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News & Trends: Consultancy reports on AI, tech spend & digital fragmentation

Gartner: AI will create 2 million net-new jobs in 2025

We’re nowhere near the point where machine learning algorithms could become self-aware, much less develop an unrelenting grudge against mankind. Photo Courtesy of 123rf.com | Andrea Danti

We’re nowhere near the point where machine learning algorithms could become self-aware, much less develop an unrelenting grudge against mankind.
Photo Courtesy of 123rf.com | Andrea Danti

2020 will be a pivotal year in AI-related employment dynamics, according to Gartner, as artificial intelligence (AI) will become a positive job motivator. The number of jobs affected by AI will vary by industry; through 2019, healthcare, the public sector and education will see continuously growing job demand while manufacturing will be hit the hardest. Starting in 2020, AI-related job creation will cross into positive territory, reaching two million net-new jobs in 2025.

“Many significant innovations in the past have been associated with a transition period of temporary job loss, followed by recovery, then business transformation, and AI will likely follow this route,” says Svetlana Sicular, research vice president at Gartner.

According to Sicular, AI will improve the productivity of many jobs, eliminating millions of middle- and low-level positions, while creating millions more new positions of highly skilled, management and even the entry-level and low-skilled variety. “Unfortunately, most calamitous warnings of job losses confuse AI with automation that overshadows the greatest AI benefit – AI augmentation – a combination of human and artificial intelligence, where both complement each other,” Sicular says.

IT leaders should not only focus on the projected net increase of jobs. With each investment in AI-enabled technologies, they must take into consideration what jobs will be lost, what jobs will be created, and how it will transform how workers collaborate with others, make decisions and get work done.

“Now is the time to really impact your long-term AI direction,” Sicular adds. “For the greatest value, focus on augmenting people with AI. Enrich people’s jobs, reimagine old tasks and create new industries. Transform your culture to make it rapidly adaptable to AI-related opportunities or threats.”

AI has already been applied to highly repeatable tasks where large quantities of observations and decisions can be analyzed for patterns. However, applying AI to less-routine work that is more varied due to lower repeatability will soon start yielding superior benefits. AI applied to non-routine work is more likely to assist humans than replace them as combinations of humans and machines will perform more effectively than either human experts or AI-driven machines working alone will.

Gartner predicts that by 2022, one in five workers engaged in mostly non-routine tasks will rely on AI to do a job.

“Companies are just beginning to seize the opportunity to improve non-routine work through AI by applying it to general-purpose tools. Once knowledge workers incorporate AI into their work processes as a virtual secretary or intern, robo-employees will become a competitive necessity,” says Craig Roth, research vice president at Gartner.

Leveraging technologies such as AI and robotics, retailers will use intelligent process automation to identify, optimize and automate labor-intensive and repetitive activities that are currently performed by humans, reducing labor costs through efficiency from headquarters to distribution centers and stores. Many retailers are already expanding technology use to improve the in-store check-out process.

Through 2022, multichannel retailer efforts to replace sales associates through AI will prove unsuccessful, although cashier and operational jobs will be disrupted. However, research suggests that many consumers still prefer to interact with a knowledgeable sales associate when visiting a store, particularly in specialized areas such as home improvement, drugstores and cosmetics, where informed associates can make a significant impact on customer satisfaction. Though they will reduce labor used for check-out and other operational activities, retailers will find it difficult to eliminate traditional sales advisers.

“Retailers will be able to make labor savings by eliminating highly repetitive and transactional jobs, but will need to reinvest some of those savings into training associates who can enhance the customer experience,” says Robert Hetu, research director at Gartner. “As such, most retailers will come to view AI as a way to augment customer experiences rather than just removing humans from every process.”

While many industries will receive growing business value from AI, manufacturing is one that will receive a massive share of the business value opportunity. Automation will lead to cost savings, while the removal of friction in value chains will increase revenue further, for example, in the optimization of supply chains and go-to-market activities.

In 2021, AI augmentation will generate $2.9 trillion in business value and recover 6.2 billion hours of worker productivity, according to Gartner. However, some industries, such as outsourcing, are seeing a fundamental change in their business models, whereby the cost reduction from AI and the resulting productivity improvement must be reinvested to allow reinvention and the perusal of new business model opportunities.

Forrester predicts that U.S. business and government tech spending will surpass $1.5 trillion in 2018. Photo Courtesy of 123rf.com | ©?

Forrester predicts that U.S. business and government tech spending will surpass $1.5 trillion in 2018.
Photo Courtesy of 123rf.com | ©?

Forrester: U.S. tech spending to surpass $1.5 trillion in 2018

Forrester predicts that U.S. business and government tech spending will surpass $1.5 trillion in 2018, up nearly 6 percent from 2017. In its newly published 2018 outlook for U.S. industry tech budgets, Forrester reveals industries with the fastest-growing tech budgets as well as the technologies they’re choosing to invest in.

The key findings from the research:

  • The 5.8 percent increase in U.S. tech spending is concentrated in tech staff salaries and benefits, tech outsourcing purchases, software and tech consulting, and systems integration services.
  • The U.S. tech budget will grow faster than nominal GDP in 2018 due to the rising adoption of cloud solutions and an increased use of business technology.
  • Although U.S. industries vary widely in terms of growth, half will have growth rates that exceed the overall U.S. tech growth rate. Ten industries will see growth of 7 percent or more in their 2018 tech budgets.
  • The chemicals and insurance industries will see the biggest tech budget growth in 2018, with an increase of approximately 11 percent and 10 percent, respectively
  • Although the retail industry will experience lower growth in its tech budgets, it is expected to dedicate 45 percent of that budget to business technology.

Accenture: ‘Digital fragmentation’ poses threat to innovation

The trend of “digital globalization,” powered by the free flow of data, is giving way to “digital fragmentation.” Photo Courtesy of 123rf.com | © marinv

The trend of “digital globalization,” powered by the free flow of data, is giving way to “digital fragmentation.”
Photo Courtesy of 123rf.com | © marinv

A new report from Accenture warns that “digital fragmentation” – the rise in restrictions on the free flow of data, IT products, IT services and IT talent across country borders – is disrupting the global business environment and could inhibit companies’ strategies for growth and innovation. The report, “Digital Fragmentation: Adapt to Succeed in a Fragmented World,” argues that national policies causing digital fragmentation are often created with good intentions, such as improving data privacy and cybersecurity. It maintains that greater collaboration between companies and governments can help such policies meet their objectives while stimulating, rather than inhibiting, innovation and the use of new technologies.

The report reveals that 74 percent of more than 400 chief information officers (CIOs) and chief technology officers (CTOs) surveyed expect to exit a geographic market, delay their market-entry plans or abandon market-entry plans in the next three years as a result of increased barriers to globalization. It shows that the number of restrictive trade measures adopted by G20 members has quadrupled from 324 in 2010 to 1,263 in 2016; and the number of countries with data privacy laws has tripled from 34 in 1995 to more than 100 in 2015.

As a result of such developments, the trend of “digital globalization,” powered by the free flow of data, is giving way to “digital fragmentation.”

More than half of the business leaders surveyed believe that the increasing barriers to globalization will compromise their ability to: use or provide cloud-based services (cited by 54 percent of respondents, versus 14 percent that disagree); use or provide data and analytics services across national markets (54 percent versus 15 percent); and operate effectively across different national IT standards (58 percent versus 18 percent).

“Moves against globalization are forcing companies to make fundamental changes to key strategic and operational plans across global IT architectures, the recruitment of IT talent, the physical location of IT and cybersecurity,” say Omar Abbosh, Accenture’s chief strategy officer. “Regulation can provide critical safeguards in the digital economy. But it should be designed to stimulate, rather than inhibit, growth and innovation. Stronger dialogue between business and government is required.”

According to the report, more than half of business leaders surveyed believe that these increasing barriers to globalization will force their companies to rethink their: global IT architectures (cited by 60 percent of respondents); physical IT location strategy (52 percent); cybersecurity strategy and capabilities (51 percent); relationship with local and global IT suppliers (50 percent); and geographic strategy for IT talent (50 percent).

Ninety-one percent of survey respondents also expect increasing barriers to globalization to raise IT costs over the next three years. Areas most affected will be sourcing inputs such as IT talent; the need to multiply IT infrastructure, such as data centers; and compliance with multiple national IT standards.

“Contrary to the rhetoric of many digital evangelists, national borders do matter,” adds Armen Ovanessoff, principal director at Accenture Research. “Business   are waking up to their responsibility in helping shape the rules of our digital future. Given the transformations taking place in artificial intelligence, bio-technology and the Internet of Things, it’s clear that this is just the beginning of a complex journey that demands cross-border and cross-sectoral cooperation.”

Many companies are beginning to plan their response to increasing fragmentation, according to the report. Four in five (80 percent) of the companies surveyed said they are already factoring obstacles to globalization in their strategic planning. About half (51 percent) are already reorganizing their global IT architectures and governance structures in response. Two-thirds (67 percent) are now investing in automation to offset labor restrictions.

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