Governance Insights Center
Technology series
Emerging technologies
December 2017
The Essential Eight technologies
Board byte: artificial intelligence
Artificial intelligence is changing how companies
do business. What should boards know?
Companies across industries are using,
investing in or planning to invest in
artificial intelligence (AI). AI is improving
industry processes and making
machines “smart.” It is expected to be
one of the most disruptive technologies
impacting industry and business. As
the market for AI grows, boards should
understand how this technology will
affect their company’s strategy.
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PwC Governance Insights Center
Technology series
AI is wide-ranging We’ve all heard of artificial intelligence (AI). It’s in the movies
and is now in our everyday lives at home and work. AI is
AI is an umbrella term for “smart”
more than just a single independent technology. It’s making
technologies that are aware of and
can learn from their environments. smart devices smarter, data more valuable and cloud-based
Robotic process automation (RPA), tools more efficient. It’s turning autonomous vehicles into
machine learning, natural language
reality. It will disrupt business models, create new ways
processing and neural networks all
incorporate AI into their operations. of working and facilitate digital transformation. In the
What are they? not-so-distant future, most technology applications will
• RPA software automates
likely incorporate or harness the output of some form
repetitive business, industrial of artificial intelligence.
and other tasks. RPA can help
users in the back office optimize
their processes. So what is it, exactly? In a nutshell, AI enables computers
• Machine learning allows computer
and other devices to perceive, analyze and adapt to
systems to learn from data and their environments. Using software algorithms, these
recognize patterns, predict devices can perform tasks that would normally require
outcomes, assist humans with
understanding or suggest actions
human intelligence. AI enables machines to sense their
(becoming “smart”) without being environments, think, learn and respond on their own,
explicitly programmed. Among becoming increasingly autonomous. In effect, AI allows
other things, machine learning can
machines to contribute more intelligently to business
inform decision-making and make
process automation more flexible.1 activities. They do this by recognizing and interpreting
digitized text, sound and images, making it possible to
• Natural language processing
(NLP) interprets aspects of
answer questions, suggest solutions and diagnose problems
natural spoken language or text or take actions. As a result, AI can reduce the amount of rote
in order to provide insights or work humans are faced with everyday.
enable functions. NLP allows
computer systems to analyze and
understand the human language.
• Neural networks are interconnected
networks of artificial neurons, or
nodes, that simulate human brain
cells. They’re designed to learn
from labeled patterns in data that
flow through the network layer by
layer. They record what they learn
by weighting or unweighting an
“Just as electricity is fundamental to the way we live,
input – to determine how correct in the not-so-distant future, it is not hard to see how
or incorrect it is – with the ultimate
goal of using probability to solve AI will become the new electricity – embedded and/or
the task being performed. Deep
learning is machine learning supporting just about every aspect of our life.”
using several hidden layers of
neural networks. – Daniel Eckert, PwC's Emerging Tech Leader
Board byte: artificial intelligence 2
PwC Governance Insights Center
Technology series
AI: the future of everything?
After analyzing more than 150 emerging technologies,
72% of business PwC categorized AI as one of its Essential Eight
leaders believe AI will be technologies. AI is transforming all industries. In fact,
CEOs agree that AI will impact every facet of business,
the business advantage offering unprecedented ways to innovate and grow
of the future. companies in nearly every industry. And the market for AI is
growing – fast. In 2016, the AI market attracted more than
– PwC, 20th Global CEO Survey, 2017 $3 billion in venture funding.2 The total projected market is
expected to reach $70 billion by 2020.3 According to PwC’s
2017 Global Digital IQ Survey, the number of companies that
are investing or have plans to invest in AI is second only to
those investing in the internet of things (IoT).
So why are companies investing in this technology?
Companies are looking at AI as a means to foster innovation,
optimize business efficiency and improve productivity. AI also
enables other emerging technologies, like robots and the IoT,
and it can improve data analytics.
Artifical intelligence investment in three years by industry
80%
74%
68% 67% 66%
59% 58% 58% 56%
51%
Hospitality Healthcare Technology, Public Financial Industrial Retail & Energy & Power & Automotive
& Leisure Media Sector Services Products Consumer Mining Utilities
& Telecomm
Source: PwC, 2017 Global Digital IQ® Survey.
Bases: Automotive: 72; Energy & Mining: 135; Financial Services: 332; Healthcare: 237; Hospitality & Leisure: 75; Industrial Products: 375; Power & Utilities: 131;
Public Sector: 156; Retail & Consumer: 217; Technology, Media & Telecommunications: 433
Board byte: artificial intelligence 3
PwC Governance Insights Center
Technology series
AI in action today
• Jeeves goes digital – Digital assistants – AI programs
that help people get answers to questions and perform
tasks and services – are most commonly used at home,
through mobile devices or computers. They can interpret
language to search vast amounts of information for
answers to questions, make changes to your calendar and
even control some household appliances and smart home
devices with verbal commands – part of the IoT. Forty-
two percent of consumers already use them, and 72% of
business executives do.4 What else is coming?
AI assistants as tutors, travel agents and tax preparers.
• Never forget a face – Uploading your pictures to social
media and tagging your friends? Often, their names pop
right up, thanks to AI. But there’s more to facial recognition
technology today than what you see on Facebook.
Companies in the advertising, security and automotive
industries are using image recognition, machine learning and
deep learning to better serve customers. The data from an
image can help identify customer preferences and offer new
suggestions. Its benefits also extend to law enforcement – the
data can be used to detect suspicious behavior. And it can
help Alzheimer’s patients and the visually impaired as well.
• AI in the sky – Some researchers are looking to AI to
develop a “smarter” autopilot that does more than fly pre-
planned flight paths. The autopilot can learn how to adapt
to changing conditions, such as bad weather or engine
failure, by studying pilot actions and sorting through flight
data. Airlines are also starting to use AI outside of the
cockpit for preventative and predictive maintenance, as well
as for route management, booking and customer service.
Board byte: artificial intelligence 4
PwC Governance Insights Center
Technology series
Four ways to apply AI,
from simple to advanced:
What’s next for AI?
• Automated intelligence
is the automation of manual
or cognitive tasks and does
not involve new ways of doing Transforming healthcare. AI is fast becoming
things (e.g., software that a critical part of the healthcare industry. A vast
compares documents and spots amount of patient healthcare data has been
inconsistencies and errors).
collected in recent years. With AI, that data
can be sorted, organized and interpreted,
• Assisted intelligence
improves what people and
helping doctors and nurses make better and more efficient
organizations are doing today, patient care decisions. The healthcare industry can also use
helping people perform tasks AI for diagnostics, for example, to detect small variations
better (e.g., industrial robots, within patients’ health data, compare them to similar
medical image classification,
patients, and enhance imaging diagnostics in radiology and
paper check reading and
verification by a bank’s ATM). pathology. AI can also help identify potential pandemics
early and track the incidence of diseases to help prevent or
• Augmented intelligence contain their spread.5
enables them to do things they
otherwise couldn’t do and make
better decisions (e.g., Netflix
suggesting viewing choices for AI is changing the relationship between
users based on a customer’s humans and machines. Leaders across
patterns of behavior and those industries are banking on the connection
of the broader audience, guided between human and artificial intelligence. AI
personal budgeting).
could process, analyze and evaluate the vast
amounts of data generated today, allowing humans to focus
• Autonomous intelligence
automates the decision-making on creative high-level thinking. Companies are also thinking
process without human about what AI could mean for their workforce. How will AI
intervention, establishing affect employees? Will it change the kinds of skills we need?
machines that act on their own How will humans and machines work together? Do we pair
(e.g., automated trading in stock
markets, fully autonomous
our best people with the technology so it can learn from
self-driving cars, full-fledged them? Or do we have the technology handle certain tasks
language translation programs). while employees focus on others?
Board byte: artificial intelligence 5
PwC Governance Insights Center
Technology series
Adoption benefits and barriers
Companies adopting AI expect to see increased productivity.
76% of CEOs are New efficiencies can be derived from streamlining tasks that
concerned about the previously took humans weeks to complete and improving
work processes by pairing people and machines in new
possibility of unintended ways. Many businesses also believe AI will accelerate and
biases creeping into enhance innovation, creating new jobs. And some expect to
AI algorithms or see increased consumer demand from more personalized and
higher-quality AI-enhanced products and services.
decision-making models.
– PwC, Global CEO Pulse Survey, Some worry that AI and automation will end up eliminating
April 2017. jobs. But to capitalize on the technology, companies will need
to hire people with AI experience or the skills to analyze and
use the data. This talent is in short supply, though, which
means securing it could become expensive. Companies
also need the computing power and system infrastructure
to support AI-enabled products and services, and they need
platforms to organize and integrate their data. Getting this
infrastructure in place can be costly.
The data collected by AI presents another big challenge.
How do companies ensure it is valid? What limits do they
need to put on its use? Can safeguards ensure that machines
carry out human orders as intended? There are concerns
that unintended biases may find their way into AI algorithms
or decision-making models. Companies need to establish
strong controls to prevent this from happening and monitor
the systems that learn through AI. Letting stakeholders know
about the company’s oversight can help establish trust with
stakeholders that companies are using AI responsibly. And
given the vast amounts of data collected by AI, privacy and
data protection are other big concerns.
Board byte: artificial intelligence 6
PwC Governance Insights Center
Technology series
Questions boards can ask
Boards will want to understand AI’s opportunities, and its
risks. Here are some questions boards can ask management
about how AI will fit into the company’s strategy:
Have we considered how AI could transform our products
or services and which aspects of our business could
benefit from increased automation or machine learning?
Have we considered the potential efficiency and
productivity benefits that may come with adopting AI?
How might AI fit with other emerging technologies we
are investing in?
Do we have the computing power and infrastructure to
support the use of AI? Do we have the digital skills and
talent to move forward?
How will we gain the trust of our stakeholders if we use AI?
How can we ensure that biases do not alter AI decisions?
Do we have established practices and controls in place to
minimize any reputational or other risks?
Have we thought about how we would use data collected
by AI? Have we considered cyber risks and data
privacy issues?
Boards that develop a basic understanding of AI and the
other Essential Eight technologies can better oversee
management’s decisions on which of these technologies are
most relevant to the company’s business and most likely to
create strategic opportunities.
For more resources on what boards should know about the
Essential Eight and digital transformation, go to our website,
Digital hub: insights for corporate board members.
Find additional resources on AI and emerging
technologies on PwC’s Next in Tech hub.
Board byte: artificial intelligence 7
Contacts Project team
For a deeper discussion about how this topic Elizabeth Strott
might impact your business, please contact: Senior Research Fellow
US Integrated Content Team
Vicki Huff Eckert
Global and US New Venture
Chrisie Wendin
and Innovation Leader
Editorial Director, Technology
(408) 817 4136
US Integrated Content Team
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Karen Bissell
Paula Loop
Marketing
Leader, Governance Insights Center
Governance Insights Center
(646) 471 1881
[Link]@[Link]
Felipe Oppen
Design
Barbara Berlin
Creative Team
Director, Governance Insights Center
(973) 236 5349
Ryan Lasko
[Link]@[Link]
Design
Creative Team
1.
Tami McQueen, “The Future of Artificial Intelligence Will Amplify And Catalyze Workflows,” Forbes, October 3, 2017; [Link]
forbescommunicationscouncil/2017/10/03/the-future-of-artificial-intelligence-will-amplify-and-catalyze-workflows/2/#1735cb412293.
2.
PwC, US Moneytree Report, 2016.
3.
PwC, Consumer Intelligence Series: [Link]: A revolutionary partnership, How AI is pushing man and machine closer together, April 2017.
4.
Ibid
5.
Brian Wilson, “Enabling better healthcare with artificial intelligence,” PwC Next in Tech blog, August 28, 2017;
[Link]
[Link]
This content is for general information purposes only, and should not be a substitute for consultation with professional advisors.
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