Cognitive technologies enhance enterprise software

TMT Predictions 2016

Executive summary

Deloitte Global predicts that by end-2016 more than 80 of the world’s 100 largest enterprise software companies by revenues will have integrated cognitive technologies into their products, a 25 percent increase on the prior year. By 2020, we expect the number will rise to about 95 of the top 100.

What do we mean by cognitive technologies and artificial intelligence (AI)? We distinguish between the overall field of AI and the specific technologies that emanate from the field. The popular press portrays AI as the advent of computers as smart as—or smarter than—humans. The individual technologies, by contrast, are getting steadily better at performing specific tasks that were formerly only deliverable by humans.

Many cognitive technologies could be relevant for enterprises, including robotics, rules-based systems, computer vision, optimization, and planning and scheduling. However, in 2016 we expect the cognitive technologies that will be the most important in the enterprise software market will be:

  • Machine learning – the ability of computer systems to improve their performance by exposure to data but without the need to follow explicitly-programmed instructions — is likely to be the most prevalent. It enhances a large array of applications, from classification to prediction, from anomaly detection to personalization.
  • Natural language processing (NLP) – whereby computers can process text in the same way as humans, for example extracting meaning from text or even generating text that is readable, stylistically natural, and grammatically correct – has multiple valuable applications when incorporated in software that analyses unstructured text.
  • Speech recognition – the ability to automatically and accurately transcribe human speech, is useful for applications that may benefit from hands-free modes of operation.

Many top software companies have already discovered the potential for cognitive technologies to improve the core functionality of their products, generate new and valuable insights for customers, and improve business operations through automation. These benefits are simply too compelling for software companies to ignore.

Some business software companies have developed AI capabilities in-house, but many others are acquiring capabilities through M&A, and we expect this to continue in 2016. Strong support from venture capital investors is also helping to further commercialize this market. Since 2011, US-based start-ups that develop or apply cognitive technologies to enterprise applications have raised nearly $2.5 billion, suggesting that the biggest near-term opportunity for cognitive technologies is in using them to enhance business practices.

Cognitive technologies enhance enterprise software

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