Artificial Intelligence in Europe - Sweden Outlook for 2019 and Beyond - How 277 Major Companies Benefit from AI - Microsoft News

 
Artificial
Intelligence
in Europe
Sweden
Outlook for 2019 and Beyond

How 277 Major Companies Benefit from AI
R E P O R T CO M M I S S I O N E D BY M I C R O S O F T A N D CO N D U C T E D BY E Y
Contents
                                                                                                                                                                     Preface
                                                                                                                                                                     Foreword  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 06
                                                                                                                                                                     Executive Summary - ‘At a Glance’ .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  08

                                                                                                                                                                     Setting the Scene
                                                                                                                                                                     About this Report  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .              10
                                                                                                                                                                     Rich Data  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .       13
                                                                                                                                                                     Executive Perspective .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                 14
                                                                                                                                                                     Participating Companies .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                     16
                                                                                                                                                                     Bits & Bytes  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .       18
                                                                                                                                                                     Follow the Money  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .               20
                                                                                                                                                                     Case Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                  22
                                                                                                                                                                     Experts .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .    23

                                                                                                                                                                     Role of AI in European Business
                                                                                                                                                                     A Strategic Agenda  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  27
                                                                                                                                                                     Among Friends .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  28
                                                                                                                                                                     Push or Pull  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  29
                                                                                                                                                                     Ready, Set... .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  30
                                                                                                                                                                     AI Maturity Curve  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  32
                                                                                                                                                                     State Your Business .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 34
                                                                                                                                                                     Case Study  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 36

                                                                                                                                                                     Business Benefits and Risks
                                                                                                                                                                     Another World .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  38
                                                                                                                                                                     AI Here, There, Everywhere .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 40
                                                                                                                                                                     Case Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
                                                                                                                                                                     Use it or Lose it .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  42
                                                                                                                                                                     Making AI simple  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  44
                                                                                                                                                                     Case Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
                                                                                                                                                                     Sector Benefits Landscape .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  48
                                                                                                                                                                     Risky Business  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  51

                                                                                                                                                                     Learn from the Leaders
                                                                                                                                                                     Capabilities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  53
                                                                                                                                                                     AI Competency Model  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  55
                                                                                                                                                                     Advanced Analytics  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  56
                                                                                                                                                                     Data Management  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 58
                                                                                                                                                                     AI Leadership  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 60
                                                                                                                                                                     Open Culture  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  62
                                                                                                                                                                     Emerging Technology  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 64
Disclaimer                                                                                                                                                           Agile Development  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  66
This report has been prepared by Ernst & Young LLP in accordance with           This report does not constitute a recommendation or endorsement by Ernst             External Alliances  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  68
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2                                                                                                                                                                                                                                                                                                                             3
Sweden is a great example of how AI is
    enabling companies and leaders to make
    better business decisions. 30 percent of
    Swedish companies in the study view AI
    as the highest priority in their own digital
    transformations. AI is becoming more
    relevant to companies than ever before,
    and integration of AI into the DNA of all
    companies – beyond the IT department – will
    ensure that everyone can benefit from the
    transformative power of AI.

     — Harry Shum, Executive Vice President of
     Microsoft AI and Research Group

4                                                  5
Preface                                                                                                                                                                      Preface

Foreword

          Human Ingenuity                                                                  Icon of Digital Success

                                                                                           Many say that data is the new currency, or oil, to stress its significance. But
          The printing press, the automobile & the Internet are just a few technolog-
                                                                                           in order to create value from raw data, you must find ways to analyze and
          ical achievements that have advanced our world. All were driven by human
                                                                                           learn from it. This is where Artificial Intelligence comes in, because it can
          ingenuity: our innate creativity that inspires us to learn, imagine & explore.
                                                                                           help turn data into valuable insights that can improve lives and transform
          This spirit is what pushes us to challenge the boundaries of the possible to
                                                                                           businesses.
          go ever forward.
                                                                                           AI is on top of the public agenda in Sweden and not only as a trendy word
          Today, AI is helping to amplify our human ingenuity, opening up exciting
                                                                                           used by politicians and companies to describe their ambitions for the fu-
          new possibilities for how intelligent technology can shape our world. At
                                                                                           ture. As we can see in this report, many Swedish businesses are already
          Microsoft, our goal is to democratize access to AI for everyone through in-
                                                                                           implementing it widely today. We commissioned this report to learn first-
          novative & powerful platforms, & above all, we’re focused on ensuring that
                                                                                           hand from companies in Sweden across various industries what they see as
          our AI tools & technologies are deployed responsibly & earn people’s trust.
                                                                                           opportunities and challenges with AI, how and why they are investing in it,
                                                                                           and how AI is re-shaping their businesses and processes.
          And yet, we realize that AI is one of the lesser understood modern tech-
          nological break-throughs. Many questions remain. How are companies
                                                                                           Swedish Minister of Enterprise and Innovation, Mikael Damberg, recently
          applying this technology to empower employees, engage with customers,
                                                                                           set the ambition that Sweden should become the leading country in ap-
          transform their business and optimize their operations? Where are they
                                                                                           plied AI*. AI will be a key component in Swedish enterprises’ ability to drive
          seeing benefits, and what are their blockers?
                                                                                           successful digital transformation. As we can see in this report based on
                                                                                           interviews with 20 Swedish companies, there are still challenges, including
          To provide answers, Microsoft commissioned this study to understand the
                                                                                           concerns about cybersecurity and trust.
          AI strategy of major companies across 7 sectors & 15 countries in Europe.
          It examines these companies’ readiness to adopt AI, how they rate the im-
                                                                                           But one thing is clear: Swedish companies are convinced of AI’s potential
          pact and benefits from AI implementations, and what they perceive as risks
                                                                                           for impact on all areas of business and prioritize AI higher than the Euro-
          & keys to success.
                                                                                           pean benchmark. This puts Sweden in a pole position toward making the
                                                                                           government’s AI vision a reality.
          We hope you find these insights inspirational for your own journey toward
          adopting AI & realizing its benefits for amplifying human ingenuity.

          Vahé Torossian                                                                   Daniel Akenine
          President, Microsoft Western Europe                                              National Technology Officer, Microsoft Sweden

6                                                                                                                                                                                 7
Preface                                                                                                                                                                                                                                                                   Preface

At a Glance
                                                                                                                                       Noticeable potential for AI in many            Swedish companies slightly ahead on AI compared
                                                                                                                                       corporate functions                            to European peers
                                                                                                                                       The most widely reported adoption of           When looking across the 20 companies that have participated in the
                                                                                                                                       AI (47%) was in the IT/Technology func-        study in Sweden, it is clear that there are areas were they appear slightly
                                                                                                                                       tion, followed by R&D with 36%, and            ahead on AI compared to their European peers. Across the organiza-
                                                                                                                                       customer service with 24%. Interestingly,      tional hierarchical levels, more Swedish companies report that AI is an
                                                                                                                                       several functions are hardly using AI at       important topic compared with the European aggregate. Furthermore,
                                                                                                                                       all; most notably, the procurement func-       companies in Sweden self-report as being more mature – 45% of Swed-
While the hype of artificial intelligence    Most impact expected from ‘opti-            is almost as much as AI is expected to
                                                                                                                                       tion, where only 4% of the companies           ish companies are in the ‘released’ AI stage compared with 28% in the
(AI) and its potential role as a driver of   mizing operations’, with ‘engaging          impact the core of these companies’ cur-
                                                                                                                                       currently use AI, followed by HR with 7%       European aggregate. Additionally, they report expecting more impact
transformational change to businesses        customers’ as a close second                rent business with 65% expecting AI to
                                                                                                                                       and product management with 9%. This           from AI across all business areas – core, adjacent and new – than the
and industries is pervasive, there are       89% of the respondents expect AI to         have a high or a very high impact on the
                                                                                                                                       is perhaps surprising, given the many          European aggregate does.
limited insights into what companies         generate business benefits by optimiz-      core business. With AI presumably push-
                                                                                                                                       use cases and applicable solutions in
are actually doing to reap its benefits.     ing their companies’ operations in the      ing companies into totally new domains
                                                                                                                                       these functional areas.
This report aims at getting a deeper         future. This is followed by 74% that ex-    in the future, it is perhaps not surprising
understanding of how companies cur-          pect AI to be key to engaging custom-       that AI is receiving attention as a key
                                                                                                                                                                                        What sets the most ‘AI mature’
                                                                                                                                       8 key capabilities that are most im-
rently manage their AI activities, and       ers by enhancing the user experience,       topic for executive management.
                                                                                                                                       portant ‘to get AI right’
                                                                                                                                                                                        companies apart?
how they address the current challeng-       tailoring content, increasing response
es and opportunities ahead.                                                              Very few of the 277 companies con-            When asking the respondents to rank
                                             speed, adding sentiment, creating
                                                                                         sider themselves “advanced” with AI           the importance of 8 capabilities to ena-
                                             experiences, anticipating needs, etc.
To get to the heart of this agenda, we                                                                                                 ble AI in their businesses, ‘advanced ana-       They expect AI will be beneficial in ‘empowering employees’ (76%
                                                                                         Despite the apparent sizable impact that
received input from AI leaders in 277                                                                                                  lytics’ and ‘data management’ emerged            of ‘more mature’ companies* vs. 42% of ‘less mature’ companies)*.
                                             C-suite respondents scored ‘engaging        companies expect from AI, only a very
companies, across 7 sectors and 15                                                                                                     as the most important. ‘AI leadership’
                                             customers’ highest of the AI benefit        small proportion of companies, consti-
countries in Europe, via surveys and/or                                                                                                and having an ‘open culture’ followed.           They report using a combination of structured and unstructured
                                             areas. Noticably, 100% of the most ad-      tuting 4% of the total sample, self-re-
interviews. Below is the brief summary       vanced* companies expect AI will help       port that AI is actively contributing to                                                       data for AI (65% of ‘more mature’ companies vs. 15% of ‘less mature’
of what they had to say.                                                                                                               When self-assessing the capabilities             companies), and data from both internal and external sources (68%
                                             them engage customers, compared to          ‘many processes in the company and
                                                                                                                                       where the companies are least com-               of ‘more mature’ companies vs. 16% of ‘less mature’ companies).
                                             only 63% of the less mature companies.      enabling quite advanced tasks today’
AI is a “hot topic” - but more so on                                                                                                   petent, they point to emotional intelli-
                                             Using AI to ‘transform products and         (referred to as ‘most advanced’ in this
C-level than in daily operations                                                                                                       gence and AI leadership - defined as the         They expect AI will help them ‘engage customers’ (85% of ‘more
                                             services’ comes out slightly lower with     report).
                                                                                                                                       (lack of) ability to lead an AI transfor-        mature’ companies vs. 59% of ‘less mature’ companies).
71% of the companies respond that            65%, and ‘empowering employees’
                                                                                                                                       mation by articulating a vision, setting
AI is considered an important topic          the lowest with 60% of the companies        Another 28% are in the ‘released’ stage
                                                                                                                                       goals and securing broad buy-in across           They see AI predominately being driven from a combination of
on the executive management level.           expecting AI-generated benefits in          where they have put AI selectively to ac-
                                                                                                                                       the organization.                                technology push and business pull (61% of ‘more mature’ compa-
This is significantly higher than on         that area.                                  tive use in one or a few processes in the
the non-managerial / employee level                                                      company. The majority, 51% of compa-                                                           nies vs. 32% of ‘less mature’ companies).
                                                                                                                                       To summarize, the challenge ahead
where AI is only considered an impor-        AI is expected to impact entirely           nies, are still only planning for AI or are
                                                                                                                                       appears to be as much about culture and
tant topic in 28% of the companies.          new business areas in the future            in early stage pilots. 7% of companies
                                                                                                                                       leadership as it is about data, analytics,       * ‘More mature’ defined as companies that self-ranked as 4 or 5 on the maturity
Interestingly, Board of Directors also       57% of the companies expect AI to           are self-rated as least mature, indicating                                                     5-scale, and ‘less mature’ defined as companies that self-ranked as 1 or 2.
                                                                                                                                       and technology.
came out lower with ‘only’ 38% of            have a high impact or a very high im-       that they are not yet thinking about AI at
respondees reporting that AI is impor-       pact on business areas that are “entirely   this stage.
tant to their board.                         unknown to the company today”. This

          Only   4%
                                                Percentage of companies
                                                 that are still only in the
                                               planning or piloting stages:
                                                                                                        71%
                                                                                                   of the companies
                                                                                                                                                  57%
                                                                                                                                               of the companies
                                                                                                                                                                                    Share of companies that use
                                                                                                                                                                                      acquisitions as a way to                                    80%
                                                                                                                                                                                                                                            of the most mature
                                                                                                                                                                                       obtain AI capabilities:

                                                         61%                                                                                                                               10%
of the companies are actively                                                              respond that AI is considered               expect AI to have a high impact                                                                 companies expect that AI
 using AI in ‘many processes                                                                ‘an important topic’ on the                  on ‘business areas that are                                                                      will be beneficial by
and to enable advanced tasks’                                                              executive management level                     entirely unknown today’                                            only                      ‘empowering employees’

8                                                                                                                                                                                                                                                                              9
Setting the Scene                                                                                                                                                                                                                        Setting the Scene

About this Report
What’s new?

Artificial Intelligence (AI) is not new.   in AI, what they are investing in, and    benefit areas, how mature companies       Straight from the executives               Contributions from open-minded
It has existed for decades: processing     how they are managing the compli-         are in terms of adoption, and examin-                                                and collaborative companies
                                                                                                                               Where this report and extensive da-
voice to text or language translation;     cated process of adopting this new        ing self-reported competence levels       taset adds new insights is primarily       We are extremely thankful for the time
real-time traffic navigation; dynami-      technology and deriving value across      regarding the capabilities required to    into how leading companies are ap-         and effort the many executives have
cally serving targeted advertisements      business opportunities.                   succeed when implementing AI.             proaching AI on a very practical level.    put into participating in interviews and
based on personal data and browsing                                                                                            We hear straight from executives how       providing data for this study. We’re par-
history; predicting trends and guiding     Perspectives, experiences, self-          From the aggregate dataset we have        their companies are addressing cur-        ticularly appreciative of their willing-
investment decisions in financial in-      assessment, and benchmarks                been able to determine some bench-        rent challenges, and how they apply AI     ness to openly share experiences and
stitutions. The current developments       From new surveys, interviews and case     marks across the covered markets,         to unlock new value pockets.               provide their perspectives on where
have been fueled by an exponential         studies gathered from approximately       which we compare the individual                                                      the future is heading within AI.
rise in computing power, increasing        277 companies, we provide a snapshot      country with throughout the report.       Based on the many interviews con-
accessibility and sophistication of pow-   of the currrent state of AI in 15 Euro-   The report also covers a full spectrum    ducted, this report reveals some clear     While this indicate a general interest in
erful algorithms, and an explosion in      pean markets. This includes analyzing     of industry groups which tend to reveal   excitement and immense potential for       the AI topic, it also speaks to the in-
the volume and detail of data available    AI’s relative importance on the strate-   interesting insights.                     using AI to bring new, improved prod-      creasingly collaborative approach
to feed AI’s capabilities.                 gic agenda, its expected impact and                                                 ucts and services to market, create        many leading companies are taking
                                                                                                                               exceptional experiences for customers      when entering new technology do-
Reality vs. hype                                                                                                               and employees, and create ways to          mains and embarking on journeys
                                                                                                                               operate that enhance performance           into unknown territories.
Only recently started to see more
widespread, scaled adoption of AI                                                                                              across the board.
across sectors, value chains and eco-
systems. Yet AI technology is quickly                                                                                          We learned that regardless of which
approaching a point where it is be-                                                                                            use cases the companies pursue and
                                                                  When it comes to AI, the urgency is                          the role that AI currently has, taking a
coming a critical element in enabling                                                                                                                                                                                 AI is so general that it can
companies across sectors to drive                                 there and the need is there. Needs differ                    strategic outlook to assess the implica-
                                                                                                                               tions for the business and responding                                                  be applied to any problem,
revenue, increase profits and remain                              by the industry but in the past year the
competitive.                                                                                                                   accordingly are increasingly seen as                                                   where there is enough data.
                                                                  actual engagement and understanding
                                                                                                                               crucial for any executive agenda.                                                      But every business problem
                                                                  has increased quite rapidly. A lot of
We hear many people in numerous                                                                                                                                                                                       is unique so how companies
companies talk about AI. While the                                experiments and implementations
                                                                                                                                                                                                                      apply AI will differ for each
hype is pervasive, not a lot of people                            have been done and the knowledge of
fully understand its technological                                                                                                                                                                                    company.
                                                                  what and how to do such projects has
potential, where it can create value or
                                                                  increased.
how to get started. This report aims at                                                                                                                                                                               — Peltarion
providing a practical understanding of                                                                                                                                                                                  Technology membership
why European companies are investing                              — Combient                                                                                                                                            organization
                                                                    Technology membership organization

10                                                                                                                                                                                                                                                     11
Setting the Scene                                                                                                                                                   Setting the Scene

                                                    Rich Data
                                                    Which sources of information is the study based on?

One risk, or argument, is that people don’t
know yet if it is really necessary and whether      This report combines multiple sources
                                                    of data to answer the questions of why,
                                                                                                 We also present case studies of specific
                                                                                                 companies, both local and internation-
                                                                                                                                             Recognizing and mitigating
                                                                                                                                             potential survey and interview bias

they have to do it now. Is there a risk that part   where and how AI is currently being used
                                                    in business. It provides an inside view
                                                                                                 al, to provide an understanding of what
                                                                                                 they are doing with AI and why, draw-
                                                                                                                                             In terms of methodology, this report
                                                                                                                                             follows robust research design and

of their business is targeted for disruption?
                                                    across markets and sectors. It combines      ing on lessons learned and obstacles to     protocol. Doing so minimizes potential
                                                    local and pan-European views, and adds       overcome when putting AI to use for         bias, but does not eliminate it, as it
                                                    value through a quantitative perspective     specific use cases and to derive value      is inevitable in market research. One

We see more people understanding that we            on how advanced companies are with
                                                    AI, and a qualitative perspective on how
                                                                                                 on a strategic level.                       potential type is social desirability
                                                                                                                                             and conformity bias, as the topic of
                                                                                                 Proprietary AI investment data
need to start acting here and now.
                                                    to develop the skills required to succeed                                                AI receives lots of media and political
                                                    with AI. We have recived input from over     We have supplemented the prima-             attention. Response bias, including
                                                    300 people from 277 participating com-       ry source input from the companies          extreme responding, cultural bias, and
                                                    panies. This has resulted in a range of      with acquisition data from numerous         acquiescence bias (“yea-saying”), are
                                                    interviews and case studies as well as 269   sources, to take the pulse of the AI        potential factors as we ask respondents

— Assa Abloy Manufacturing company
                                                    company responses to our survey.             investment market in Europe. These          to self-report on their respective com-
                                                                                                 insights help provide a picture of the      panies’ experience. Therefore, while
                                                    Extensive online survey data from            wider European AI ecosystem and its         this report follows best practices, some
                                                    business leaders in 269 companies            development.                                bias is possible.
                                                    We have surveyed people with a leading
                                                    role in managing the AI agenda in all the    AI expert perspectives                      Nonetheless, with the combination of
                                                    companies that have contributed to the       With this wider understanding of AI         extensive survey data, interview data,
                                                    study. This gives us an aggregate dataset    start-up acquisitions, partnerships, and    investment data, and expert perspec-
                                                    that enables a perspective for each mar-     investment funding, we outline how          tives, we believe the report provides a
                                                    ket and each sector, as well as compara-     investments in AI are skyrocketing,         solid foundation for an indispensable

The challenge is that AI will be available in
                                                    tive insights for the respective company     where AI investment is taking place         view of executive experience with –
                                                    types, sectors, and countries in Europe.     geographically, and which sectors are       and future plans for – AI in business.

many different places so you will need to
                                                                                                 making bets. As we are on the cusp of
                                                    Qualitative in-depth interviews with         widespread change driven by AI, we
                                                    senior business executives                   also reached out to AI experts from

manage all AI and machine learning in all your      In addition, we conducted deep-dive
                                                    interviews to gain deeper, qualitative
                                                                                                 academia for an outlook of AI technol-
                                                                                                 ogies going mainstream, and to gain

products and services. It is not in one place or
                                                    insights into how AI is affecting the ex-    an understanding of the macro scale
                                                    ecutive agenda. Through conversations        of business effects that they expect will
                                                    with business leaders, we report on          materialize when looking into a distant

one function, it is all over the place.             where they expect AI will have an impact,
                                                    how important AI is to their current and
                                                                                                 future.

                                                    future business strategies, what benefits
                                                    they hope to realize from implementing
                                                    AI, and which capabilities they believe

 — Ericsson Telecommunications company              are key to advance AI maturity in their
                                                    companies.

12                                                                                                                                                                                13
Setting the Scene                                                                                                                                                                                                                                                                                                                                                                                                        Setting the Scene

Executive Perspective
                                                                                                                                            Large group of respondents                                                                                                                                      Surveyed companies are well represented across
Who are the respondents that have contributed to the study?                                                                                 with a specific AI/digital role                                                                                                                                 each of the 15 European markets
                                                                                                                                            Organizational function of respondents                                                                                                                          Number of online surveyed companies per country
                                                                                                                                            in the online survey

The data approach used allows us to         Functional diversity                          A combined annual revenue
identify trends across industries and       The respondents cover very different          of $1.9 trillion
countries based on input from various       functions, of which the most common           Participants come from both major

                                                                                                                                                                                                                                                                                                                                                               N e th
functional business areas. Consequent-      are designated AI/digital department,         listed companies, privately held com-                67

                                                                                                                                                                                                                                                                                                                                                                erlan

                                                                                                                                                                                                                                                                                                                                                                                            nd
ly, we have captured a range of in-         followed by IT, and strategy/general          panies, and in some case relatively small

                                                                                                                                                                                                                                                                                                                                                                                          Ir e l a
sights, learnings, and perspectives from

                                                                                                                                                                                                                                                                                                                                                                  ds
                                            management functions. This functional         companies. In totality, they represent a                               60
both strategic and technical points of      diversity increases the breadth of the        combined revenue of approximately

                                                                                                                                                                                                                                                                                                                                   N

                                                                                                                                                                                                                                                                                                                                                                                                                        en
                                                                                                                                                                                                                                                                                                                                       or

                                                                                                                                                                                                                                                                                                                                                                                                                     ed
view.

                                                                                                                                                                                                                                                                                                                                            w
                                            report, with insights and perspectives        $1.9 trillion. Despite covering a signifi-

                                                                                                                                                                                                                                                                                                                                                                                                                  Sw
                                                                                                                                                                                                                                                                                                                                                ay

                                                                                                                                                                                                                                                                                                                                                                        22

                                                                                                                                                                                                                                                                                                                                                                                      20
                                            covering widely different aspects of AI.      cant part of total European business, our                                                             45
Respondents predominantly in                                                              selection criteria have also favored more

                                                                                                                                                                                                                                                                                                                                                                                                     20
                                                                                                                                                                                                                                                                                                                                                         21
                                                                                                                                                                                                                                                                                                                  D e nm                                                                                                                             an d
senior level positions                                                                                                                                                                                                                                                                                                     ar k                                                                                                             ze r l
                                            Surveyed companies span                       niche oriented companies with extensive                                                                                       39                                                                                                                                                                                                        Swit
To ensure that these insights and per-      multiple sectors                              AI experience and capabilities.                                                                                                                           27
                                                                                                                                                                                                                                                                                                                                                   25                                                           20
                                                                                                                                                                                                                                                                                     26
spectives are relevant at the executive
level, we surveyed and interviewed
                                            The participating companies are spread                                                                                                                                                                                                                                                                                        269
                                            fairly evenly across seven sectors, with                                                                                                                                                                                                                                                                                    online survey
                                                                                                                                                                                                                                                                                                                                                   21                                                           20
high-ranking officers with a responsi-      the majority of companies belonging               Primarily listed companies                                                                                                                                                                                                                                                 companies                                                        Italy
                                                                                                                                                                                                                                                                                                                  Austria                                                  in total
bility for driving the AI agenda in their   to Industrial Products & Manufactur-              represented in Swedish data                                                                                                                                                                            5
respective companies. With 60% of           ing, followed by Financial Services, and          The vast majority of respondents                                                                                                                                                                                                                                                                             22
                                                                                                                                                                                                                                                                                                                                                        22
respondents being either part of top        Transportation, Energy & Construction.            in Sweden are major listed com-
management or the executive man-            Services and Life Science are represented         panies, with some companies                                                                                                                                                                                                              ga
                                                                                                                                                                                                                                                                                                                                            l                                                                             Fin

                                                                                                                                                                                                                                                                                                                                                                                             15
                                                                                                                                                                                                                                                                                                                                                                20
                                                                                                                                                                                                                                                                                                                                                                                                                                lan
                                                                                                                                                                                                                                                                                                                                  tu

                                                                                                                                               Digital/AI

                                                                                                                                                                                        General Management, Strategy
                                                                                                                                                                General IT/Technology

                                                                                                                                                                                              & Business Development

                                                                                                                                                                                                                       R&D/Product Management

                                                                                                                                                                                                                                                Customer Service & Marketing

                                                                                                                                                                                                                                                                                  Admin & Finance

                                                                                                                                                                                                                                                                                                    Other

                                                                                                                                                                                                                                                                                                                                                                               21
agement team, their input is likely well                                                                                                                                                                                                                                                                                      r                                                                                                       d
                                            to a lesser extent.                               privately held by foundations.                                                                                                                                                                                               Po
atuned to the general perspective and                                                         The participating companies in

                                                                                                                                                                                                                                                                                                                                                                                                      Un ce & G
overall strategic direction of the com-

                                                                                                                                                                                                                                                                                                                                                         ain
                                                                                              Sweden had a combined total

                                                                                                                                                                                                                                                                                                                                                                                                       Fra
                                                                                                                                                                                                                                                                                                                                                                                                        ite
                                                                                                                                                                                                                                                                                                                                                        Sp
panies they represent.

                                                                                                                                                                                                                                                                                                                                                                             Luxenbourg
                                                                                                                                                                                                                                                                                                                                                                             Belgium &

                                                                                                                                                                                                                                                                                                                                                                                                           n
                                                                                                                                                                                                                                                                                                                                                                                                            dK
                                                                                              annual revenue of over $158

                                                                                                                                                                                                                                                                                                                                                                                                               i n g m a ny
                                                                                              billion in 2017.

                                                                                                                                                                                                                                                                                                                                                                                                                    do
                                                                                                                                                                                                                                                                                                                                                                                                                    er

                                                                                                                                                                                                                                                                                                                                                                                                                       m,
More than 300 participants                          Majority hold a top management or executive position
Number of participants interviewed                  Organisational level of person participating in the study
and/or online surveyed in the study
                                                                                                                                            Seven major sectors covered in the study
                                                                                                                                            Representation of participating companies per sector category
       25 of +300
       are Swedish participants                                                                                  10%
                                                    C-suite/Executive                         27%
                                  +                                                                                                                                                                                    9%                                                                                    21%                                                        17%                                                                7%
                                                                                                                       35%

                                                    Top Management                                                                                  Life Science                                                                                                                          Industrial Products                                        Finance                                                  Services
                                                    (non-executive)                     33%                                                   Pharmaceutical, Healthcare,                                                                                                                   Manufacturing,                                      Banking, Insurance,                                    Professional Services,
                                                                                                                                                       Biotech                                                                                                                            Materials, Equipment                                     Investments                                       Hospitality, Public Services,
                                                                                                                                                                                                                                                                                                                                                                                                     Membership Organization

                                                                                                                                 55%
                                                    Management
                                                    Level                         37%                                                                                                                                  13%                                                                                   16%                                                        17%
                                                    Employee
                                                    (non-managerial level)   3%                                                        0%                         CPR                                                                                                                      TMT                                              Infrastructure
                                                                                                                                                            Consumer Products                                                                                                           Technology,                                     Transportation, Energy,
                                                                                                                                                                 & Retail                                                                                                      Media/Entertainment & Telecom                           Construction, Real Estate
     15 European markets          Sweden                                                        15 European markets          Sweden

14                                                                                                                                                                                                                                                                                                                                                                                                                                                      15
277 Companies                                                             Indie Campers, Intesa Sanpaolo, ISDIN, ISS, Jansen AG, Julius Baer,
                                                                          Katoen Natie, KBC Group, Kemira, Kingspan Group, KLP Banken,
                                                                          Komplett, Kongsberg Gruppen, LafargeHolcim, LanguageWire,
                                                                          LEGO, LEO Pharma, Lerøy Seafood, Liga Portugal, L’Occitane, Lonza,
A.P. Moller - Maersk, Acciona, Adamant-Namiki of Europe, Aegon,           L’Oreal, Lusíadas Saúde, Luz Saúde, Länsförsäkringar, MAPFRE,
Aena, Ageas, Agfa-Gevaert, Agrifirm Group, Ahlstrom-Munksjö,              Merkur Versicherung, Metall Zug, Metro, Metso, M-Files, Millicom,
AIB, AkzoNobel, Almirall, Alpro, ALSA, Amadeus, AMAG, Ambea,              Mota-Engil, Mutua Madrileña Automovilista, Møller Mobility Group,
APM Terminals, Aprila Bank, Arcelor Mittal, Ardagh Group,                 Neste, NH Hotel Group, Nilfisk, Nokia Corporation, NorgesGruppen,
Arval BNP Paribas Group, Asiakastieto Group, Assa Abloy,                  Norstat,     Novabase,    Novartis,    Novo     Nordisk,     Novozymes,
Assicurazioni Generali, Atea, Audi, Austrian Airlines, Austrian           Now TV, OBI, Oesterreichische Nationalbank, OP Financial Group,
Federal Computing Centre, Autogrill, BAM Group, Barco, BASF,              Opportunity Network, Orion, Paddy Power Betfair, Peltarion,
BAWAG P.S.K, Baxter, BBVA, Besix, Bolloré, BTG, BUWOG, C&C                Pernod Ricard, PFA, Philips, Planeta DeAgostini, Poste Italiane,
Group, Campbells International, Capio, Carmeuse, Carnival                 Posti, PostNord, Proximus, Pöyry, Rabobank, Raiffeisen Software,
UK, CEiiA, Cermaq, Chr. Hansen, Cirsa, City of Amsterdam,                 Raiffeisen Switzerland, Ramada Investimentos SA, Randstad, Rexel,
Colruyt Group, Com Hem, Combient, Comifar Distribuzione,                  ROCKWOOL Group, Room Mate Hotels, Royal College of Surgeons in
Constitutional Court of Austria, Coolblue, COOP Nederland,                Ireland, S Group, Saipem, Saint Gobain, Sakthi Portugal, Salsa, Saxo Bank,
Cosentino Group, Costa Crociere, Credit Suisse, Crédito Agrícola,         Sbanken, SBB Swiss Federal Railways, Schindler, SEB, SGS,
DAF Trucks, Danfoss, Danske Bank, Dawn Meats, DFDS, DNA,                  Siemens Mobility, SimCorp, Skandia, Solvay, Sonae, Sonae Arauco,
DNB, DSM, DSV, Dümmen Orange, Dynamic ID, DAA, Edison,                    SpareBank 1 SMN, SpareBank 1 Østlandet, Sportmaster, Statkraft,
EDP - Energias de Portugal, Egmont, EQT, Ericsson, Erste Group            Stedin, Steyr Mannlicher, Stora Enso, Styria Marketing Services, Suomen
Bank, ESB, ESIM Chemicals, Esprinet, Europac, Fazer, FDJ,                 Terveystalo, Swedbank, Swisscom, Taylor Wimpey, TDC, Teamwork,
Federal Office of Meteorology and Climatology MeteoSwiss, Ferrovial,      Telefónica, Telekom Austria, Telenor Global Shared Services, Telia,
Fexco, Finnair, Fortum, Galp, Geberit, Genalice, Generali Versicherung,   Tesco, Tetra Pak, The Navigator Company, TIM, Tine, Tokmanni ,
GetVisibility, Gjensidige Forsikring, Glen Dimplex Group, Globalia,       TomTom, Tryg, TTS Group, TVH, Ubimet, UDG Healthcare, UniCredit,
GN Store Nord, GrandVision, Grupo Antolin, Grupo Ascendum,                Unilin, UPM, Vaisala, Valmet, Valora Group, Van Lanschot, Vattenfall,
Grupo Codere Cablecom, Grupo Juliá, Grupo Nabeiro – Delta Cafés,          Version 1, Visana, Vodafone Automotive, VodafoneZiggo, Voestalpine
Grupo Pestana, Grupo Visabeira, GSK, GAA, H. Lundbeck, Hafslund,          High Performance Metals, WABCO, WALTER GROUP, Western Bulk,
Handelsbanken, Hera, Hostelworld, Husqvarna, IKEA Group,                  William Demant, Wind Tre, WIT Software, Wolters Kluwer, Zurich
Ilmarinen Mutual Pension Insurance Company, Implenia, Impresa,            Airport, Zurich Insurance, Öhman, Ørsted, Österreichische Post.

     Swedish companies   All companies, excluding Swedish companies                                     Note: Of all contributing companies, 14 chose to be anonymous, 0 of them being from Sweden

16                                                                                                                                                                                             17
Setting the Scene                                                                                                                                                                                                                                                                                      Setting the Scene

Bits and Bytes
                                                                                                                                                                                                                                  Companies are using a mix of Data Sources and Storage
                                                                                                                                                               Companies are using a combination                                  Solution: How are you primarily dealing with the computing demands
                                                                                                                                                               of on-premise and cloud solutions                                  needed for AI?
                                                                                                                                                                                                                                  Data Source: 1.Are you currently using unstructured or structured data
                                                                                                                                                               Companies are increasingly using
What technologies and data solutions are within the scope of the study?                                                                                        cloud-based AI solutions for both
                                                                                                                                                                                                                                  types in your AI process? 2.Are you currently using internal or external
                                                                                                                                                                                                                                  data sources in your AI process?
                                                                                                                                                               storage and on-demand computing
                                                                                                                                                               power - 83% of companies reporting
                                                                                                                                                               using Cloud technology to some ex-
AI can be defined as the ability of a               not in common use by companies in          While companies historically have                               tent to enable their AI capabilities. Key
machine to perform cognitive func-                  Europe. Companies surveyed are cur-        primarily have used internal data for                           benefits of cloud solutions mentioned
                                                                                                                                                               by many respondents are the flexibility

                                                                                                                                                                                                                        Solution
tions which are normally associated                 rently focused on narrower and more        supervised Machine Learning, many
with humans. This includes reasoning,               specific use-cases that support existing   have begun exploring the possibility of                         to swiftly scale systems up and down
learning, problem solving, and in some              business. These efforts will undoubt-      combining internal and external data-                           to accommodate changing demand, a
cases even exercising human behavior                edly help companies build capabilities     sets in order to produce even deeper                            variable cost structure, and access to                                           27%                        17%                           56%
such as creativity.                                 that are necessary to deploy more          insights.                                                       larger data sets. However, many com-                                           In Cloud                 On premise                        Both
                                                    advanced AI solutions in the future.                                                                       panies are still relying on on-premise
Advanced AI applications are not                                                               Machine Learning and Smart Robot-                               solutions, not least due to existing data
yet widespread                                      Machine Learning                           ics were found to be the most useful.                           infrastructure.
AI holds the potential to transform                 The most commonly used AI technol-         It is not clear from the study if this is
business in a radical way given its wide            ogy among the surveyed companies           because they are simply the most com-
variety of use. Quite simply, business              is Machine Learning. This is inarguably    mon starting points before deploying                               Machine learning and natural
leaders need to understand AI in order              due to its wide-ranging applicabili-       more advanced technologies, or if they                             language processing most
to grasp the opportunities and threats              ty, making it relevant for a variety of    also longer term hold the most wide                                used by Swedish companies
the technologies pose.                              use-cases across the value chain. Of the   and sigificant application potential.                              On average, the underlying

                                                                                                                                                                                                                        Data Source
                                                    different types of Machine Learning,                                                                          technologies that are used most                                               32%                         7%                           43%
While companies acknowledge the                     the most common is supervised Ma-                                                                             by Swedish companies are con-                                             Structured                 Unstructured                      Both
significant potential of broader, more              chine Learning, where software is fed                                                                         centrated in two areas: machine
advanced AI technologies such as                    structured data and finds patterns that                                                                       learning (80%), and natural lan-
computer vision, speech recognition,                can be used to understand and inter-                                                                          guage processing (65%). Natural
and virtual agents, they are currently              pret new observations.                                                                                        language processing ranks con-
                                                                                                                                                                  siderably higher than the Euro-
                                                                                                                                                                  pean aggregate (39%). Overall,
A broad definition of technologies are included in this AI definition                                                                                             there is a higher share of Swedish
                                                                                                                                                                  companies in each of the technol-                                             38%                         3%                           44%
Technologies included in the definition of AI used in this study
                                                                                                                                                                  ogies compared to the European                                              Internal                   External                        Both
                                                                                                                                                                  aggregate.
                                                         Text Analysis
                                                         Computational analysis of texts,

              Natural Language Processing
                                                         making it readable by other AI or
                                                                                               Biometrics                                                     Machine Learning and Smart Robotics found to be the most useful
                                                         computer systems.
              Computer interpretation, under-                                                  Analysis of human physical and                                 Which of the following technologies have you found to be most useful in your company’s deployment of AI?
              standing, and generation of written                                              emotional characteristics – used
              natural human language.                                                          also for identification and access
                                                                                               control.

                                                                                                                                                                 77%             44%               40%            39%                     39%             26%               21%              20%                6%
Virtual Agents
Computer-generated virtual personas                                                                                Machine Learning
that can be used to interact with people                                                                           A computer’s ability to ‘learn’
in both B2C, C2B, and B2B contexts.                                                                                from data, either supervised or               80%             55%               50%           65%                      55%             40%              30%               25%                5%
                                                                                                                   non-supervised.

Speech Recognition                                                                                                 Neural Networks and Deep Learning
Enables computers to interpret spo-                                                                                Machines emulating the human brain,
ken language and to transform it into                                                                              enabling AI models to learn like humans.
written text or to treat it as commands
for a computer.                                                                                                                                                Machine      Smart robotics        Neural         Natural              Text analysis   Virtual agents     Computer          Speech            Biometrics
                                                                                                                   Computer Vision                             learning                        networks and     language                                                   vision        recognition
                                                                                                                   Gives computers the ability to                                              deep learning   processing
Smart Robotics                                                                                                     “see” images similar to how
The combination of AI and robots to                                                                                humans see.
                                                                                                                                                                  Affirmative responses, 15 European markets      Affirmative responses, Sweden
perform advanced tasks compared to
traditional non-intelligent robots.
                                                                                                                                                                                                                                                                       Note: Remaining percent ‘Don’t know’ responses

18                                                                                                                                                                                                                                                                                                                   19
Setting the Scene                                                                                                                                                                                                                                                                                                           Setting the Scene

Follow the Money                                                                                                                                                                       acquisitions, and is also much in line
                                                                                                                                                                                       with what we’re seeing when compar-
                                                                                                                                                                                       ing with the US and Asia.
                                                                                                                                                                                                                                                   Over $254 million invested in
                                                                                                                                                                                                                                                   AI start-ups in Sweden in the
                                                                                                                                                                                                                                                                                                 TMT most active, behind private
                                                                                                                                                                                                                                                                                                 equity and venture capital
                                                                                                                                                                                                                                                                                                 Investments into AI companies per sector,
How much is invested in AI in Europe?                                                                                                                                        Finland                                                               past decade                                   mUSD (accumulated 2008-2018)*
                                                                                                                                                                   $24M                Investment activity concentrated in                         In Sweden, there were 73 trans-
                                                                                                Norway                                                            21 deals             major European markets                                      actions over the past decade
                                                                                                               $30M                                                                    It comes as no surprise that a lot of                       involving companies working
A few big AI transactions                                                                                      5 deals
influencing the overall picture                                                                                                                                                        investment activity is in the UK, France,                   with AI. Of these, 55 reported
Company AI investments in mUSD and                                                                                                                                                     and Germany, having attracted 87% of                        deal value totaling $254 million.
                                                                                                                                       $254M
transaction volume per market                                                                                                          73 deals                                        investment in AI companies over the                         A large portion of this amount
                                                                                                                                                                                       past decade. The UK leads significantly                     was the $121 million investment                                         $7,453M
(accumulated 2008-2018)                                                                                                                Sweden                                                                                                                                                                              1,027 deals
                                                                                                                                                                                       in this regard, with 533 of the total                       in Zenuity in 2016, which works                                         Private Equity /
                                                                                                                                                                                       1,362 AI transactions in Europe. From                       with autonomous vehicles. Of                                            Venture Capital**
                                                                                                                                                                                       an investment perspective, it is also                       the AI companies in Sweden that
                                                                                                                $330M*
                                                                                                                21 deals                                                               worth noting that in April 2018, the EU                     received investments or were
                                                                                                                                                                                       committed to a 70% increase in invest-                      acquired, 55% focus primarily on
                                                                $7262M                                          Denmark
                                        Ireland                                                                                                                                        ment in European AI by 2020, suggest-                       machine learning technology,
                                                                533 deals
                                                                              The Netherlands                                                                                          ing further growth and potential in the                     likely due to its wide applicability
                                                          United Kingdom
                                              $39M                                                                                                                                     region.                                                     across a range of business prob-
                                                                                                      $43M
                                             37 deals                                                45 deals                                                                                                                                      lems and sectors.

                                                                                          $110M                      $520M
                                                                                         14 deals                   140 deals
                                                                                         Belgium
                                                                                                                    Germany
                                                                                                                                                                                       Steady increase in European AI investment
                                                                                                                                                                                       AI companies invested into, transaction volume, Europe (from 2008-2018)**                                                           $1,843M
                                                                                                                                                                                                                                                                                                                           220 deals
                                                                                                    $107M                                                                                                                                                                                                                  TMT
                                                                                                    31 deals          $75M
                                                                                                                     17 deals
                                                                              $1357M            Switzerland
                                                                              165 deals                                                                                                Number of                                                                                                                           $494M
                                                                                                                                Austria                                                transactions                                                                                                                        17 deals
                                                                                France                                                                                                                                                                                                                                     Industrial Products

                                              $3M                                                                                                                                      450
                                             8 deals                                                                                                                                                                                                                                                                       $368M
                                                                                                                                                                                                                                                                                          398
                                  Portugal                                                                                   $47M                                                                                                                                                                                          12 deals
                                                                                                                            29 deals                                                   400                                                                                                                                 Infrastructure

     European                 Sweden                              $131M                                                                Italy
                                                                                                                                                                                       350                                                                                        327
     markets                                                     79 deals
                                                                                                                                                                                                                                                Total                                                                      $254M
     UK bubble size not represenative                                                                                                                                                  300                                                   investment                                                                    21 deals
*Universal Robots acquired for $285M                                                                                                                                                                                                           $10.5bn                                                                     Life Science
                                                        Spain
                                                                                                                                                                                       250                                                                                228

The acquisition data from numerous                      alone. This trend is on track to con-                       tive investors and acquirers of AI than                                                                                                                                                                $70M
                                                                                                                    corporates, accounting for 75% of deal                             200                                                                                                                                 41 deals
sources enabled us to explore the                       tinue, with an exponential increase                                                                                                                                                                                                                                Finance
European AI ecosystem and gain in-                      in interest in AI driving more large                        volume in the last 10 years. This is an                                                                                                     148
                                                                                                                    indication that AI companies are in the                            150
sights into investment activity.                        companies to invest in AI or acquire AI
                                                        capabilities from innovative start-ups.                     early stages of high risk/high growth
                                                                                                                                                                                       100                                                            88                                                                   $38M
An exponential increase in AI in-                       Of the 15 markets surveyed, some in-                        dynamics. It also indicates that, for                                                                                                                                                                  10 deals
                                                                                                                                                                                                                                            64
vestment over the past decade                           clude one or two transactions that are                      large corporates, acquiring or invest-                                                                                                                                                                 CPR
                                                                                                                    ing in external AI businesses in order                              50                              29        27
Looking at AI transaction activity                      significantly large deals.                                                                                                                 14         11
                                                                                                                    to obtain AI capabilities is relatively
across Europe, there has been a steep                                                                                                                                                    0                                                                                                                                 $22M
                                                        Majority of investments in AI from                          limited. This is confirmed by our survey                                                                                                                                                               14 deals
consistent growth trend over the past
                                                        private equity and venture capital                          results where only 10% of companies                                           2008      2009       2010      2011       2012      2013      2014       2015   2016    2017                             Services
10 years, totaling 1,334 transactions
                                                                                                                    are seeking to obtain needed AI capa-
involving AI by 2017 – with a six-fold                  Private equity (PE) and venture capital
                                                                                                                    bilities through external investment or
increase in activity in the last 5 years                (VC) firms are significantly more ac-                                                                                                 Europe                                                                                                  **Including governmental investment

Note: Several transactions in the dataset did not have publically disclosed deal values, suggesting that actual total values are higher than what’s shown above                         *For all of Europe, 34 countries (not just the 15 markets focused on in this report)

20                                                                                                                                                                                                                                                                                                                                          21
Artificial Intelligence in Europe
                                                        ( Case Study )                                                                                                                                                                                                 Setting the Scene

Combient                                                                                                                                              Expert Perspective
                                                                                                                                                      What does the future look like according to AI analysts?

Combient is a Swedish- and Finn-            organizational change, including ed-   fierce competition for talent. As the
ish-based collaboration network of          ucating the C-suite to build awareness partner companies emphasize, you not
enterprises representing various in-        and urgency for change. Companies      only need data scientists but the entire
dustries with the goal of driving digital   represent various industries, making   setup for AI, including data analysts,
innovation. By leveraging a shared pool     for an open culture which resulted in  software engineers, and people who
of experts and focusing on implemen-        an understanding of AI from real-life  can integrate AI projects into the busi-
tation, companies reduce the                                                                  ness. You also need to un-
risks and costs of experimen-                                                                 derstand what data you have                             We also spoke to a range of leading AI     Agile culture enables AI                    task is to educate and improve un-
tation. AI is currently a signif-                                                             and need, and how AI can                                                                                                                       derstanding, from C-suite leadership
icant part of the venture, with
                                       By leveraging a shared pool of experts                 be applied to your individual
                                                                                                                                                      experts from business and academia         Culture was a recurring theme as well.
                                                                                                                                                      to gain insights into the kind of change                                               teams to employees at the coal face.
over 50% of its staff working         and focusing on implementation, com-                    context, as copying compet-                             which we are on the cusp, and the
                                                                                                                                                                                                 It can either stifle forward momentum
                                                                                                                                                                                                                                             This also ties in with the importance of
                                                                                                                                                                                                 in organizations, or be the silver bullet
with AI and Advanced Analyt-              panies reduce the risks and costs of                itors may not be the right                              role AI is expected to play as part of a   that enables the potential of AI to be      partnering to get started and access
ics and is a significant part of     experimentation. AI is currently a signifi-              approach for solutions that                             broader transformational wave.                                                         the expertise needed to use AI. While
                                                                                                                                                                                                 realized from top to bottom.
what it does for its partners.                                                                are not plug and play. This                                                                                                                    partnering and collaborating solves
                                                cant part of the venture.                     is made easier with broad                               AI is entering the mainstream              Some of the experts even argue that         the perennial AI challenge concerning
In practice, Combient’s                                                                       access to experts. Efforts                              and here to stay                                                                       the scarcity of talent, the significant
                                                                                                                                                                                                 it’s not only technical skills that hold
experts work with partner                                                                     so far are mainly in driving                                                                                                                   cost and substantial benefit that can
                                                                                                                                                      One thing was clear from the experts       up AI projects, it’s also the need for a
companies to identify what their needs      examples that were launched in rapid   radical efficiency, where AI is used in                                                                                                                   be gained from AI means that organ-
                                                                                                                                                      we spoke to: as far as the peaks and       culture of experimentation.
are and what areas of digital focus will    succession over the past year.         back office functions, customer service,                                                                                                                  izations also need to be cognizant of
                                                                                                                                                      troughs of hype and technological
make them successful. They help with        Collaboration helps companies address  R&D, production planning, chatbots                                                                                                                        building capabilities in-house for the
                                                                                                                                                      leaps surrounding AI go, there is no       Companies that are more natively
everything from implementation to           the biggest challenge on the market:   and optimizing the value chain.                                                                                                                           long-term.
                                                                                                                                                      doubt that we are living through a         digital or have gone down that road
                                                                                                                                                      particularly prominent peak, with no       understand the value of experimenting
                                                                                                                                                      indication that the buzz nor the po-       and iterating. They don’t think in tra-     Finally, as AI develops, we are also
                                                                                                                                                      tential will fade away any time soon. In   ditional terms of committing to year-       going to see innovation and expertise
                                                                                                                                                                                                                                             spreading outside of the dominant
                                                                               What next?                                                             a world increasingly dominated, dis-
                                                                                                                                                      rupted and driven by innovative tech
                                                                                                                                                                                                 long projects that need to produce
                                                                                                                                                                                                 specific outputs, but rather to explore     clusters of the likes of Silicon Valley,
                                                                                                                                                      powerhouses, large and small, it is no     and test ideas before scaling.              as governments, businesses and uni-
     Founded in January 2015 and headquartered in Sweden and                   Combient is continuing its efforts in driving the digital agenda                                                                                              versities increasingly invest in building
                                                                                                                                                      understatement to suggest that AI will
     Finland, Combient is a joint venture of global enterprises with a         across industries and it believes that in 1-2 years, the benefits of                                                                                          knowledge, resources and capabilities.
                                                                                                                                                      be a chief protagonist in the change       When it comes to AI,
     vision of bringing digital innovation to the industry. Its key values     AI will be prevalent. Companies will be much more efficient and
                                                                                                                                                      transcending all elements of business      knowledge is power
     are innovation, collaboration and experimentation. Its work               grow much faster, to the point that they could disrupt their own
                                                                                                                                                      in what has been labelled the Fourth       Expert opinion also seemed unani-
     with leading Swedish technical universities and the Wallenberg            industries. Besides radical efficiency initiatives, Combient expects
                                                                                                                                                      Industrial Revolution.                     mous in that most people not directly
     Autonomous Systems Program (WASP) makes Combient a                        new business models to ramp up in the coming years. There are
                                                                               already interesting initiatives moving forward, yet due to their                                                  involved with AI must still have quite a
     bridge between industry and academia. Combient supports 24                                                                                       Business-minded people will
                                                                               more transformative nature, they are progressing slower than the                                                  basic understanding of what AI is and
     companies, with a combined total of over 500,000 employees and                                                                                   drive the transformation
                                                                               early cost-efficiency initiatives.                                                                                what it can actually do. Therefore, the
     €130 billion in turnover.
                                                                                                                                                      The AI experts confirmed some of the
                                                                                                                                                      key ingredients necessary for AI in
                                                                                                                                                      organizations: a combination of do-
                                                                                                                                                      main and technical expertise, the ap-
                                                                                                                                                      propriate technology, the right talent,
                                                                                                                                                      and lots and lots of data. While letting
                                                                                                                                                      tech-savvy individuals drive innovation               Farmers and growers are still reasonably
The challenge is to understand how to                                        Expectations and reality usually do not match.                           is great for building understanding,                  conventional, with an average age of 55 years. The
benefit from something that is so new. Some                                                                                                           true transformation will not come until
                                                                             People think of movie-like advanced reality.                                                                                   chances are that this will change significantly in the
                                                                                                                                                      business people start suggesting prob-
AI technologies are not mature, so you can’t                                 If the company does not have right advisors                                                                                    future. It could just be that technology companies
                                                                                                                                                      lems for AI to solve - not the other way
have a ‘plug and play’ approach. There is a lot                              and references, they can make the wrong                                  round.                                                will become the disruptors of our market.
of work and adoption to do, as there are no                                  assumptions and get disappointed.
solutions available where you can just buy                                                                                                                                                                  — Royal Agrifirm Group
and start using.                                                                                                                                                                                              Agricultural cooperative

22                                                                                                                                                                                                                                                                                   23
Setting the Scene                                                                                                                     Setting the Scene

                                                                      We believe that every organization is going to have to write their
From the Horse’s Mouth*                                               own AI manifesto: what they believe about AI, how they’re going
                                                                      to use or not use data, how they’re going to publish data, and
*From the highest authority
                                                                      make the consumers of their products and services aware of that.
                                                                      The creation of those manifestos is going to become a gateway
                                                                      to the success of AI.

                                                                      — Norm Judah, Chief Technology Officer of Worldwide Services
                                                                      at Microsoft

The full extent of the AI story remains in its early stages. What
we do know is that big data, computing power and connectivity         If you have a ton of data, and your problem is one of classifying
are changing the industrial landscape. The opportunity rests in       patterns (like speech recognition or object identification), AI may
accelerating the digitization of businesses, making them more         well be able to help. But let’s be realistic, too: AI is still nowhere
data driven by building applications that deliver machine-assist-     near as flexible and versatile as human beings; if you need a ma-
ed insights.                                                          chine to read, or react dynamically, on the fly, to some kind of
                                                                      ever changing problem, the technology you seek may not yet ex-
— Mona Vernon, CTO, Thomson Reuters Labs                              ist. Intelligence is a really hard problem.

                                                                      — Gary Marcus, Professor, New York University

In some cases, there is too much hype, but paradoxically, the
potential opportunities and benefits of AI are still, if anything,
under-hyped. Often, the impact of new technologies is overes-         AI is a general purpose technology, so will eventually affect all in-
timated in the short term and underestimated in the long term,        dustries. However, this impact can be slowed by the lack of data
and while there is a lot of noise regarding AI, there’s been a lack   in particular industries. There’s also more innovative cultures
of in-depth discussion and analysis of how it’s actually going to     inside different organizations, that can either drive adoption or
transform businesses.                                                 prevent it.

— Nigel Duffy, Global AI Innovation Leader, EY                        — Marc Warner, CEO, ASI Data Science

24                                                                                                                                                  25
Artificial intelligence in Europe                                                                                                                                                   Role of AI in European Business

                                                                      A Strategic Agenda
                                                                      Where is the AI conversation currently taking place?

Role of AI
                                                                      A good starting point to understand                 Active C-suite and Board of Direc-          both pertain to job insecurity and to
                                                                      how large European companies are                    tors involvement                            the fact that AI is still a highly abstract
                                                                      handling AI is to look at who in the                In 71% of the companies surveyed, AI        topic for many when it comes to prov-
                                                                      organization is driving the AI agenda,              is already an important topic on the        ing day-to-day business value.
                                                                      whether it be the Board, the C-suite,               C-suite agenda and across various
                                                                      managers, or employees.                             roles - from cost-focused CFOs looking
                                                                                                                          for efficiency through automation, to         AI important across all hierar-

in European
                                                                      AI is particularly relevant at                      CDOs with customer-oriented ambi-             chical levels in Sweden
                                                                      higher organizational levels                        tions as part of wider digitalization         In Sweden, AI is an important
                                                                      From driving strategic considerations               efforts, to the CTOs who is often still       topic across all levels of the or-
                                                                      at the Board level to being a topic of in-          responsible for a type of AI Center of        ganization, particularly at the
                                                                      terest or concern at the employee level,            Excellence.                                   executive and managerial level.
                                                                      the results are clear: AI is important                                                            Additionally, at 60%, Sweden is

Business
                                                                      and resides across all levels at many of            Companies more advanced in AI tend            the country with the highest num-
                                                                      the organizations we interviewed.                   to have stronger involvement of the           ber of respondents that report
                                                                                                                          C-suite and the Boards of Directors           AI is an important topic at the
                                                                      Only a few companies stated that AI is              than the rest. They focus less on the         non-managerial level. This could
                                                                      not currently an important topic at any             technology itself and more on the busi-       reflect the recent influx to the
                                                                      level of the organization - while the               ness problems that AI can addresses.          country’s workforce of graduates
                                                                      vast majority of companies view AI as                                                             with AI related backgrounds.
                                                                      generally important regardless of how               Relatively speaking, the AI topic seems
                                                                      advanced they are, or how much AI is                to not yet having reached the same
                                                                      being considered for deployment in                  level of importance at the non-mana-
                                                                      the near future.                                    gerial level (employees) than at the top.
                                                                                                                          Speculating about the reason, it could
There is a lot of hype surrounding AI at the moment, and few
doubt its potential. We examine how important is AI compared to
other digital priorities and where AI fits on the strategic agenda.   AI is an important topic on the C-suite level in particular
                                                                      On what hierarchical levels in your company is AI an important topic?                                       AI is in particular an im-
                                                                                                                                                                                portant topic at the Execu-
                                                                                                                                                                                   tive Management level

We look at the impact of AI on the company’s core business, as
                                                                      S T R AT E G I C L E V E L

well as adjacent and new areas of business.                                 Board                                                        60%
                                                                            of Directors                                                                                 38%
                                                                            level

                                                                            Executive                                                                     80%

We also examine the current AI maturity levels across sectors and           Management
                                                                            level
                                                                                                                                                                          71%

markets, the potential drivers for deploying AI, and where AI is                                                                                          80%
                                                                            Managerial                                                                                    56%
applied within organizations, across customer-facing functions,             level

operations, product development, and internal business support.             Employee
                                                                            (non managerial
                                                                                                                                         60%
                                                                                                                                                                         28%
                                                                            level)

                                                                      O P E R AT I O N A L L E V E L

                                                                             Affirmative responses, 15 European markets         Affirmative responses, Sweden

26                                                                                                                                                                                                              27
Role of AI in European Business                                                                                                                                                                                                                                         Role of AI in European Business

Among Friends                                                                                                                                      Push or Pull
What is the importance of AI against other digital priorities?                                                                                     How is AI predominately deployed into the organizations?

                                                                                                                                                   To understand the drivers behind                                  Both Business and IT drive AI advancements in
In a business era driven by innovation        The participating companies are gen-                AI slightly more important                       the adoption and deployment of AI                                 Swedish companies
and tech-led disruption, AI is obviously      erally in the process of understanding              than other digital priorities                    in the companies, we took a closer
not the sole priority.                        the potential of existing data, includ-                                                                                                                                Among Swedish companies surveyed, AI deployment is driven by
                                                                                                  in Sweden                                        look at how AI is approached in a top
                                              ing to what extent it can be used,                                                                                                                                     both pull from the needs of the business as well as push from IT’s
                                                                                                  Most companies in Sweden are                     down-bottom up management con-
AI as a digital priority                      what it can be used for, and how to                                                                                                                                    capabilities and innovations. In addition, 35% of Swedish compa-
                                                                                                  engaging in successful pilot                     text, and from a functional tech- vs.
                                              capture and leverage it.                                                                                                                                               nies manage AI via a combination of a top-down and bottom-up
When asked on a scale of 1 to 5 how                                                               projects and proofs of concept,                  business driven dynamic.
                                                                                                                                                                                                                     approach, 30% only use a bottom-up approach, and 30% only
important AI is to the business relative                                                          or have AI initiatives that are
                                              Furthermore, many of the companies                                                                                                                                     top-down. These results suggest Swedish companies do not grav-
to other digital priorities, the majority                                                         released into production. When                   AI driven from a combination of
                                              are focused on building the appropri-                                                                                                                                  itate towards a singular approach to managing AI in the organiza-
of respondents told us that it is about                                                           it comes to their prioritization,                technology push and business pull
                                              ate data infrastructures or modern-                                                                                                                                    tion.
equal. Very few organizations said it                                                             respondents in Sweden on av-                     The contributing companies are quite
was their most important digital priori-      izing legacy systems as a top digital                                                                evenly split across deploying AI as a
                                                                                                  erage consider AI slightly more
ty, or not formalized as a digital priority   priority, both being prerequisites                                                                   top down process, as a bottom up, or
                                                                                                  important than other digital
at all, with the spread of responses          for introducing AI into the company.                                                                 as a combination of the two. However,        AI deployed and managed in a balanced way
                                                                                                  priorities, a ranking above the
leaning slightly towards the upper end        Considering that AI is heavily reliant                                                               when looking at the self-reported most       How would you characterize the way AI is being managed in your com-
                                                                                                  European aggregate. Additionally,
of the importance spectrum.                   on data as its fuel, this development                                                                advanced companies, they are more            pany? How would you characterize the way AI is being deployed in your
                                                                                                  20% of Swedish companies report
                                              suggests that the foundations are                                                                    top down than bottom up in their ap-         company?
                                                                                                  AI is the most important digital
This slant is likely to increase as many      being laid for further AI integration in                                                             proach. It was clear from speaking with
                                                                                                  priority for their organization,
companies expect AI to become more            the years to come.                                                                                   them, that this is partly a result of AI
                                                                                                  the highest result across all par-
important, as the technology develops                                                             ticipant countries. This aligns with             being increasingly important enabler in
and use-cases become more clear to                                                                respondents saying their focus is                the company, and playing an increas-
                                                                                                                                                                                                                            Top Down                    Bottom up                   Both
companies.                                                                                        on collecting and storing the right              ingly significant role in the the overall
                                                                                                  data, and executing their general                strategy.
                                                                                                  digital strategy as a company.
                                                                                                                                                   AI driven from a combination of
                                                                                                                                                   technology push and business pull
                                                                                                                                                   According to a large part of the com-

                                                                                                                                                                                               Deployment Approach
                                                                                                                                                   panies. and despite still being a techni-
                                                                                                                                                   cally complex thing that requires many                                 34%       30%                29%       30%          28%        35%
                                                                                                                                                   specially skilled employees, AI is most
AI is seen as one of many digital priorities - but rarely the most important                                               The majority consider
                                                                                                                              AI to be important   often deployed as a combination of
How important is AI relative to your company’s other digital priorities?
                                                                                                                                                   business pull and technology push.

                                                                                                                                                   This resonates well with one of the                                    Business Pull                   IT Push                   Both
                                                                                                                               Avg. Score          most consistent inputs from the execu-
                                                 30%
                                                                  44%                                                                              tives on the most sought after AI pro-
                                                                        25%          28%
                                                                                                    20%                                            files which centered in on the hybrid
                             15%
       10%          9%                 12%                                                                                     3.3    3.1
                                                                                                                7%                                 prodile that understand the business
                                                                                                                                                   needs and the ability to match them to
                                                                                                                                                   the technological possibilities.
              1                    2                     3                      4                          5
                                                                                                                                                                                                                          24%       25%                23%        15%         45%        60%
      Not important                                 Important                                       Most important
     AI is not formalised                        AI is one of many                              AI is the most important
     as a digital priority                        digital priorities                                  digital priority

                                                                                                                                                                                                                        15 European markets                    Sweden

       15 European markets         Sweden                                     Note: Remaining percent ‘Don’t know’ responses
                                                                                                                                                                                                                     Note: Remaining percent ‘Don’t know’ responses

28                                                                                                                                                                                                                                                                                                  29
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