Mark McDonald, a year-after-year favorite WTN Fusion speaker, created a compelling case for Information Technology’s next revolution at the recent Fusion 2017 conference. Mainframe computers, the first innovation, made Information Technology (IT) a specialty that enabled organizations to scale their operations. Client Servers, the next innovation, and the software they deployed allowed processes to be dramatically improved and automated – think ERP systems, on-line purchasing, and Human Resource systems. Next came mobile computing and the digital transformation of businesses that greatly enhanced customer experience. All of these stages were ones of mechanization, with hardware and software replacing previously manual activities.
The next wave of IT-related change brings widespread adoption of Artificial Intelligence (AI), transforming IT’s focus from managing processes and experiences to managing outcomes. Large database tools, cloud computing, machine learning, interpreting text, and affordable storage and computational power have collectively moved AI from the imagination and science fiction pages to the marketplace. Whereas the first generation of IT delivered more user-friendly and informative car dashboards and automated braking, AI enables autonomously driven vehicles.
The changes induced in business by AI will no longer be mechanical, but rather, largely human, according to McDonald. AI can augment human capability (IBM Watson’s use in medical diagnosis), completely replace workers (automated mining), and enable work that men and women could never do without AI (making sense out of gigabytes of textual and digital data instantaneously). “In the emerging world, Shadow IT (i.e., the adoption of IT solutions not housed in or led by the IT department) is not an exception to the rule, but a fact,” McDonald stated.
We have models of businesses where AI is the heart of the business’ success – Facebook and Google, LYFT and Uber. These types of businesses will become the norm, not the exception, in the next wave of change. An article I read on the “Hospital of the Future,” for example, compared the future hospital to an Air Traffic Control Center: patients stay in their homes while AI serves as air traffic control for the patients’ needs. AI will alert nurses and doctors on when they need to interact with patients. In this world, surgeons will guide surgical robots placed across the globe, and AI will replace the radiologists who read scans. If hospitals—a prime example of a business based on human interactions—can become digitally-based businesses with many routine activities operated by AI, most other businesses can as well. Leading healthcare centers have many aspects of the hospital of the future already implemented.
These changes bode significant upheavals for IT organizations. QBE Insurance Group Ltd provided a compelling example at Fusion. The company is a global specialty insurer, working in 110 countries. To remain a leader, the company reduced its IT department from 3,000 people spread across business units to 130 centralized staff who manage IT partners, cyber security, and new development projects.
Concurrently, QBE created a Global Innovation Lab. The Innovation Lab works to advance the core competency of QBE – assessing risks in order to make sound underwriting decisions. For example, the team placed sensors on shipping containers so they could track them and weather conditions across the sea, creating fresh insights into shipping risks and its underwriting.
These changes have brought QBE needed flexibility and the freedom to innovate versus wasting talent on legacy systems. Outside IT partners not only manage legacy systems but also serve as implementers for experiments conceived of and tested in the Innovation Lab (and, if successful, developed by IT and the business units until handed off to partners to operationalize).
Success in the future will require your organization to unlock itself from legacy systems, ways of doing things, business models and beliefs. Create a vision of the outcomes you want to promise your customers and how you will achieve them. The future will be here faster than you think.
Kay Plantes is an MIT-trained economist, business strategy consultant, columnist and author. Business model innovation, strategic leadership and smart economic policies are her professional passions. She resides in San Diego, California but still considers Madison home. She is the author of Beyond Price. This post was originally posted at Kay’s blog ~ Business Model Innovation.
The opinions expressed herein or statements made in the above column are solely those of the author, and do not necessarily reflect the views of WTN Media, LLC. WTN accepts no legal liability or responsibility for any claims made or opinions expressed herein.