Artificial intelligence
The modern definition of artificial intelligence (or AI) is “the study and design of intelligent agents” where an intelligent agent is a system that perceives its environment and takes actions which maximizes its chances of success.

John McCarthy, who coined the term in 1956, defines it as “the science and engineering of making intelligent machines.”

Other names for the field have been proposed, such as computational intelligence, synthetic intelligence or computational rationality.

The term artificial intelligence is also used to describe a property of machines or programs: the intelligence that the system demonstrates.

AI research uses tools and insights from many fields, including computer science, psychology, philosophy, neuroscience, cognitive science, linguistics, operations research, economics, control theory, probability, optimization and logic.

AI research also overlaps with tasks such as robotics, control systems, scheduling, data mining, logistics, speech recognition, facial recognition and many others.

Computational intelligence Computational intelligence involves iterative development or learning (e.g., parameter tuning in connectionist systems).

Learning is based on empirical data and is associated with non-symbolic AI, scruffy AI and soft computing.

Subjects in computational intelligence as defined by IEEE Computational Intelligence Society mainly include: Neural networks: trainable systems with very strong pattern recognition capabilities.

Fuzzy systems: techniques for reasoning under uncertainty, have been widely used in modern industrial and consumer product control systems; capable of working with concepts such as ‘hot’, ‘cold’, ‘warm’ and ‘boiling’.

Evolutionary computation: applies biologically inspired concepts such as populations, mutation and survival of the fittest to generate increasingly better solutions to the problem.

These methods most notably divide into evolutionary algorithms (e.g., genetic algorithms) and swarm intelligence (e.g., ant algorithms).

With hybrid intelligent systems, attempts are made to combine these two groups.

Expert inference rules can be generated through neural network or production rules from statistical learning such as in ACT-R or CLARION.

It is thought that the human brain uses multiple techniques to both formulate and cross-check results.

Thus, systems integration is seen as promising and perhaps necessary for true AI, especially the integration of symbolic and connectionist models.

Three Types of AI

It is useful for companies to look at AI through the lens of business capabilities rather than technologies. Broadly speaking, AI can support three important business needs: automating business processes, gaining insight through data analysis, and engaging with customers and employees. 

Cognitive Projects by Type

We studied 152 cognitive technology projects and found that they fell into three categories.ROBOTICS & COGNITIVE AUTOMATION
71COGNITIVE INSIGHT
57COGNITIVE ENGAGEMENT
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Process automation.

Of the 152 projects we studied, the most common type was the automation of digital and physical tasks—typically back-office administrative and financial activities—using robotic process automation technologies. RPA is more advanced than earlier business-process automation tools, because the “robots” (that is, code on a server) act like a human inputting and consuming information from multiple IT systems. Tasks include:

• transferring data from e-mail and call center systems into systems of record—for example, updating customer files with address changes or service additions;
• replacing lost credit or ATM cards, reaching into multiple systems to update records and handle customer communications;
• reconciling failures to charge for services across billing systems by extracting information from multiple document types; and
• “reading” legal and contractual documents to extract provisions using natural language processing.

RPA is the least expensive and easiest to implement of the cognitive technologies we’ll discuss here, and typically brings a quick and high return on investment. (It’s also the least “smart” in the sense that these applications aren’t programmed to learn and improve, though developers are slowly adding more intelligence and learning capability.) It is particularly well suited to working across multiple back-end systems.

At NASA, cost pressures led the agency to launch four RPA pilots in accounts payable and receivable, IT spending, and human resources—all managed by a shared services center. The four projects worked well—in the HR application, for example, 86% of transactions were completed without human intervention—and are being rolled out across the organization. NASA is now implementing more RPA bots, some with higher levels of intelligence. As Jim Walker, project leader for the shared services organization notes, “So far it’s not rocket science.”

One might imagine that robotic process automation would quickly put people out of work. But across the 71 RPA projects we reviewed (47% of the total), replacing administrative employees was neither the primary objective nor a common outcome. Only a few projects led to reductions in head count, and in most cases, the tasks in question had already been shifted to outsourced workers. As technology improves, robotic automation projects are likely to lead to some job losses in the future, particularly in the offshore business-process outsourcing industry. If you can outsource a task, you can probably automate it.

Cognitive insight.

The second most common type of project in our study (38% of the total) used algorithms to detect patterns in vast volumes of data and interpret their meaning. Think of it as “analytics on steroids.” These machine-learning applications are being used to:

• predict what a particular customer is likely to buy;
• identify credit fraud in real time and detect insurance claims fraud;
• analyze warranty data to identify safety or quality problems in automobiles and other manufactured products;
• automate personalized targeting of digital ads; and
• provide insurers with more-accurate and detailed actuarial modeling.

Cognitive insights provided by machine learning differ from those available from traditional analytics in three ways: They are usually much more data-intensive and detailed, the models typically are trained on some part of the data set, and the models get better—that is, their ability to use new data to make predictions or put things into categories improves over time.

Versions of machine learning (deep learning, in particular, which attempts to mimic the activity in the human brain in order to recognize patterns) can perform feats such as recognizing images and speech. Machine learning can also make available new data for better analytics. While the activity of data curation has historically been quite labor-intensive, now machine learning can identify probabilistic matches—data that is likely to be associated with the same person or company but that appears in slightly different formats—across databases. GE has used this technology to integrate supplier data and has saved $80 million in its first year by eliminating redundancies and negotiating contracts that were previously managed at the business unit level. Similarly, a large bank used this technology to extract data on terms from supplier contracts and match it with invoice numbers, identifying tens of millions of dollars in products and services not supplied. Deloitte’s audit practice is using cognitive insight to extract terms from contracts, which enables an audit to address a much higher proportion of documents, often 100%, without human auditors’ having to painstakingly read through them.

Cognitive insight applications are typically used to improve performance on jobs only machines can do—tasks such as programmatic ad buying that involve such high-speed data crunching and automation that they’ve long been beyond human ability—so they’re not generally a threat to human jobs.

Cognitive engagement.

Projects that engage employees and customers using natural language processing chatbots, intelligent agents, and machine learning were the least common type in our study (accounting for 16% of the total). This category includes:

• intelligent agents that offer 24/7 customer service addressing a broad and growing array of issues from password requests to technical support questions—all in the customer’s natural language;
• internal sites for answering employee questions on topics including IT, employee benefits, and HR policy;
• product and service recommendation systems for retailers that increase personalization, engagement, and sales—typically including rich language or images; and
• health treatment recommendation systems that help providers create customized care plans that take into account individual patients’ health status and previous treatments.

The companies in our study tended to use cognitive engagement technologies more to interact with employees than with customers. That may change as firms become more comfortable turning customer interactions over to machines. Vanguard, for example, is piloting an intelligent agent that helps its customer service staff answer frequently asked questions. The plan is to eventually allow customers to engage with the cognitive agent directly, rather than with the human customer-service agents. SEBank, in Sweden, and the medical technology giant Becton, Dickinson, in the United States, are using the lifelike intelligent-agent avatar Amelia to serve as an internal employee help desk for IT support. SEBank has recently made Amelia available to customers on a limited basis in order to test its performance and customer response.

Companies tend to take a conservative approach to customer-facing cognitive engagement technologies largely because of their immaturity. Facebook, for example, found that its Messenger chatbots couldn’t answer 70% of customer requests without human intervention. As a result, Facebook and several other firms are restricting bot-based interfaces to certain topic domains or conversation types.

Our research suggests that cognitive engagement apps are not currently threatening customer service or sales rep jobs. In most of the projects we studied, the goal was not to reduce head count but to handle growing numbers of employee and customer interactions without adding staff. Some organizations were planning to hand over routine communications to machines, while transitioning customer-support personnel to more-complex activities such as handling customer issues that escalate, conducting extended unstructured dialogues, or reaching out to customers before they call in with problems.

As companies become more familiar with cognitive tools, they are experimenting with projects that combine elements from all three categories to reap the benefits of AI. An Italian insurer, for example, developed a “cognitive help desk” within its IT organization. The system engages with employees using deep-learning technology (part of the cognitive insights category) to search frequently asked questions and answers, previously resolved cases, and documentation to come up with solutions to employees’ problems. It uses a smart-routing capability (business process automation) to forward the most complex problems to human representatives, and it uses natural language processing to support user requests in Italian.

Despite their rapidly expanding experience with cognitive tools, however, companies face significant obstacles in development and implementation. On the basis of our research, we’ve developed a four-step framework for integrating AI technologies that can help companies achieve their objectives, whether the projects are moon shoots or business-process enhancements.

“Our intelligence is what makes us human, and AI is an extension of that quality.” – Yann LeCun
“As a technologist, I see how AI and the fourth industrial revolution will impact every aspect of people’s lives.” – Fei-Fei Li

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