• 84% of respondents say AI will enable them to obtain or sustain a competitive advantage.
• 83% believe AI is a strategic priority for their businesses today.
• 75% state that AI will allow them to move into new businesses and ventures.

These and many other fascinating insights are from the Boston Consulting Group and MIT Sloan Management Review study published this week, Reshaping Business With Artificial Intelligence. An online summary of the report is available here. The survey is based on interviews with more than 3,000 business executives, managers, and analysts in 112 countries and 21 industries. For additional details regarding the methodology, please see page 4.

The research found significant gaps between companies who have already adopted and understand Artificial Intelligence (AI) and those lagging. AI early adopters invest heavily in analytics expertise and ensuring the quality of algorithms and data can scale across their enterprise-wide information and knowledge needs. The leading companies who excel at using AI to plan new businesses and streamline existing processes all have solid senior management support for each AI initiative.

Key takeaways include the following:

72% of respondents in the technology, media, and telecommunications industry expect AI to have a significant impact on product offerings in the next five years

The technology, media and telecommunications industry has the highest expectations for AI to accelerate new product and service offerings of all industries tracked in the study, projecting a 52% point increase in the next five years. AI-based improvements are expected to deliver Business Process Outsourcing (BPO) gains in the Financial Services and Professional Services industries as well. The following graphic compares expectations for AI’s expected contributions to business offerings and process improvements over the next five years by industry.

Customer-facing activities including marketing automation, support, and service in addition to IT and supply chain management are predicted to be the most affected areas by AI in the next five years

Demand management, supply chain optimisation, more efficient distributed order management systems, and Enterprise Resource Planning (ERP) systems that can scale to support new business models are a few of the many areas AI will make contributions to the in the next five years. The following graphic provides an overview of operations, IT, customer-facing, and corporate center functions where AI is predicted to contribute.

84% of respondents say AI will enable them to obtain or sustain a competitive advantage

75% state that AI will allow them to move into new businesses and ventures. The research shows that AI will be the catalyst of entirely new business models and change the competitive landscape of entire industries in the next five years. 69% of respondents expect incumbent competitors in their industry to use AI to gain an advantage. 63% believe the pressure to reduce costs will require their organisations to use AI in the next five years.

Despite high expectations for AI, only 23% of respondents have incorporated it into processes and product and service offerings today

An additional 23% have one or more pilots in progress, and 54% have no adoption plans in progress, 22% of which have no current plans. The following graphic provides insights into the current adoption of AI with survey respondents.

By completing a cluster analysis of survey respondents based on AI understanding and adoption questions, four distinct maturity groups emerged including Pioneers, Investigators, Experimenters, and Passives

19% of the respondent base is Pioneers or those organisations who understand and are adopting AI. The study says that “these organisations are on the leading edge of incorporating AI into both their organisation’s offerings and internal processes.” Investigators (32%) are organisations that understand AI but are not deploying it beyond the pilot stage. Experimenters (13%) are organisations that are piloting or adopting AI without deep understanding. Passives (36%) are organisations with no adoption or much knowledge of AI.

Pioneers and Investigators are finding new ways to use AI to create entirely new sources of business value

Pioneers (91%) and Investigators (90%) are much more likely to report that their organisation recognises how AI affects business value than Experimenters (32%) and Passives (23%). One of the most differentiating aspects of the four maturity clusters is understanding the differences and value of investing in high-quality data and advanced AI algorithms. Compared to Passives, Pioneers are 12 times more likely to understand the process for training algorithms and ten times more likely to comprehend the development costs of AI-based products and services.

Organisations in the Pioneer cluster excel at analytics expertise versus competitors and have exceptional data governance processes in place, further accelerating their AI-driven growth

Pioneers are excellent at change management, citing their senior management’s vision and leadership as a foundational strength in accomplishing their AI-based initiative Early adopter Pioneers are also adept at product development, capable of changing existing products and services to take advantage of new technologies.

61% of all organisations interviewed see developing an AI strategy as urgent, yet only 50% have one done today

The research found that regarding company size, the largest companies (those with more than 100K employees) are the most likely to have an AI strategy, but only half (56%) have one. The following graphic compares the percentage of respondents by maturity cluster who say developing a plan for Al is urgent for their organisation relative to those that have a strategy in place today.

70% of respondents are personally looking forward to delegating the more mundane, repetitive aspects of their jobs to AI

84% believe employees will need to change their skill sets to excel at delivering AI-based initiatives and strategies. Taking this approach provides career growth and a chance to become more marketable for many whose jobs that are being increasingly automated. Cautious optimism regarding AI’s effects on employment dominates early adopter organisations, not dire fatalism. The bottom line is that AI is providing opportunities for career growth that will only accelerate in the future. Those that seize the chance to learn and earn more will end up having AI removing the mundane tasks from their jobs, leaving more time for the most challenging and rewarding work.

Editor’s note: To read more about artificial intelligence news, analysis and opinion, visit our sister publication AI News.

Three quarters of organisations would be willing to pay a premium to enhance their cloud services, according to the latest note from 451 Research.

In the latest from its Voice of the Enterprise series – this time around organisational dynamics in hosting and cloud managed services – the research firm found that companies were most likely to pay more for security guarantees than anything else.

Just under half (48.7%) of those polled said they would pay to enhance their security, ahead of guaranteed uptime and performance metrics (43.3%), enhanced customer service (33.6%), and operational management (26.4%). Yet when it came to how much organisations were prepared to pay, customer service came out on top, ahead of security, uptime and operational management respectively.

The research also found gaps between current offerings and customer expectations. More than half (58.1%) of the 600 IT professionals polled said they see managed services, or security services, bundled in with infrastructure or applications as important to them, yet only two in five (38.8%) say their current vendors offer this capability to a satisfactory level. Only one in five said their vendors meet their expectation when it comes to migrating workloads to and from data centres.

“We frequently talk about pricing competition in cloud infrastructure and applications, which leaves many service providers wondering how they can differentiate themselves,” said Liam Eagle, study author and research manager at 451. “The good news is that many customers tell us they’re evaluating vendors on value, rather than cost. That value can reside in services like guaranteed levels of performance, security and support.”

This is the latest in the company’s missives around cloud and hosted services and strategy. Last month, 451 argued the majority of IT managers were examining a mix of on- and off-premises computing resources in their organisations, rather than “blindly following the pack” to infrastructure as a service (IaaS) et al. Two thirds of respondents said they found recruiting for roles across both traditional servers and converged infrastructure difficult.

DevSecOps – a trend around transformation in process, people and technology – is about breaking down silos and waste along the software development lifecycle and using agile methodologies, automation and insights to help get apps to market faster. This leads to higher quality apps, greater trust in organizations, less organizational friction, and ultimately a five-star customer experience.
These apps are the new competitive currency in this digital economy and they’re powered by data. Without data or data-based interactions, these apps would be of little value to the user and would be just static one-dimensional bulletin boards. Imagine a banking app, for example, that does not give you data about your account or let you take some action. How much value is this bringing to the user?

read more

With the modern notion of digital transformation, enterprises are chipping away at the fundamental organizational and operational structures that have been with us since the nineteenth century or earlier.
One remarkable casualty: the business process. Business processes have become so ingrained in how we envision large organizations operating and the roles people play within them that relegating them to the scrap heap is almost unimaginable, and unquestionably transformative.

In the Digital Era, however, everything you thought you knew about business processes, and thus how human effort drives productivity and profit in the organizations we work for, is wrong.

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Born in the cloud services may be one thing – but what are the key aspects to look out for when migrating existing applications to the cloud? According to a new whitepaper from IDC, security, privacy, and compliance regulations came out on top for organisations.

The study, ‘Critical Application and Business KPIs for Successful Cloud Migration’, polled 600 enterprises and was conducted alongside application performance management provider AppDynamics. Naturally, the paper exists to point readers in the direction of the company’s platform in helping with cloud migration – but the statistics are interesting to note.

46% of respondents said they had already migrated some custom developed, browser-based applications from traditional IT infrastructure to cloud. The numbers go steadily down after that, with email and collaboration apps (42%), mainframe applications (39%), and ERP/CRM (39%).

Two thirds (65%) said security was the primary reason for migrating existing apps to the cloud, ahead of infrastructure scalability impact (57%), app performance impact (56%), total cost of development (53%) and business agility impact (52%).

Benefits, on the technical side, included reduced IT operations and infrastructure costs, cited by 55% of respondents, and on the business side saving costs for IT and development (60%). Again, greater security was cited as a primary business benefit, alongside improved employee productivity and customer experience, while other technical benefits included greater app performance, speed of app deployments, and reduced outages and security events.

This purported cost benefit appears to be working, but with a caveat, as John Rakowski, Appdynamics director of product marketing points out. “While the survey suggests that these expectations are often met, it’s important to note that this requires modernisation of application architectures, supporting technology, people, and processes,” Rakowski wrote.

As a result, containers are increasingly playing a role in successful cloud migration, Rakowski added. When it came to the role container technologies played in organisations’ strategies, only 4% said they were not currently considering their use, and more than two thirds said they were either actively planning to implement them, or containerising new and existing applications.

IDC estimates approximately 60% of enterprises worldwide currently match the profile of organisations included in the survey – the remaining 40% were less mature, in other words only limited cloud use to development or not using cloud at all.

You can read the full report here (registration required).

Microsoft has announced the launch of availability zones in Azure, giving customers more options if a localised data centre fault occurs – and catching up with its competitors in the process.

The move puts Microsoft alongside the likes of Amazon, Google, and Oracle in giving extra resiliency to customers with fault-tolerant locations within a data centre region. As an example, while Microsoft claims to have the most regions out of any major cloud provider – 36 regions, with six additional being announced – Amazon Web Services (AWS) has only 16 regions, with six more on the way, but 44 availability zones.

“Availability Zones are fault-isolated locations within an Azure region, providing redundant power, cooling, and networking,” wrote Tom Keane, head of global infrastructure at Microsoft Azure, in a blog post. “Availability Zones allow customers to run mission-critical applications with higher availability and fault tolerance to data centre failures.”

The zones are being trialled in two regions, East US 2 in Virginia and West Europe in the Netherlands, with plans to expand to additional regions in the US, Europe and Asia by the end of the year. The planned expansion includes a new data centre in Paris, first announced in October last year.

Alongside this, Microsoft announced it had completed the construction of its transatlantic subsea cable, aiming to give increased speed and lower latency.

The cable, called Marea, is a joint project between Microsoft, Facebook and Telxius, the telecommunications infrastructure arm of Telefonica.  Keane said it will “help support the growing demand for high speed, reliable connections to the US and Europe, including our newest Azure regions coming to France, and beyond.”

AWS is no stranger to this sort of investment either, with the company purchasing capacity on an upcoming cable connecting Australia and New Zealand to the US. Among the six new regions on the way for AWS customers is Bahrain, also announced today, with plans to open – with three availability zones at launch – by early 2019.

“Some of the most gratifying parts of operating AWS over the last 11 years have been helping thousands of new companies get started, empowering large enterprises to reinvent their customer experiences, and allowing governments and academic institutions to innovate for citizens again,” said Andy Jassy, AWS CEO. “We look forward to making this happen across the Middle East.”