Insight

The Intelligence Revolution: Driving ROI with AI

by

The rise of artificial intelligence both reflects and accelerates the major geopolitical, social, and economic shifts happening around the world. With growing evidence that AI gives companies and organizations the ability to be more efficient, effective, and profitable, how can leaders, who may have limited understanding of AI and its benefits, make informed investment decisions about AI?

To help executives drive ROI from AI, ESI ThoughtLab, together with a group of AI leaders, conducted a benchmarking study of 1,200 organizations across industries and world markets. This ground-breaking research is designed to provide executives with an evidence-based roadmap for supercharging their business performance through AI.

View this on-demand webinar featuring Lou Celi, CEO of ESI ThoughtLab, Peter Henstock, Machine Learning & AI Lead at Pfizer, and Ari Kaplan, AI Evangelist at DataRobot as they discuss the findings of the study, and how executives are using AI to drive more business value.

During this webinar, you will learn:

  • Insights around the current state of AI at major companies and how and why those organizations have plans to continue to make major investments in AI.
  • The 5 best practices to be successful at AI and drive high performance.
  • How Pfizer is already using AI to meet challenges and “lead from the middle.”

Click here to watch the full on-demand webinar.

In Africa, Accra Leads in Progress on SDGs

by

Africa faces the most challenges of any region in meeting the UN’s Sustainable Development Goals (SDGs) commitments, given its high levels of environmental degradation, poverty, and unemployment along with rapid population growth and weak state institutions. In ESI ThoughtLab’s survey of 167 cities across six regions designed to explore cities’ progress on the SDGs, African cities overall trailed those in all the other regions. Unlike other regions, all African cities are in emerging economies, which struggle more than advanced economies to make headway on the SDGs.

Just 55% of African cities surveyed said they had adopted the SDG framework into their plans (vs. 78% of all cities on average), and just 31% on average reported notable progress on the goals (vs. 59% for all cities).

However, progress has been uneven and is further along in some areas. With increasing temperatures and sea levels threatening their citizens and economies, African cities are moving most aggressively on climate action—with 55% saying they have made considerable progress in this area. They are also making moderate advances on partnerships to achieve the SDGs, education, poverty alleviation, health, gender equality, decent work, and life on land. Conversely, they are far off track on goals such as clean energy and water, and industry and innovation.

Smart city technologies and solutions can help African and other cities to meet their social, environmental, and economic goals. However, as part of the least economically developed region, cities in Africa invest less than others in such technologies and have the smallest average technology budgets—just $2 million annually (vs. $9.8 million on average for all cities). Yet despite smaller budgets, African cities are making large investment in a few technologies, notably mobile, biometrics, IoT, and cloud.

‍

Accra stands out

Notably, one African city—Accra, Ghana—stands out ahead of the others on that continent in advancing its SDG agenda. Under the maturity framework developed as part of the study, Accra is the only city in the region classified as a “sprinter”—among those making the most progress on its goals. While Accra leads, Addis Ababa, Ekurhuleni, Kigali, and Touba are not far behind—they are classified as advancers. The remaining 20 African cities are classified as early-stage implementers.

What has Accra done differently that has put it ahead of the others? Besides Accra, only one other African city (Kigali) has incorporated all the 17 SDGs into its plans. And Accra reports having made considerable progress on more of the SDGs (14) than any other city in the region.

Accra has also followed several critical steps that can help ensure the success of an SDG program. It has a high level of support for the SDGs across government departments; it regularly monitors SDG efforts; and it has designated a specific department to take the lead on SDG initiatives. It is also using technology solutions across more urban domains than other African cities and has made important headway on citizen engagement—another key component of SDG achievement. ‍

‍

‍

Innovative initiatives

Environmental sustainability, particularly related to clean water and sanitation (SDG #6), is one area where Accra has adopted bold initiatives. The government has committed to make Accra one of the cleanest cities in Africa, and in 2019 it drafted a new national plastics management policy to reduce plastic pollution. The policy was designed to promote recycling of plastic waste into other products as well as to begin an intensive environmental education program. At the same time, Ghana became the first African nation to join the Global Plastic Action Partnership, a public-private platform dedicated to fostering action to combat the plastics pollution crisis.

Funding of SDGs programs is one of the biggest challenges for Africa cities and is another area where Accra has taken a strong approach. In 2018, the country’s Ministry of Finance in collaboration with the Ghana Investment Promotions Centre and the SDGs Advisory Unit launched the annual Accra SDGs Investment Fair to encourage private financing of the SDGs. The fair aims to facilitate collaboration between investors and sustainable public and private-sector project and businesses. The 2020 fair was conducted virtually and was designed to develop post-COVID-19 funding strategies, since the pandemic has further squeezed already constrained public finances.

In 2020, the government also partnered with the Sustainable Development Investment Partnership (SDIP), an initiative of the World Economic Forum and the OECD, to hold the first SDGs Country Financing Roadmap Roundtable in Accra. It was the first African country to partner with the SDIP. The event brought together governmental institutions, donors, multilateral organizations, development banks, and private investors to investigate innovative strategies to finance the SDGs, including foreign investment and private equity.

Ghana’s approach to funding the SDGs also engages leaders at the local level. The SDGs national budgeting and financing process involves a bottom-up approach where local authorities actively participate. And in addition to national efforts, Accra city leaders are looking to diversify their sources of financing. According to our survey, the main sources of funding now for Accra are multilateral financing, government-based borrowing, and user fees taxes. Over the next three years, multilateral financing will remain important for the city, but the other main sources will be private-sector financing and crowdsourcing from the public.

‍

Business, Government, and Academic Leaders Analyze the Post-pandemic Future of Cities and Create Roadmap for Change

by

ESI ThoughtLab Study will examine how innovative technologies will drive urban sustainability, resilience, and citizen well-being

November 5, 2020 (Philadelphia, PA) –ESI ThoughtLab, a leading research firm, has joined forces with a coalition of business, government, and academic leaders to analyze how COVID-19 and associated disruptions will permanently change how people work, shop, travel, learn, and live in cities. This comprehensive research program, titled Smart City Solutions for a Riskier World: How innovation will drive urban resilience, sustainability, and citizen well-being, will examine what 150 cities across six continents are doing to promote a safe, sustainable, and inclusive future for their citizens.

The pandemic is already reshaping urban environments in fundamental ways—increasing reliance on remote working, medicine, and education; changing the role of distance and mobility; and speeding up adoption of IoT, AI, RPA, 5G, biometrics, and other smart technologies. At the same time, COVID-19 has served as a stress test for cities, revealing weaknesses in their digital infrastructure, data security, and operating procedures. But it has also been a wake-up call for government and business to do more to build the social good—including prioritizing the UN’s 17 Sustainable Development Goals (SDGs) around citizen safety, green living, social equality, and economic development.

Creating an evidence-based roadmap for cities

To help cities advance their future social and economic agendas, the research coalition will work together to provide urban leaders with an evidence-based roadmap that includes best practice insights, benchmarking data, and ROI analysis of digital, policy, funding, and partnership solutions that will work best to help them achieve the SDGs. The research program will include:

  • An exchange of perspectives and insights from business, government, and academic leaders in the coalition.
  • A rigorous benchmarking survey of 150 cities across population, income, and economic levels.
  • Ongoing sentiment analysis of citizen concerns and views across locations and demographics.
  • Economic modeling of the social, environmental, and performance benefits of smart solutions for achieving the UN’s SDGs.
  • In-depth case studies of cities that excel at driving positive social, environmental, and economic outcomes.

“From electric cars to smart streetlights and intelligent water networks, technology has the potential to dramatically improve urban living and conserve finite resources,” said Lou Celi, CEO of ESI ThoughtLab and the project director. “But succeeding in a post-pandemic world will also require cities to draw on innovative funding and partnership approaches, while taking a fresh look at public policies and governance procedures. Our economic analysis will help cities find the best path.”

The research coalition consists of:

  • Corporate leaders, including Cisco, Hatch, Deloitte, NTT, Oracle, Honeywell, Microsoft, Bentley, Axis Communications, GM, Intel, and RH Strategic.
  • Multilateral organizations, including the World Bank, the Asian Development Bank, and UNECE.
  • Academic institutions, including Carnegie Mellon University, Penn IUR, IESE Business School, Sogang University, Nankai University, Zigurat Global Institute of Technology, and University of Southern California.
  • City leaders from Singapore, Tel Aviv, Orlando, Philadelphia, Dublin, Moscow, Trondheim, Helsinki, Pearland, and Stockholm, among others.

As part of the initiative, ESI ThoughtLab has teamed up with CityAge, a media and event company, to create a dedicated website (www.citysolutions.riskierworld.com) that will provide regular updates on the program, along with the latest analysis, useful data resources, and shared content. An eBook, benchmarking platform, and other decision support tools developed from the research will be released in early 2021, together with calls to action for city leaders and the broader urban ecosystem related to the urban imperatives and solutions uncovered by the study.

For more information, contact:

Mike Daly, Marketing Director at ESI ThoughtLab
215-717-2777 | Mdaly@esithoughtlab.com

Loretta Prencipe, Vice President at RH Strategic Communications
202-658-9024 | lprencipe@rhstrategic.com

 

About ESI ThoughtLab: ESI ThoughtLab is the thought leadership arm of Econsult Solutions Inc., a leading economic consultancy. The innovative think tank offers fresh ideas and evidence-based analysis to help business and government leaders understand and respond to economic, industry, and technological shifts around the world. Its team of top economists and thought leaders excels at creating valuable decision support that combines visionary thinking, analytical excellence, and multi-format content.

Firms will Invest More in AI After the Pandemic, but Delivering ROI will take Skill, Scale, and Time

by

ESI ThoughtLab study of 1,200 organizations reveals that generating ROI on AI is still a work in progress that requires a focus on strategic change

September 15, 2020 (Philadelphia, PA) – Two-thirds of senior executives across industries—and nearly nine out of ten leaders from the world’s largest enterprises—believe that artificial intelligence (AI) is vitally important for the future of their businesses and will be upping their investments in the post-pandemic era. Yet their companies are now seeing an average ROI of only 1.3%, and 40% of AI projects are not yet profitable, according to Driving ROI through AI, a just-released research study conducted by research firm ESI ThoughtLab and a coalition of AI leaders, including Appen, Cognizant, Cortex, Dataiku, DataRobot, Deloitte, and Publicis Sapient.

The reason for this paradox, according to the research, is that AI initiatives require time, expertise, and scale to deliver on their promise of high returns. With the pandemic speeding up the need for quick data-driven decision-making, companies should act now to develop the skills, platforms, and processes that can enable them to achieve the full strategic, operational, and financial benefits from AI.

As part of a rigorous research program, ESI ThoughtLab economists benchmarked the AI practices, performance results, and three-year plans of 1,200 companies in 12 industries and 15 countries, which together have a combined revenue of $15.5 trillion (or about $12.9 billion per firm). Conducted during the COVID-19 outbreak, the study reveals the value that AI can bring in a socially distancing, digital-first world—including access to time-critical data, events-driven forecasts, personalized digital experiences, flexible work processes, rapid decision-making, tighter cybersecurity, and greater cost efficiencies.

But executives should not expect fast results

The research shows that delivering ROI on AI can be elusive for the uninitiated and slow going even for experienced organizations. Those in earlier stages of AI adoption often see flat results. It is not until they scale AI more widely across their enterprises and become leaders that the ROI rises to 4.3%. With frequently high upfront costs in data preparation, technology adoption, and people development, it takes an average of 17 months for a firm to reach break-even and months more to generate significant returns.

Most companies, even leaders, are still relatively early in their AI journey. Only about one-quarter of AI projects are now in widespread deployment among AI leaders. Many AI projects are still in pilot or early deployment stages. However, firms are planning to boost their AI investments by an average of 8.3% annually over the next three years, bringing their annual AI spend from $38 million currently (or 0.75% of revenue) to over $48 million.

The ROI of AI comes from strategic change

As companies progress in AI use, they often shift their focus from automating internal employee and customer processes to delivering on strategic goals. For example, 31% of AI leaders report increased revenue, 22% greater market share, 22% new products and services, 21% faster time-to-market, 21% global expansion, 19% creation of new business models, and 14% higher shareholder value. In fact, the AI-enabled functions showing the highest returns are all fundamental to rethinking business strategies for a digital-first world: strategic planning, supply chain management, product development, and distribution and logistics.

The study found that automakers are at the forefront of AI excellence, as they rush to use AI to deliver on every part of their business strategy, from upgrading production processes and improving safety features to developing self-driving cars. Of the 12 industries benchmarked in the study, automotive employs the largest AI teams (557 people on average vs. 370 for all industries) and has the largest AI budgets ($59.4 million on average vs. $38.3 for all industries). With the government actively supporting AI under its Society 5.0 program, Japanese companies lead the pack in AI adoption. Unlike in the US, where AI is viewed often as a threat to jobs, firms in Japan tend to see AI a way to fill the employment gap caused by an aging population and stringent immigration laws.

Driving high ROI from AI

To drive AI performance, executives should consider these best practices uncovered by the research:

  1. Begin with pilots, then scale AI applications across the enterprise. Companies starting out should work closely with business teams to identify use cases and demonstrate AI’s worth through pilots. But the true value of AI can materialize only with widescale deployment when firms can offset their upfront costs with substantial business gains.
  2. Lay a firm foundation. Organizations should have the proper IT and data management system in place; have a secure and sufficient budget; work through the data security, privacy, and ethical risks of AI; develop a clear vision and plan that takes into account AI-driven strategic transformation; obtain senior management support; and have a robust ecosystem of partners and suppliers.
  3. Get your data right. Nine out of ten AI leaders are advanced in data management. But ensuring your data is in good shape is not enough; organizations should bring in a diverse set of data, such as psychographic, geospatial, and real-time data. The study found that combining different types of data can create a multiplier effect on AI returns.
  4. Solve the human side of the equation. AI is as much about people as technology. AI leaders spend 27% of their AI budget on developing and hiring people, almost twice the percentage that AI beginners spend. They are also more apt to appoint specialists, such as Chief AI and Data Officers, to lead their AI initiatives. They outsource less and build internal teams more.
  5. Adopt a culture of collaboration and learning. About 85% of companies that generate large AI returns work to ensure close collaboration between AI experts and business teams. AI leaders are better at providing non-data-scientists with AI skills. They also decentralize AI authority to help ensure that AI responsibility and expertise is distributed across their organizations

“As the pandemic propels businesses into a digital-first world, AI will become a key driver of corporate growth  and competitiveness. But building proficiency in AI is not easy,” said Lou Celi, ESI ThoughtLab CEO and program director for Driving ROI through AI. “AI is not a magic bullet. It can fail to deliver results if the wrong business case is selected, the data is  prepared incorrectly, or the model is not built for scale.”

Additional information on the study can be found by visiting www.esithoughtlab.com or by contacting:

Lou Celi, Program Director
ESI ThoughtLab
917-459-4614
Lceli@esithoughtlab.com   		     Mike Daly, Marketing Director
    ESI ThoughtLab
    215-717-2777
    Mdaly@esithoughtlab.com  

 

About the research coalition 

ESI ThoughtLab is an innovative thought leadership firm that creates fresh thinking and actionable insights through rigorous research and evidence-based analysis. Our firm specializes in using the latest quantitative and qualitative tools to examine the impact of technology on companies, cities, industries, and business performance. ESI ThoughtLab is the thought leadership arm of Econsult Solutions, a leading economic consultancy, with direct links to the academic community.  

Appen collects and labels images, text, speech, audio, and video used to build and continuously improve the world’s most innovative artificial intelligence systems. With expertise in more than 180 languages, a global crowd of over 1 million skilled contractors, and the industry’s most advanced AI-assisted data annotation platform, Appen solutions provide the quality, security, and speed required by leaders in technology, automotive, financial services, retail, manufacturing, and governments worldwide. Founded in 1996, Appen has customers and offices around the world. 

Cognizant is one of the world’s leading professional services companies, transforming client’s business, operating, and technology models for the digital era. Our unique industry-based, consultative approach helps clients envision, build, and run more innovative and efficient businesses. Headquartered in the U.S., Cognizant is ranked 194 on the Fortune 500 and is consistently listed among the most admired companies in the world. 

Cortex is the enterprise SaaS solution for marketing executives at leading brands to predict the performance of their visuals using AI and machine learning. By leveraging Cortex’s powerful consumer insights, brands such as Marriot, Kao, Mondelez, and more are creating award-winning visual creative, at scale, that drives reliable results. 

Dataiku is the platform democratizing access to data and enabling enterprises to build their own path to AI. More than 300 customers and 30,000 users (from data scientists to architects to analysts) across retail, e-commerce, health care, finance, transportation, the public sector, manufacturing, pharmaceuticals, and more use Dataiku to massively scale AI efforts. 

DataRobot is the leader in enterprise AI, delivering trusted AI technology and ROI enablement services to global enterprises competing in today’s Intelligence Revolution. The company’s proven combination of cutting-edge software and world-class AI implementation, training, and support services empowers any organization—regardless of size, industry, or resources—to drive better business outcomes with AI. With a singular focus on AI since its inception, DataRobot has a proven track record of delivering AI with ROI. DataRobot has offices across the globe and $431 million in funding from top-tier firms, including New Enterprise Associates, Sapphire Ventures, Meritech, and DFJ Growth. For more information, please visit www.datarobot.com   

Deloitte provides industry-leading audit, consulting, tax, and advisory services to many of the world’s most admired brands, including nearly 90% of the Fortune 500® and more than 7,000 private companies. Our people work across the industry sectors that drive and shape today’s marketplace—delivering measurable and lasting results that help reinforce public trust in our capital markets, inspire clients to see challenges as opportunities to transform and thrive, and help lead the way toward a stronger economy and a healthy society. Deloitte is proud to be part of the largest global professional services network serving our clients in the markets that are most important to them. Now celebrating 175 years of service, our network of member firms spans more than 150 countries and territories. Learn how Deloitte’s more than 312,000 people worldwide make an impact that matters at www.deloitte.com. 

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the “Deloitte” name in the United States, and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see www.deloitte.com/about  to learn more about our global network of member firms. 

Publicis Sapient is a digital transformation partner helping established organizations get digitally enabled, both in the way they work and the way they serve their customers. We help unlock value through a start-up mindset and modern methods, fusing strategy, consulting, and customer experience with agile engineering and problem-solving creativity. As digital pioneers with 20,000 people and 53 offices around the globe, our experience spanning technology, data sciences, consulting, and customer obsession—combined with our culture of curiosity and relentlessness—enables us to accelerate our clients’ businesses through designing the products and services their customers truly value. Publicis Sapient is the digital business transformation hub of Publicis Groupe.  

COVID-19: The View from the C-Suite with Cognizant

by

The COVID-19 pandemic has not only upended society and inflicted tragic losses; it has also been a defining moment for business. The crisis has accelerated the use of modern technology, radically altered customer behavior, short-circuited business operations, and revised how employees get things done. To get a sense of how senior executives are responding to the crisis, Cognizant commissioned ThoughtLab to conduct a survey of 500 senior executives at U.S.-based companies. The companies ranged in size from $500 million in revenue to over $50 billion, and came from six industries: education, financial services, healthcare, life sciences, manufacturing and retail.

For most businesses, the pandemic has been a stress test, exposing failings in the way they operate. Management teams had to rush to close facilities and offices, rethink supply chains, defuse rising cyber threats, and preserve their bottom lines as the world economy tanked. Business continuity planning, scenario analysis, and corporate cultures strained to meet this unprecedented challenge.

Many of the practices that have become commonplace during this time—from online commerce and banking, to remote working and healthcare, to digital learning and entertainment—will continue to be our new normal long after the crisis subsides. One big shift will be a rapid acceleration of digital initiatives to keep pace with the fast-changing expectations and behaviors of customers and employees. But perhaps most important, the health and well-being of people and the world has become a shared business mission, as companies expand their thinking from shareholder to stakeholder value.