Organizations that speed their decision intelligence abilities will be those that survive and thrive, while those that don't digitally transform will fail.
By
Eric Avidon,Senior News Writer
Published: 01 Jun 2022
The combination of analytics, automation and augmented intelligence will drive the future of business.
That was the message delivered by Ray Wang, founder and analyst at Constellation Research, who spoke recently during the Graph + AI Summit, the spring edition of the biannual open conference hosted virtually by graph data and analytics vendor TigerGraph.
According to Wang, nearly two-thirds of the companies that made up the Fortune 500 in 2000 are now gone, having been acquired, merged with another company or gone bankrupt. And by 2040, 80% will have disappeared.
Meanwhile, tech vendors such as Amazon, Apple, Facebook and Microsoft have quintupled their market capitalization in the last five years alone.
The difference is data -- specifically, decision velocity, which is the use of data to rapidly make informed decisions -- according to Wang.
And what will play out going forward, what will drive the future of business and determine the companies that survive and thrive versus those that fade into oblivion, will be a battle for data supremacy.
"Never before have companies been able to quintuple their market cap [so quickly], and that is done because these are companies that are built on data," Wang said. "These are companies that are built on new business models. Data is the foundation for these next set of businesses."
The 3 A's -- analytics, automation and AI
That foundation for the future of business starts with analytics, according to Wang. It begins with the ability to ask business questions, such as whether to add staff to the marketing team or spend money on a marketing campaign to increase sales, and be able to answer those questions.
Ray Wang
And the data used to inform those decisions can come from anywhere rather than just the data captured through traditional sales channels. It can be as varied as information related to supply chains and data related to the weather, and it has to be captured and analyzed in real time.
Beyond analytics, Wang said the foundation for the future of business includes automation and AI to create feedback loops that add context, eliminate false positives and negatives to result in precision, and improve decision velocity.
Through the combination of analytics, automation and AI, organizations can vastly improve decision accuracy. In addition, while humans can take weeks or months to collectively make a strategic decision, machines can make hundreds or even thousands of decisions per second.
So it will be the companies that combine analytics, automation and AI that make up the future of business, while those that continue to rely on human decision-making will ultimately fail, according to Wang.
"That asymmetry will be the difference between companies that are going to succeed in this world and the companies that are going to fall behind," he said.
Another key to the future of business will be the deployment of graph databases, Wang continued.
Graph databases enable data points to simultaneously connect to multiple other data points rather than to just one other data point at a time, as within a traditional relational database. And by connecting to multiple data points at once, users can more easily discover relationships between data -- for example, information about a single customer captured by disparate sources or multiple customers who might be part of the same family -- resulting in speed and accuracy.
"Behind decision velocity ... is the business graph," Wang said. "Interactions over time form the business graph, and that's how we go from data to decisions -- how we go from the ability to take insight to action."
Early winners
Some of the companies already effectively using analytics, automation and AI -- and using graph technology to build networks -- to drive growth are in the food delivery industry.
Never before have companies been able to quintuple their market cap [so quickly], and that is done because these are companies that are built on data.
Domino's Pizza's stock price has gone from about $3 per share in 2008 to a high of more than $550 in late 2021, and opened trading on June 1 at $364.97.
The company now offers multiple ways to order -- for example, in person, online, over the phone, in the app and through Amazon Alexa. Every step of the preparation and delivery process is tracked. And when the food is delivered, customers can upload pictures to an AI-powered engine to give quality control feedback.
All of that creates data that Domino's uses to build a feedback loop that informs decisions ranging from how to market to specific customers to measuring the performance of each franchise.
"Domino's won the digital transformation battle," Wang said.
Similarly, companies such as Grubhub, DoorDash and Uber Eats have thrived throughout the pandemic as a result of their use of analytics, automation and AI.
With many small businesses unable to deliver during the COVID-19 pandemic, food delivery companies took over. As they did, they collected transaction data and built large networks of optimal delivery routes and drivers.
"This is the story of what is going on in this next stage of digital transformation," Wang said. "They built networks and used digital monetization models."
Getting started
While the future of business will be built on analytics, automation and AI, organizations must go through a process to get from ad hoc decision-making to autonomous decision-making, according to Wang.
And technology is not at a point where fully autonomous decision-making is optimal, meaning that organizations must begin by balancing human decision-making with machines, he continued. As they digitally transform, organizations will need to understand when to rely on machine automation, when to augment machine intelligence with human decision-making, when to augment human decision-making with machine intelligence and when to fully rely on human judgment.
Prime candidates for automation include repetitive tasks and those with a high volume of nodes that need to be connected, while some that should still be done by humans include those in which creativity is critical and a physical presence is required for oversight.
Organizations also need to assign outcomes, making sure they understand what questions they want answered with their analytics, automation and AI. Among the outcomes are notifications, suggestions, predictions and prevention.
"Right now, we're in an era where data and digital require [humans] to get to automation, this level of being fast and work in real time," Wang said. "We're in the middle of a digital transformation that's much bigger than what we've seen in the past, and this digital transformation runs on data."
Through the combination of analytics, automation and AI, organizations can vastly improve decision accuracy. In addition, while humans can take weeks or months to collectively make a strategic decision, machines can make hundreds or even thousands of decisions per second.
Advanced algorithms will spot glitches that might remain hidden to human eyes. The consequence? Dramatically lower rates of mistakes and a significant reduction in operational expenses. AI is expected to drive a 37% reduction in costs for businesses in 2024.
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Coming over the horizon is a new wave of opportunity related to the use of robotics, machine learning, and AI. Companies that deploy automation technologies can realize substantial performance gains and take the lead in their industries, even as their efforts contribute to economy-level increases in productivity.
Increased Efficiency: AI can automate repetitive tasks, improving efficiency and productivity in various industries. Data Analysis and Insights: AI algorithms can analyze large data quickly, providing valuable insights for decision-making.
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In the AI-led future, data teams will become strategists who manage an organization's use of AI to solve challenges across the business. The groundwork you lay now can help determine their success in doing so—and, ultimately, the success of your business long term.
John McCarthy is considered as the father of Artificial Intelligence. John McCarthy was an American computer scientist. The term "artificial intelligence" was coined by him. He is one of the founder of artificial intelligence, together with Alan Turing, Marvin Minsky, Allen Newell, and Herbert A.
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