As companies start to see tangible results from their pilots and experiments in Artificial Intelligence and Machine Learning, we’re seeing an increase in investment in technology by major brands. While recent investment has been heavily driven by data-heavy industries like banking and healthcare, retail and logistics operations are beginning to make significant capital investments to set themselves apart from the competition.
The promise of greater insights into customers, a proactive map of the competitive landscape, and the opportunity to create new and exciting ideas is driving companies like Nike, UPS, and more to take the next step in their AI infrastructure.
Nike’s Big Leap into AI
Nike recently purchased Boston AI startup, Celect. Founded by a pair of MIT professors, Celect had raised more than $30 million, including a $15 million Series C in late 2018. Their primary focus was on capturing structured and unstructured retail data and providing insights that would allow retailers to improve inventory organization. Designed to learn over time, Celect’s technology will be integrated into Nike’s Global Operations Team to improve its predictive analytics capabilities. Nike has previously invested heavily in geographical and behavioral data analysis to improve store offerings.
UPS Moves on Self Driving Trucks
Self-driving trucks have taken to the road as part of a pilot by UPS with autonomous trucking startup TuSimple. Only announced in August, the pilot started in May and consisted of recurring cargo trips between Tucson and Phoenix, Arizona – a trip of about 110 miles. This was not the first test of TuSimple’s AI-powered trucks as the United States Postal Service ran a similar trial between Phoenix and Dallas earlier this year. However, UPS has invested as a minority stakeholder in TuSimple, and has made similar investments in drone technology, electric trucks, and more. They routinely invest $1 billion annually on technology initiatives, with recent developments including the UPS Bot for consumer interactions, its ORION route-optimization algorithm working to reduce delivery miles by 100 million, and its EDGE system to optimize internal operations efficiency.
Fast Food Getting Faster
McDonald’s recently acquired Dynamic Yield for more than $300 million. The move illustrates McDonald’s embrace of technology to improve the customer experience and offer a more customized menu based on data insights. They’ve already started the process of integrating the Dynamic Yield technology in 1,000 stores and plan to roll it out to all 14,000 stores over time. The menu customization options offered by the new platform will allow McDonald’s to make adjustments based on seasonality, geography, weather, time of day, and other elements that could not be performed at scale in the past.
While McDonald’s has been experimenting with several new technologies, including the presentation of the menu in its self-service kiosks, this acquisition illustrates how important AI is for all types of companies. The ability to show a unique menu, potentially on a customer-by-customer basis on drive-thru menus and in-store kiosks that predict a customer’s order demonstrates what retailers at large aspire to in their offerings. A completely bespoke experience at every interaction point, with AI helping to drive higher sales and a better overall level of engagement.
The AI Acquisition Arms Race
The world’s largest companies are rapidly snapping up whatever technologies they can to augment their internal efforts. CB Insights reported that between 1998 and 2017, Google acquired 29 AI companies totaling $3.72 billion, followed by Amazon’s $821 million investment in 8 companies, Intel’s $776 million investment in 5 companies and Twitter’s $629 million investment in 4 companies. Since 2010, the five big tech companies have acquired 50 AI companies. Partially, this reflects how rare AI expertise is, while simultaneously highlighting how important it is to the growth and development plans of big technology firms.
This is likely to change as the rate of adoption necessitates greater diversity in those investments. MMC Ventures recently released it’s The State of AI: Divergence report, highlighting that in the next 12 months 48% of insurance companies, 40% of transport providers, and 44% of retail and media companies were planning on deploying AI initiatives. That is expected to attract a more diverse set of investors from outside big tech, which should lead to greater innovation and diversity in technology, especially as other countries start to catch up to the US in AI development.
The Future of AI in Business Is Now
AI is already impacting businesses. With AI expected to contribute up to $15.7 trillion to the global economy by 2030, it’s not just mega-corporations investing any longer. Local governments are investing in smart infrastructure to improve traffic and reduce commute times. Small retailers are using chatbots and AI insights to streamline operations and compete online. Agencies and brands are investing in smarter marketing technologies to create more efficient advertising campaigns and improve their customer targeting.
In 2019, Artificial Intelligence and Machine Learning are moving beyond trendy experiments and becoming core strategic elements in businesses of all sizes. To learn more about the state of AI in 2019 and how it is influencing industries like healthcare, banking, media, journalism, and marketing, download our recent report, AI and Machine Learning Trends in 2019. Learn where investments are happening, and the way technology is transforming businesses.
It’s this evolving technology landscape that is the focal point of the upcoming DATAx conference on November 6-7, 2019 in New York City. Bringing together technology and business leaders from the world’s top companies, DATAx is about identifying and implementing real-world solutions to common challenges through AI and machine learning. You’ll hear from data science leaders at Bank of America, The Associated Press, Airbnb, Nasdaq, WW (Weight Watchers), and many more on what their teams and companies are doing to leverage AI and innovate.
Visit Argyle Executive Forum's Argyle Digital: CIO Leadership Forum in Virtual Forum, on Jul 07, 2020