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​How the potential of cognitive is playing out in the channel

​How the potential of cognitive is playing out in the channel

Partners that can identify, understand and act on the growth opportunities for cognitive/AI systems will be key to business.

Widespread adoption of cognitive systems and artificial intelligence (AI) across a broad range of industries will drive substantial worldwide revenues gains, opening the door for partners to expand market capabilities.

Representing a sizeable increase in spending, IDC findings predict that market revenue will jump from $US8 billion in 2016 to more than $US47 billion in 2020.

From a channel perspective, partners now have the opportunity to capitalise on an industry forecast to grow 55.1 per cent within the next four years.

“Software developers and end user organisations have already begun the process of embedding and deploying cognitive/artificial intelligence into almost every kind of enterprise application or process,” IDC research director of Cognitive Systems, David Schubmehl, said.

“Recent announcements by several large technology vendors and the booming venture capital market for AI startups illustrate the need for organisations to be planning and undertaking strategies that incorporate these wide-ranging technologies.”

Consequently, and of relevance to the channel, partners that can help identify, understand and act on these use cases, technologies and growth opportunities for cognitive/AI systems will be the differentiating factor for enterprises.

For Schubmehl, the ability to recognise and respond to data flows using algorithms and rule-based logic enables cognitive/AI systems to automate a broad range of functions across many industries.

The use cases that are attracting the most investment in 2016 are automated customer service agents, quality management investigation and recommendation systems, diagnosis and treatment systems, and fraud analysis and investigation.

Looking ahead, the use cases that will experience the fastest revenue growth over the next five years are public safety and emergency response, pharmaceutical research and discovery, diagnosis and treatment systems, supply and logistics, quality management investigation and recommendation systems, and fleet management.

“Near-term opportunities for cognitive systems are in industries such as banking, securities and investments, and manufacturing,” IDC program director of Customer Insights, Jessica Goepfert, added.

“In these segments, we find a wealth of unstructured data, a desire to harness insights from this information, and an openness to innovative technologies.

“Furthermore, the value proposition of cognitive systems aligns well with industry executives' chief priorities.”

For instance, Goepfert said cognitive technologies are being used in the banking industry to detect and combat fraud - consistently a top industry pain point.

Meanwhile, in manufacturing, executives cite improving product quality as a top initiative.

“In this case, cognitive systems recognise and know how to respond to dynamic fluctuations in product specs by adapting the production to stay within quality targets,” Goepfert added.

Going forward, the industries that will invest the most in cognitive/AI systems in 2016 are banking and retail, followed by healthcare and discrete manufacturing.

Combined, these four industries will generate more than half of all worldwide cognitive/AI revenues in 2016, with banking and retail each delivering nearly $US1.5 billion.

Delving deeper, healthcare and discrete manufacturing will deliver the greatest revenue growth over the 2016-2020 forecast period, with growth of 69.3 per cent and 61.4 per cent, respectively.

In addition, education and process manufacturing will also experience significant growth over the forecast period.

Nearly half of all cognitive/AI revenue throughout the forecast will go to software, which includes both cognitive applications and cognitive software platforms, which facilitate the development of intelligent, advisory, and cognitively enabled solutions.

As both the largest and fastest-growing category, cognitive applications spending is forecast to reach $US18.2 billion in 2020.

Cognitive/AI-related services (business services and IT consulting) represent the second largest revenue category while hardware revenues (primarily from dedicated purchases of servers and storage) will grow nearly as fast as software with five-year growth of more than 60 per cent.

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