Friday, October 27, 2017

Digital Intelligence Weekly by Kevin Benedict

Kevin Benedict's
Center for Digital Intelligence
In this weekly report I collect, curate and comment on subjects related to emerging technologies and digital trends.  I hope you find it useful.

Question: Where are VC's placing their money today?  Answer: Vijay Pande, a general partner at Andreessen Horowitz, says, “We’re interested in companies in the healthcare and biology space with machine learning at their core."

Question: When will Twitter finally be profitable according to GAAP rules?  Answer: The fourth quarter of 2017 according to Reuters. KRB Comment:  Google, Microsoft and Facebook all had great quarters, so it is about time for Twitter to be profitable.

Question:  How can the German e-commerce company, Otto, predict, with 90% accuracy, what they will sell in the next 30 days?  Answer: They use artificial intelligence (AI) to analyze around 3 billion past transactions and 200 variables (such as past sales, searches on Otto’s site and weather information) to predict what customers will buy each week.  The AI system has proved so reliable—it predicts with 90% accuracy what will be sold within 30 days.  Source: The Economist  KRB Comment: Those numbers are truly impressive, and Otto now let's the AI system order products in advance of sales, WOW!  The list of functions that AI can do better than humans is growing quickly.

Question:  How do you keep IT resources and call centers busy?  Answer: Buy PCs instead of Macs.  IBM noted that PC users drive twice the number of support calls compared to Mac users, and that PC support tickets require desk side support by IT personnel five times as often. Macs will save enterprise customers $270/user in support costs compared to a Windows PC.  Source - Apple Insider  KRB Comment: Anybody that has ever switched from a PC to a Mac could have told them this same information.

Question: How do you shrink your IT services business?  Answer: Focus on supporting legacy systems.  "The digital portion of the IT services market is growing at 20%, while the legacy arbitrage portion of the market shrank by 2.8% last quarter,” reported Peter Bendor-Samuel, CEO of Dallas-based Everest Group.  KRB Comment: The digital portion of services needs to include digital strategy and a healthy dose of change management.  Cultural issues are big problems in companies involved in digital transformation.

Question: How are first mover CIOs in machine learning different than other CIOs?  Answer: According to Oxford Economics, more than 70% of machine learning first-mover CIOs have developed a roadmap for changing business process, compared with just 33% of others.  KRB Comment: This data suggests first movers understand that digital transformation and machine learning aren't just add-ons, but represent a new and different paradigm that involves the entire organization.

Question: What are the biggest challenges to implementing machine learning?  Answer: According to Oxford Economics, 51% of responding CIOs say data quality is the top barrier to adoption, while 48% cite outdated processes.  KRB Comment: I have been involved in and around enterprise IT for over 30-years, and these are the same problems.  IT can't escape them, and the business still resists paying to fix them.

Question: How do you maximize the value of machine learning?  Answer: According to Oxford Economics, “Unless CIOs turn their attention to updating not just technology, but talent and business processes, the full value of machine learning cannot be realized,” the study states. In other words, machine learning will not let you skip over the difficult talent and culture change issues associated with it.  KRB Comment: I agree that organizational culture is one of the biggest challenges.  Read my article here on this subject.

Question: How are delivery companies responding to the increase in online ordering?  Answer: UPS, for one, plans to spend more on bigger package-handling facilities, planes and other capacity upgrades.  "We are investing in order to build our network, not just for the next year or two, but for the next generation,” UPS Chief Financial Officer Richard Peretz said on a call with analysts. “If we can move a little faster, it’s always going to be the best thing we can do.” Source.  KRB Comment: Moving faster than is humanly possible requires automation and robotics.  Read my article on speed here.

Question: How do you track where your Turkey has been before it goes in your stomach on Thanksgiving day?  Answer: Minnesota-based Cargill is using blockchain to build a series of links that will help track individual turkeys from farms to processing lines and ultimately to grocery stores and your stomach. Each turkey in the program will bear a tag with a code that consumers can punch into a website, which will take them to a website detailing the farm that raised it. SourceKRB Comment:  ...but did they have friends?  It's not just the chopping block, but blockchain for Turkeys today.

Question: What digital transformation news this week shook up the pharmaceutical industry?  Answer: News that Amazon had received pharmacy-wholesaler licenses in a dozen states triggered a sell-off in the online pharmaceutical industry. Executives in the drug industry say Amazon could use its expansive online reach and its logistical muscle to threaten companies that ship and sell medicines to consumers and cut pricing deals with drug makers. SourceKRB Comment:  If your company is in an industry where inefficiencies and market friction has been tolerated, watch out!  Amazon is coming.

Kevin Benedict provides advisory, strategy and consulting services.

Kevin Benedict
Principal Analyst, Futurist, the Center for Digital Intelligence™
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***Full Disclosure: These are my personal opinions. No company is silly enough to claim them. I work with and have worked with many of the companies mentioned in my articles.