Dbriefs 082615 Tmt Slidesfinal YES

The Dbriefs TMT series presents:

Cognitive computing: How AI-based capabilities are transforming businesses

Host: Paul Sallomi, Partner, Deloitte Tax LLP

Presenters: Bob Dalton, Principal, Deloitte Consulting LLPDavid Schatsky, Senior Manager, Deloitte LLP

August 26, 2015

Copyright 2015 Deloitte Development LLC. All rights reserved.

Agenda

What is cognitive computing? Cognitive computing technology landscape and

dynamics Business impact of cognitive technologies Key takeaways

What is cognitive computing?


Lots of hype surrounding artificial intelligence

1 Erik Brynjolfsson and Andrew McAfee, The Second Machine Age; 2 Nick Bostrom, Super intelligence; 3 Ray Kurzweil, The Singularity is Near

Credit: Peter Yang/Wired (c) Conde Nast

More important than anything since the

Industrial Revolution1

Human-level machine intelligence has a fairly sizeable chance of being developed by mid-century2

By 2045, machine intelligence will be one billion times more powerful than all human intelligence today3


Also, a measure of doomsaying

1 Carl Benedikt Frey and Michael A. Osborne, The future of employment: How susceptible are jobs to computerisation?, Oxford Martin School, University of Oxford, September 17, 2013; 2 Elon Musk, http://www.theguardian.com/technology/2014/oct/27/elon-musk-artificial-intelligence-ai-biggest-existential-threat; 3 http://www.independent.co.uk/news/science/stephen-hawking-transcendence-looks-at-the-implications-of-artificial-intelligence--but-are-we-taking-ai-seriously-enough-9313474.html

We should be very careful about artificial

intelligenceits our biggest

existential threat2Elon Musk

About 47 percent of total US employment is at risk1

Frey and Osborne, University of Oxford

We are facing potentially the best or worst thing to happen to humanity in history3

Stephen Hawking


New technologies require new thinking

1 Beyond Automation, Harvard Business Review (June 2015), https://hbr.org/2015/06/beyond-automation

What new feats might people achieve if they had better thinking machines to assist them? Instead of seeing work as a zero-sum game with machines taking an ever greater share, we might see growing possibilities for employment. We could reframe the threat of automation as an opportunity for augmentation.1

Tom Davenport and Julia Kirby


Artificial intelligence (AI). The theory and development of computer systems that are able to perform tasks that normally require human intelligence.

The terminology

Cognitive technologies. Tangible products of the field of AI, simulate perceptual and cognitive skills to perform tasks only humans used to be able to do.

Cognitive computing: The application of cognitive technologies to business problems.


Illustration of cognitive computing (Video)


Advances in a wide range of technologies are driving the growth in cognitive computing


Poll question #1

Does your company have a cognitive computing strategy in place?

Yes No Only cognitive computing initiative(s) in place, but not a

strategy We will have strategy in place in the next 12 months We will have strategy in place in 1224 months Dont know

Cognitive computing technology landscape and dynamics


$9 billion of investments in the last 4 years

Source: Capital IQ

$1.9 $2.0

$3.1

$2.0

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

2012 2013 2014 2015

US Private Investments in Cognitive Technology Companies ($B)*

*VC funding flowing to companies creating or employing cognitive technologies as of August 10, 2015


and 240+ M&A deals

4860

80

53

0102030405060708090

2012 2013 2014 2015

Cognitive Technology M&A Deals*

Source: Capital IQ

*Acquisitions of companies creating or employing cognitive technologies as of August 10, 2015


Performance of underlying cognitive technologies is improving

1 Facebook, DeepFace: Closing the gap to human-level performance in face verification, https://www.facebook.com/publications/546316888800776/, accessed October 3, 2014; 2 Apple Insider, Tests find Apples Siri improving, but Google Now voice search slightly better, http://appleinsider.com/articles/14/07/22/tests-find-apples-siri-improving-but-google-now-voice-search-slightly-better, accessed October 3, 2014; 3 IBM, IBM Watson, http://www-03.ibm.com/press/us/en/presskit/27297.wss, accessed October 3, 2014.

Facebook facial recognition: 97% accuracy1

IBM Watson 2400% smarter than when it won Jeopardy!3

Google Now speech recognition: 98% accuracy in 2014 vs. 84% in 20122


Commercialization and improving performance expand applications

Improving performance and commercialization fueled by surging investment expand the applications for cognitive technologies.


Applications are broadening

Amazon flow and Seventh Generation photo: 2015 David Schatsky

conclusion

As performance improves, applications of speech recognition, computer vision, and natural language processing and understanding are growing.


Poll question #2

What do you believe the major benefit of cognitive computing will be?

Cutting costs through workforce reduction Scaling our business Innovating in products or services Empowering workers to do better work Uncovering valuable insights that can improve our

operations or strategy None of these benefits


Example of cognitive computing technology at work:IBM Watson Oncology (Video)


Understanding Watson

Smart machines and cognitive computing Cognitive computing enters the enterprise Our take: the disruptive power of cognitive

computing Here comes WatsonIBMs billion-dollar baby IBM investments in Watson Sizing up Watsons competition What makes Watson unique The Watson EcosystemBuilding blocks of the Watson architecture Architecture overview Watson Advisors Watson Platform Components Watson Platform Services Watson Data Services Watson Foundation Products

Lets pick Watsons brain How Watson works Problems suitable for Watson Guidelines for an effective Watson knowledge

database Data sources usable by Watson Problems not suitable for Watson Our take: Watsons limitationsWatson in action Watson use cases Case study: changing the world of health care


IBM Watson involves multiple componentsBringing Watson to market

Watson Engagement Advisor

Watson Discovery Advisor Watson Policy Advisor Watson Decision Advisor

Offerings:

Watson Explorer Watson Analytics Watson Curator

Products:

Watson for Wealth Management

Watson for Oncology Chef Watson

Applications:

Watson Zone on Bluemix Watson Developer Cloud Watson Tooling

Platform:


Example of cognitive computing technology at work:IBM Watson Ted Talks demo (Video)


Poll question #3

Has your organization considered possible use cases for IBM Watson?

We would probably not be interested in Watson We intend to learn more about Watson We have done some research on Watson, but no formal

evaluation We have formally evaluated/are formally evaluating

some use cases for Watson We have initiated a project to implement Watson Dont know/not applicable

Business impact of cognitive technologies


Three main applications of cognitive technologies: Product, process and insight

A review of 100 applications across 17 sectors revealed three main categories of application.


Product: Embedding cognitive technologies in a product or service

Embed cognitive technologies to help increase the value of products or services by making them more effective, convenient, safer, faster, distinctive, or otherwise more valuable.

eBayNetflix

GM Dominos Pizza

AudiVuCOMP


Using computer systems to do work that people used to do. The work gets done faster, cheaper, better, or some combination of the three. Organization benefits.

Process: Automate tasks or processes humans used to do

Automate internal help desk

Automated earnings reports


Insight: Discerning patterns and making predictions to improve operations or guide strategy

Generate insights that can help reduce costs, improve efficiency, increase revenues, improve effectiveness, or enhance customer service. Intel Stevia First BBVA Compass Aetna


Poll question #4

Which application of cognitive technologies will see the highest rate of adoption?

Product Process Insight All three above are compelling Not sure


Each application has distinct impacts on work and workersCognitive technologies are automating work

Automating customers work

Automating an organizations own work

Automating insight


Approach to deciding where to apply cognitive technologies in an organization


Poll question #5

Which business functions do you believe will be most affected by cognitive computing technologies?

Product/service development Sales and marketing Core business operations Back-office (finance, HR, etc.) Supply chain Others

Key takeaways


Understand how these technologies enable new, better ways of working.Prepare to adopt when appropriate, or risk being sidelined.

Begin today to explore cognitive technologies

Automating tasks only people used to be able to do, creatingentirely new capabilities.

Something new and important is happening

Large-scale investment in commercialization and continual performance improvements are driving adoption.

Applications are found in every sector

An opportunity to differentiateThe use of cognitive technologies can confer competitive advantage today. It will become table stakes tomorrow.

Key takeaways

Question and answer

Join us September 15 at 1 PM ET as our TMT series presents:

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Paul SallomiUS and Global Technology Sector LeaderDeloitte Tax [email protected]

Bob DaltonPrincipalDeloitte Consulting [email protected]

David SchatskySenior ManagerDeloitte [email protected]

Contact info


This presentation contains general information only and Deloitte is not, by means of this presentation, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this presentation.

About DeloitteDeloitte 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. Please see www.deloitte.com/about for a detailed description of DTTL and its member firms. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

Copyright 2015 Deloitte Development LLC. All rights reserved.36 USC 220506Member of Deloitte Touche Tohmatsu Limited

The Dbriefs TMT series presents: AgendaSlide Number 3Lots of hype surrounding artificial intelligenceAlso, a measure of doomsayingNew technologies require new thinkingThe terminologyIllustration of cognitive computing (Video)Advances in a wide range of technologies are driving the growth in cognitive computingPoll question #1Slide Number 11$9 billion of investments in the last 4 years and 240+ M&A deals Performance of underlying cognitive technologies is improvingCommercialization and improving performance expand applicationsApplications are broadeningPoll question #2Example of cognitive computing technology at work:IBM Watson Oncology (Video)Understanding WatsonIBM Watson involves multiple componentsExample of cognitive computing technology at work:IBM Watson Ted Talks demo (Video)Poll question #3Slide Number 23Three main applications of cognitive technologies: Product, process and insightProduct: Embedding cognitive technologies in a product or serviceProcess: Automate tasks or processes humans used to doInsight: Discerning patterns and making predictions to improve operations or guide strategyPoll question #4Cognitive technologies are automating workApproach to deciding where to apply cognitive technologies in an organizationPoll question #5Slide Number 32Key takeawaysSlide Number 34Slide Number 35Slide Number 36Contact infoSlide Number 38Slide Number 39

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