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Salesforce Basecamp Helsinki 8.5.2018 - Boston Consulting Group

The document discusses key topics around artificial intelligence (AI) and strategy. It provides an overview of what AI is, where it can be applied, why it is difficult to implement, and how companies can move forward with AI. The document also discusses how AI can create prescriptive insights from large volumes of real-time data, the many potential application areas of AI in business functions like customer experience and risk management, and challenges of AI transformations. It advocates thinking strategically about how AI will impact industries and building competitive advantages from AI tools.

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1 Copyright©2018byTheBostonConsultingGroup,Inc.Allrightsreserved. Key topics on AI and strategy 5 What is AI? Where to apply it? Why is it difficult? What about tomorrow? How to move forward?
2 Copyright©2018byTheBostonConsultingGroup,Inc.Allrightsreserved. Key topics on AI and strategy 5 What is AI? Where to apply it? Why is it difficult? What about tomorrow? How to move forward?
3 Copyright©2018byTheBostonConsultingGroup,Inc.Allrightsreserved. AI creates prescriptive insights from high volumes of unstructured, real-time data Artificial Intelligence •  Financial reports •  Geo analysis •  Heat maps •  .... PrescriptiveDescriptive Business Intelligence Traditional Analytics Machine learning •  Campaign Management •  Sentiment analysis •  .... •  Efficient personalization •  Context-aware (e.g. mobile ) recommendations •  Next best action •  Fraud detection •  Churn prediction •  .... Structured Low Volume Batch Load Unstructured High Volume Real Time Type of Data Type of Insights Predictive Optimization •  Stock allocation •  Logistics network optimization •  …
4 Copyright©2018byTheBostonConsultingGroup,Inc.Allrightsreserved. How we understand AI from a user-centric view Structured data Speech/text Optical patterns/obj. Physical agents Digital agents Communication Offering: products and services Processes: vertical and horizontal AI building blocks AI platforms and services AI infrastructure and algorithms</> Note: Unstructured data most typically sensor (visual or language) driven and classified as such Source: AI@BCG DATA PROCESSING ACTION
5 Copyright©2018byTheBostonConsultingGroup,Inc.Allrightsreserved. No shortage of AI application areas in business  Personalization  Cross sell and Up Sell  Churn and Retention  Customer Experience  Customer Acquisition  Sentiment Analysis  Data-driven Marketing  Pricing and Promo Effectiveness  Feature Optimization  Assortment Optimization  Control Tower  Sales/Ops/ Planning  Predictive Preventive Maintenance  Manufacturing process optimization  Energy efficiency  Procurement  Branch Network  Real Estate Footprint  Infrastructure Capacity and Utilization  Routing engine  Sales Territory Design  Credit Risk Assessment  Fraud/Anomaly Detection  Project Risk Management  Claims Management  Back-office process automation  Workforce Deployment Design  War gaming/ Scenario Simulation  Competitive Intelligence  Performance Management Customer Product / Price Operations Network Risk Enterprise
6 Copyright©2018byTheBostonConsultingGroup,Inc.Allrightsreserved. A fundamental transformation in action “We will evolve from a mobile first to an AI first world” “In five years, there's no doubt in my mind that cognitive [solutions], AI, will impact every decision made … If it is digital, it will be cognitive” “The development of AI and big data will bring fundamental changes to the already internetized manufacturing and financing industries, and give birth to new technologies and resources” Every manager needs an intuitive understanding of AI to steer companies today Sundar Pichai CEO, Google Virginia Rometty CEO, IBM Artificial Intelligence Panel WEF 2017 Jack Ma Founder of Alibaba Source: AI@BCG
7 Copyright©2018byTheBostonConsultingGroup,Inc.Allrightsreserved. Thinking beyond tomorrow. Shifting Value Creation Building Competitive Advantage User Centric Approach Where will AI create, destroy, or shift value in your industry? How to build a competitive advantage from AI tools ? What is the impact of AI on the your offering to yp going to be and how to prepare? Source: AI@BCG
8 Copyright©2018byTheBostonConsultingGroup,Inc.Allrightsreserved.
9 Copyright©2018byTheBostonConsultingGroup,Inc.Allrightsreserved.
10 Copyright©2018byTheBostonConsultingGroup,Inc.Allrightsreserved.
11 Copyright©2018byTheBostonConsultingGroup,Inc.Allrightsreserved. The 10/20/70 rule to drive impact. What does success look like ? Modelling •  Performance of the algorithms •  Data engineering 70% 20% Processes and resources •  Change management •  Insertion in business process •  Data quality and availability 10% Technologies •  Data and computation platform •  Visualization and restitution tools
12 Copyright©2018byTheBostonConsultingGroup,Inc.Allrightsreserved.  New Strategic objectives and time to impact should steer AI priorities Strategic objectives of internal and external innovation units Description  Mergers & Acquisitions (M&A) Acquisition of developed companies with existing business  Internal Research and Development Internal product development  Business Incubation (Incubator and Accelerator) Support of and cooperation with start-up companies in early stages  Tech Transfer Scouting/identification and transfer of innovation/technology by external sources into corporate (e.g., IP licensing)  Strategic partnerships Partnerships/joint ventures that drive incremental revenue for BU  Incubator (“Hatch”) Create new and sustainable business models along a structured approach  CVC1 Equity investments to assess and access new growth opportunities  1–3 years  4–6 years  7–10 years  Partnerships  Business Incubation (Incubator and Accelerator)  Mergers and acquisitions  Internal research and development  CVC1  Adjacent  Core  Incubator (“Hatch”)  Tech transfer  Time to impact for BU  Proximitytocore business
13 Copyright©2018byTheBostonConsultingGroup,Inc.Allrightsreserved. However, analytics transformations are difficult for most companies Talent crunch  Top talent is crucial but scarce and very difficult for traditional corps to attract 20x More demand than supply of skilled data scientists Technology paralysis  Companies invest in tech and flashy algorithms but 70% is business transformation ~30% is tech and algorithms Industrialization gap  Most analytics efforts get stuck in lab mode and never generate bottom-line impact <15% of all big data investments reach production Source: BCG
14 Copyright©2018byTheBostonConsultingGroup,Inc.Allrightsreserved. BCG approach is to think big, start small, grow fast What if... Start with the business opportunity Build, test, iterate Scale to solution Transform organization §  Business first §  Value focus §  Lean technology §  Right design §  Practical application of AI and Big data §  Well defined use cases §  Iterative technology scale up §  Purpose fit tools from existing technologies §  New ways of working §  Analytics and business strategy in lock-step §  Right organization and processes §  Transformative Analytics as BAU
15 Copyright©2018byTheBostonConsultingGroup,Inc.Allrightsreserved.
16 The services and materials provided by The Boston Consulting Group (BCG) are subject to BCG's Standard Terms (a copy of which is available upon request) or such other agreement as may have been previously executed by BCG. BCG does not provide legal, accounting, or tax advice. The Client is responsible for obtaining independent advice concerning these matters. This advice may affect the guidance given by BCG. Further, BCG has made no undertaking to update these materials after the date hereof, notwithstanding that such information may become outdated or inaccurate.   The materials contained in this presentation are designed for the sole use by the board of directors or senior management of the Client and solely for the limited purposes described in the presentation. The materials shall not be copied or given to any person or entity other than the Client (“Third Party”) without the prior written consent of BCG. These materials serve only as the focus for discussion; they are incomplete without the accompanying oral commentary and may not be relied on as a stand-alone document. Further, Third Parties may not, and it is unreasonable for any Third Party to, rely on these materials for any purpose whatsoever. To the fullest extent permitted by law (and except to the extent otherwise agreed in a signed writing by BCG), BCG shall have no liability whatsoever to any Third Party, and any Third Party hereby waives any rights and claims it may have at any time against BCG with regard to the services, this presentation, or other materials, including the accuracy or completeness thereof. Receipt and review of this document shall be deemed agreement with and consideration for the foregoing. BCG does not provide fairness opinions or valuations of market transactions, and these materials should not be relied on or construed as such. Further, the financial evaluations, projected market and financial information, and conclusions contained in these materials are based upon standard valuation methodologies, are not definitive forecasts, and are not guaranteed by BCG. BCG has used public and/or confidential data and assumptions provided to BCG by the Client. BCG has not independently verified the data and assumptions used in these analyses. Changes in the underlying data or operating assumptions will clearly impact the analyses and conclusions. Copyright©2018byTheBostonConsultingGroup,Inc.Allrightsreserved.
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