Insight

Believe the Hype

AI and IoT are fundamentally altering business - 2023 AI + IoT year in review

Joseph Radecki

Joseph Radecki

Managing Director and Group Head, TMT Investment Banking, KPMG Corporate Finance LLC

+1 651-272-7305

AI Is Progressing At Bullet Train Speeds

No Industry Is Safe From The AI Revolution

  • Artificial intelligence (AI) has reached an inflection point in development allowing the technology to permeate all walks of life and every industry, driving innovation disrupting previously unassailable firms and competitive moats in the process. Analogous to how a confluence of the computer revolution, microprocessors and the internet gave way to Marc Andreesen’s “software is eating the world” declaration in in 2011, mobile smartphones, global internet, and neural networks have laid the groundwork for AI to revolutionize the global economy across multiple industries for the next decade.1
  • Cognizant of this trend, technology’s titans including Google, Meta, Apple, and Tesla have been racing to build advanced AI models. In 2020, Google’s DeepMind AI team broke biology’s legendary protein folding problem. In July 2022 the DeepMind team followed this breakthrough up by announcing they had predicted the structure of nearly all known proteins to science. One standalone firm in the AI heavyweight mix is OpenAI, which raised over $1 billion from Microsoft in 2019. Below is a transcript of one conversation with OpenAI’s text-davinci-003 model and paintings created by OpenAI’s DALLŸE model. One can see why Microsoft is reported to be in advanced talks to double down on their OpenAI investment in the coming months.
  • Advanced models such as GPT-3 have now crossed a threshold where chief marketing and revenue officers at leading companies would be wise to map out a strategic plan for 2023 that infuses their growth marketing and customer experience interactions with AI.

OpenAI’s GPT-3 Model Responses To Questions (In Green Highlights)

  

OpenAI’s DALL E Responses To Prompts

  

Customer Experience (CX)

  • Messaging replacing the need for most surveys and reviews use cases
  • CX TAM is $60 billion1
   

  

Social Experience (SX)

  • Passive data gathering and social listening will be disrupted by active conversations with prospective, existing, and former customers
  • SX TAM is $50 billion+4

  
   

Messaging Experience (MX)

  • Total Addressable Market in 2022 is $60 billion5
 
 

 

  

 

Experience Management^2 XM^2

 

  

   
  • The next level of XM will incorporate MX across the key XM categories and grow to look more like a trusted AI advisor, than a disparate data gathering, crunching andeporting system
   

Digital Experience(DX)

  • Messaging augmenting and eventually become the best-in class version of website and online search
  • DX TAM is $25 billion3

  

Employee Experience(EX)

  • Always on messaging capabilities to neutral AI have the potential to collect dramatically more and in real-time feedback from employees
  • EX TAM is $10 billion2
  

Experience Management^2 XM^2  

Customer Experience (CX)

  • Messaging replacing the need for most surveys and reviews use cases
  • CX TAM is $60 billion1

Social Experience (SX)

  • Passive data gathering and social listening will be disrupted by active conversations with prospective, existing, and former customers
  • SX TAM is $50 billion+4

Messaging Experience (MX)

  • Total Addressable Market in 2022 is $60 billion5
   
  • The next level of XM will incorporate MX across the key XM categories and grow to look more like a trusted AI advisor, than a disparate data gathering, crunching andeporting system

Digital Experience(DX)

  • Messaging augmenting and eventually become the best-in class version of website and online search
  • DX TAM is $25 billion3

Employee Experience (EX)

  • Always on messaging capabilities to neutral AI have the potential to collect dramatically more and in real-time feedback from employees
  • EX TAM is $10 billion2

AI+IoT is changing our world

We are seeing it every day – the world around us is marching toward hyper-connectivity. Artificial Intelligence enabled Internet of Things (AI+IoT) applications are at the forefront of this transformation. It started with the explosion of data generated by IoT applications which demanded more advanced technology to maximize organizational impact. This is where Artificial Intelligence (AI) comes into play. AI+IoT is revolutionizing nearly every industry imaginable. While we are witnessing the profound impact today, AI+IoT has only just begun.

Companies that have implemented fulsome IoT platforms report previously unseen business insights resulting in dramatic increases in operational efficiency and effectiveness, as well as vast improvements in safety, customer engagement and decision making. However, the growing use of IoT applications has resulted in massive amounts of data. Dealing with this data requires enormous amounts of resources and AI is purpose built for digesting these “oceans” of data and creating action. AI+IoT is making faster decisions, enhancing customer experiences, improving healthcare outcomes, enabling more personalized, targeted advertising, optimizing supply chains, prolonging the useful life of expensive production equipment, devising the most efficient delivery routes…the list is endless. As AI+IoT continues to deploy and evolve, the possibilities for what it can achieve are expansive and the impact on our world is practically limitless.

     

     

     

     

 

New Sales $s

(CRO + CMO)

 

     

     


XM2

 

     

 

Positive Word of Mouth

(CMO + CXO)

  

     

     

 

Net Existing Customer $s

(CMO + CXO)

  

     

   

Customer Experience (CX)

  • Messaging replacing the need for most surveys and reviews use cases
  • CX TAM is $60 billion1

Social Experience (SX)

  • Passive data gathering and social listening will be disrupted by active conversations with prospective, existing, and former customers
  • SX TAM is $50 billion+4

Messaging Experience (MX)

  • Total Addressable Market in 2022 is $60 billion5


Experience Management^2 XM^2
 

  • The next level of XM will incorporate MX across the key XM categories and grow to look more like a trusted AI advisor, than a disparate data gathering, crunching andeporting system

Digital Experience(DX)

  • Messaging augmenting and eventually become the best-in class version of website and online search
  • DX TAM is $25 billion3

Employee Experience (EX)

  • Always on messaging capabilities to neutral AI have the potential to collect dramatically more and in real-time feedback from employees
  • EX TAM is $10 billion2
   
   

Footnotes

Sources: CapitalIQ, Company filings, Pitchbook

Notes:

  1. CX TAM is from Qualtrics’ Q3 2022 investor presentation
  2. EX TAM is from Technavio and Momentive’s August 2022 investor day presentation
  3. DX TAM is from Grandview Research and Yext’s March 2021 investor day presentation
  4. SX TAM is from Sprout Social’s Q4 2020 investor presentation
  5. MX TAM is from LivePerson’s Q3 2022 investor
  6. TAM stand for Total Addressable Market


We hope you find this information valuable, and as always, feel free to reach out if you would like to discuss in further detail. To read the full report, download the PDF below. Footnotes and sources are noted in the deck.


We hope you find this information valuable, and as always, feel free to reach out if you would like to discuss in further detail. To read the full report, download the PDF below.

Technology

A consistent technology stack coordinates data collection, integration and management, enables teams to perform high quality real-time customer analytics, and effectively collaborate and consume those insights through integration with business processes

Storage & Integration | Collaboration & Consumption

    

Organization

A globally aligned operating model coordinates activity to avoid duplication, share learnings, insights and models, and build digital literacy across the regions.                                                                             

Structure & Roles | Expertise & Fluency

    

    

 

Experience Management^2 XM^2

 

Strategy

The organization shares a vision for advanced analytics, drives a data-driven culture, and prioritizes the work to remain laser focused on the customer, while also executing consistently and at high quality across all regions.

Vision & Culture | Execution & Alignment

   

Data

Internal and external data required to understand customer needs and issues are collected, made accessible to the right teams, and are maintained at high quality.

Policies & Access | Management & Quality

    

Insights

Models and analytics are monitored to ensure value delivery, effective business process implementation, and appropriate governance, risk and controls.

Scalability & Controls | Value & Usability

Key Insights

Drivers of AI+IoT

The rise of AI can be attributed to several primary factors, such as the growing accessibility of software tools, the simplification of AI solution development and maintenance, and the rapid infusion of AI into existing applications. These driving forces enable businesses to harness the power of AI+IoT and innovate on an unprecedented scale. By making software tools increasingly available for industrial AI+IoT, companies can optimize their operations through the development of intelligent applications and facilitate seamless communication between interconnected devices. Simultaneously, the simplification of AI solutions, aided by user-friendly platforms and programming languages, allows for streamlined programming processes, while AI's rapid infusion into existing applications helps businesses enhance their processes and witness the value of AI+IoT firsthand.

In addition to these factors, the emergence of specialized hardware for industrial AI+IoT has played a significant role in advancing AI-driven systems capabilities.

3-5%

Potential increase of sales productivity of current global sales expenditures due to Generative AI

$91B

Expected Global AI+IoT Market by 2028

AI is today's greatest growth opportunity, representing a $13 trillion potential addition to the global economy by 2030

These advanced hardware components bridge the gap between the virtual and physical realms, ensuring seamless communication and data processing between sensors, actuators, and AI algorithms.

Hardware tailored for AI+IoT applications demonstrates a greater tolerance for challenging conditions found in industrial settings, making it highly reliable and well-suited for wide-scale deployment. The convergence of these driving forces allows businesses to capitalize on AI+IoT's potential for revolutionizing operations, increasing efficiency, and discovering new opportunities for growth and innovation in the ever-evolving world of AI+IoT.


Source: “McKinsey – Modeling the global economic impact of AI”, “Statista –AI Market Size Worldwide”, “Business wire –Global AIoT Market Projection”

To continue reading the full report, download the pdf here. We hope you find this information valuable, and as always, feel free to reach out if you would like to discuss in further detail.


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