customer service agents platforms. This is followed by the banking industry, which is likely to see USD 5.6 billion investment towards AI-enabled solutions including automated threat intelligence & prevention systems and fraud analysis & investigation systems. Besides this, healthcare providers, discrete manufacturing and process manufacturing would also dominate AI spending.
The industries that will experience the fastest growth in AI systems spending over the 2018-2022 forecast are federal/central government (44.3% CAGR), personal and consumer services (43.3% CAGR), and education (42.9% CAGR).
AI use cases that will see the most investment this year are automated customer service agents (USD4.5 billion worldwide), sales process recommendation and automation (USD2.7 billion), and automated threat intelligence and prevention systems (USD 2.7 billion). Five other use cases will see spending levels greater than USD2 billion by the end of 2019: automated preventative maintenance, diagnosis and treatment systems, fraud analysis and investigation, intelligent process automation, and program advisors and recommendation systems.
Statista claims in a recent survey that over 47% of organizations revealed scaling up or moving towards machine learning in their production. Personalization and improving customer experience are considerations for marketers to move towards AI.
McKinsey also claims 82% of enterprises adopting the two technologies have managed to garner a financial return from these investments with significant return on investments for companies operating in technology, media and entertainment. For example, entertainment major, Netflix is using AI to improve search results and prevent customer churn.
Regionally, North America seems to be moving fast towards machine learning with almost 23% of enterprises having adopted the function. On the other hand, markets like China and Europe are also catching up quickly with almost 19% and 21% integrating machine learning into operations. Boston Consulting Group’s interviews with 500 Chinese companies found that AI dominance is across industries as compared to other countries like the United States, where its focused in specific areas.
In the UK/Europe region, UK leads with investments in AI, machine learning acquisitions, Private Equity investments and mergers to the tune of USD 7.2 billion over the past ten years. The number of transactions across the continent has registered a six-fold increase to 1,334 transactions in the last three years.
McKinsey Global Institute predicts predicts AI may boost growth in the continent by 20% by 2030, especially given it is home to nearly 25% of the global AI startups.