Despite the progress that businesses have made around technology, deep-seated challenges remain.
The ability to disrupt a market, or to innovate within an organisation’s established structures, is closely linked to a business’ understanding of emerging technologies and their potential application.
A high proportion of business in the Republic of Ireland (97 percent) and Northern Ireland (76 percent) remain concerned about whether their business is keeping up to speed with new technologies. Globally this figure has been declining (Down from 77percent in 2016 to 47 percent this year). The global trend appears to be that CEOs are working with different technologies on a daily basis and have more experience in seeing how they are interlinked.
After assessing the opportunities and limitations of one technology, it may become easier to adapt and apply that knowledge to newer technologies. It remains to be seen if that premise will ultimately apply locally.
Understanding technology does not mean, however, that CEOs consider technological innovation within their business to be a fait accompli. Nine in ten (90 percent) of CEOs in the Republic and almost two thirds (64 percent) of Northern Ireland CEOs express concern that they are not using digital as effectively as they could to connect with customers.
François-Henri Pinault, Chairman and CEO of Kering, the Paris based luxury retail group whose brands include Balenciaga, Gucci and Puma, says digital is helping his business become more customer-centric rather than product-centric. “The digital revolution allows us to forge new types of relationships with customers, where technology is not only a business enabler but becomes an integral part of the way customers interact with the brand,” he says.
Despite the progress that businesses have made around technology, deep-seated challenges remain. In particular CEOs in many geographies face talent shortages and complexity around integrating cognitive technologies. When asked about their biggest barriers to implementation, issues such as the complexity of integration and skills shortages are high on the agenda.
Clearly the challenge of complexity is heightened when the business does not have an adequate number of suitably skilled people with an in - depth understanding of the technologies involved, especially around unfamiliar and fast-evolving cognitive processes.
According to Johnny Hanna of KPMG in Belfast, investment in third level education has been identified by the latest generation of CEOs as a pre-requisite for a successful economy; “Northern Ireland needs to develop its own talent pipeline both to supply indigenous firms but also to attract and sustain inward investors. Combine this with the fact that Northern Ireland also has the highest rate of economic inactivity in the UK and there are clearly significant challenges facing the Northern Ireland economy.”
Meanwhile almost all respondents in the Republic of Ireland (97 percent) and a significant majority in Northern Ireland, (84 percent) say they are concerned about their business’ ability to integrate existing business processes with artificial intelligence. Approximately one in three (37 percent in the Republic of Ireland and 36 percent Northern Ireland) tells us their organisation is not ready for advanced artificial intelligence at any level.
If they are to keep abreast with developments in this field, businesses obviously need to draw on the expertise and guidance of individuals with specific knowledge. Yet such talent is expensive to acquire – either because there is great competition for experts with these skills, or because up-skilling existing staff is time-consuming and creates new gaps to fill.
It is this competition for highly skilled talent, especially in the next few years, that is behind one of the most surprising findings of our 2017 research. Whereas the popular view of cognitive technologies is often that they could make some managerial positions redundant, CEOs in the Republic of Ireland (79 percent) and Northern Ireland (72 percent) actually expect them to increase headcount across key roles in the immediate future. Globally, CEOs expect to increase investment in artificial intelligence and cognitive technology in the coming three years. Already, these types of technology have become more common.
“People take for granted some of the things that artificial intelligence is already doing,” says Owen Lewis, Partner, KPMG Ireland. For example, this type of technology allows companies such as Netflix and Amazon to provide personalised recommendations to customers based on their viewing or purchasing habits. Lewis believes that “more and more tasks” will be automated using this sort of technology. Digital labour is a broad spectrum, explains Lewis. “It started from things like using macros on a computer to run some calculations,” he says. Next came more formalised automation, and robotics. These types of technology allow companies to reduce costs, improve accuracy and increase speed.
Some sectors, such as retail, have led the way. “There’s a real depth of experience in an organisation like Amazon, for example,” Lewis says. “They have heavily invested in this type of technology.” One sector where Lewis sees vast potential for digital labour is in medicine. “A machine can make a decision in a complex environment, based on rules and vast amounts of data,” he says. “That precision and speed of making decisions in a medical environment is a good example.”
In financial services, there’s also scope for a broader adoption of such technologies. “It is on the radar of every financial services firm, a machine can recognise and transcribe data, for example,” he explained, adding that this has made the process quicker and more accurate. “Humans can get distracted.”
Companies have started to direct resources towards these emerging technologies. Three in ten businesses in the Republic of Ireland have made a significant investment in robotic process automation in the past 12 months (although less than one in ten in Northern Ireland has taken the same approach), while six out of ten in both jurisdictions have launched a new investment programme related to cognitive technology, including areas such as artificial intelligence and machine learning.
However, almost 40 percent of CEOs North and South believe their organisation is not ready to adopt advanced artificial intelligence technology. Given the pace of change, it can be difficult for CEOs to decide on the right course of action. “It’s very hard for someone making decisions on the future to understand what hype is, and what is worth going for,” Lewis says. He advises companies to explore what’s right for their own agenda. “Dip a toe in the water, get an awareness of the technology, understand what it means for your business,” he says. “Embrace new technology but think of your customer and your business first.”
According to Lewis, companies should consider “what you want your business to be in five years and what you need to get there”. It can be difficult for businesses to navigate all the change, and integrate emerging technologies with their existing processes. “You are drinking through a fire hydrant in some respects, because there’s just so much stuff coming at you,” says Lewis. However, before companies can introduce new technologies or automate existing processes, they need to understand the end-to-end journey of each process, and the risks involved. “Which costs the most? Which takes the longest?”
The problem is that many companies don’t know the answer, making it difficult to assess the potential efficiency gains of introducing new technologies. According to Lewis; “Companies need to have clearly defined goals in place, and a proper strategic plan, in order to maximise the value of any new technology.” While he believes increased automation may allow companies to make decisions more quickly, people will continue to be at the heart of business. “People like to communicate and that will remain incredibly valuable to the way business is done.”
However, Lewis also believes that increased automation will have “Some winners and losers”, with some potential for job losses in certain industries. That said, he believes that new jobs will be created too, that rely on “the incredible nature of the human brain” to take on tasks that a robot cannot.