WHY AI?

UNDERSTANDING AI

Artificial Intelligence or ‘AI’ is a general term that refers to hardware or software that exhibit behaviour which appears intelligent.

AI refers to the ability of machines to perform cognitive tasks like thinking, perceiving, learning, problem solving and decision making.

Excitement regarding modern AI relates to a set of techniques called machine learning, where advances have been rapid and significant. Machine learning is a subset of AI. All machine learning is AI, but not all AI is machine learning.

In our business, we talk about emerging technologies and how they impact society. We’ve never seen a technology move as fast as AI has to impact society and technology. This is by far the fastest moving technology that we’ve ever tracked in terms of its impact and we’re just getting started.

Paul Daugherty

Chief Technology and Innovation Officer, Accenture

BRIEF HISTORY

The term ‘AI’ was coined in 1956 by John McCarthy.

John McCarthy was a Stanford computer science professor who organized an academic conference on the topic at Dartmouth College in the summer of that year.

During that time, research in AI was focused towards issues of problem solving and symbolic methods. Government agencies in this type of technology and began training computers to mimic basic human reasoning. The early paved the way for formal reasoning that we see in the computers today, including decision support systems and smart search systems.

CURRENT STATUS

Excitement regarding modern AI is due to the convergence of 3 key trends – increase in digital data, evolution of advance algorithms and exponential increase in computer power and storage has propelled AI as the defining technology for the next 30 years.

Today the amount of data we produce is truly mind-boggling - 2.5 quintillion bytes of data are created each day and that pace is only accelerating. The capabilities of AI solutions are rapidly expanding to beat human performance in many tasks. Even a couple of years ago it would have seemed impossible that a computer could bluff better than a human being.

BIG DATA

More data created in last 2 years than all the data before in history.

1991

2007

2012

2014

World Wide Web

iPhone launch propels smartphone sales & data generation

Facebook 1bn users

7.2bn mobiles > human population

POWERFUL CHIPS

A smartphone processor is faster than the Apollo moon mission computer.

1965

2002

2009

2011

2017

Moore's Law

Amazon launches cloud

GPU 70x faster than CPU

IBM Watson 80 Teraflops

Google introduces TPU - 30x faster than GPU

SMART ALGORITHMS

AI surpassing humans in some tasks: e.g. image analysis, text comprehension, Go & Poker!

1986

1998

2009

2012

2013

Backpropagation to train ANN

Google Page Rank Algorithm

Spark revolutionizes big data

Deep learning systems wins image classification

CNN algo to play Atari games

IMPACT OF AI

Artificial Intelligence is expected to contribute $15.7 trillion to the global economy in 2030, more than the current output of China and India combined. Of this, $6.6 trillion is likely to come from increased productivity and $9.1 trillion from consumption-side effects (PwC, 2017).

AI techniques like machine learning and deep learning are creating disruptive use cases across wide variety of sectors and impact could be more than trillion of dollars annually. There are more than 400 specific use cases across companies and organizations. AI will help transform the GDP growth, overall GDP and productivity of the globalized world. Initially, productivity gains from labour will drive the gains. Many of the gains are also likely to come from product enhancements, more product variety, personalization which is likely to stimulate consumer demand.

DISRUPTIVE USE CASES OF AI - BRIEF LIST

AI techniques such as machine learning and deep learning are creating disruptive use cases across wide variety of sectors and impact could be more than trillion of dollars annually.

Banking, financial services and insurance - BFSI

Financial Trading
Asset Management
Fraudulent transaction
KYC Management
Credit Assessment
Debt Collection
Claim Settlement

Healthcare

Medical Diagnosis
Drug Creation
Diagnose Health Diseases from Medical Scans
Medical Imaging
Predict Time Period for Hospital/ Hotel stay

Cyber Security

Surveillance
Authentication
Privacy Protection
Threat Management
Correction Action
Compliance

Mobility & Logistics

Autonomous Vehicles
Fleet Efficiency
Omni Channel Inventory Management
Logistics Management
Network Optimization

Retail

Personalized Design
Production Media
AI for Digital Store
In Store Assistance
Product Categorization
Visual Search

Marketing & Sales

Demand Forecasting
Micro Segmentation
Consumer Targeting
Optimize Pricing
Recommendation Engine
Predict Customer Action
Power Chat Bots
Customer Support

INVESTING IN AI

AI startups have attracted massive amounts of capital as investors have seen AI solutions create real value in practice. Global investments in AI in just the last 3 years has crossed $60B. Moreover, larger enterprises are acquiring AI startups at an increasing pace. Over 200 AI startups were acquired in 2019, with Big Tech playing a leading role as acquirers.

This excitement mirrors the investor sentiment during the first internet boom in 1999/2000. Even though many dotcoms valuations crashed heavily in the stock market crash of 2000, Internet companies have created more wealth than any previous technology. Today, just 5 Internet companies are worth more than all public companies at the start of the internet era (based on Netscape IPO). This ability to create massive wealth for all stake holders is the hallmark of disruptive technologies.

Internet companies have created more wealth than any previous technology. Today, just 5 Internet companies are worth more than all public companies at the start of the internet era (based on Netscape IPO).

TOP 10 STOCK BY MARKET CAPITALIZATION

1995 (in $bn)

131

113

Total Market Cap of all US Public Companies (in $trn)

6.95

Share of Technology

in Top 10

13%

2020 (in $bn)

1842

1578

1554

1012

723

673

660

475

405

383

Total Market Cap of all US Public Companies (in $trn)

Share of Technology

in Top 10

35.5

86%

Sources: World Bank, Siblis Research & Yahoo Finance.

Comments

Top 5 Internet companies are worth more than all US Public Companies in 1995.
The share of technology stocks in Top 10 companies by market cap has grown from 13% in 1995 to 86% in 2020.
AI is at an early stage. Like Internet, AI will affect every business and create $trillions of value over the next 25 years.

AI has the potential to surpass this and create even more wealth as it will impact every business and create trillions of dollars of value. However, like all previous booms, we have to be careful not to be blinded by the hype but evaluate the efficacy of an AI solution and the quality and uniqueness of its technology and algorithms.