With tech native start-ups entering the market, and large corporates investing millions to try to stay ahead of the competition, Bowmark held a roundtable with mid-market information and data providers to discuss the impact of this transformative technology on their futures. Does AI and applications like ML represent revolution or evolution? How should companies capitalise on the opportunities they offer?
At first glance, it may seem obvious that a data provider would leap at the opportunities afforded by AI – for example, to create new enriched datasets, to drive predictive analytics and to deliver greater operational efficiency. The results of Bowmark’s pre-roundtable survey seemed to confirm this, with more than two-thirds of respondents viewing AI as an opportunity and having invested in projects to implement it.
At the same time though, 60% did not believe that AI would transform their businesses within the next five years. At Bowmark’s roundtable, we examined this dichotomy.
A welcome change?
Sam Herbert, CEO of software development consultancy 67 Bricks, pointed out that AI is not new. However, cheaper processing power and the ability to store more data in the cloud have made its widespread application possible. As he put it, “AI is code that gets better with experience”.
The general view was that AI represents a once-in-a-generation opportunity for data companies. However, it also has disruptive implications for mid-market players, with new AI-native competitors entering the space. Most of Bowmark’s AI survey respondents cited the increased competitive environment from AI as their biggest potential threat.
Sam Herbert sounded a word of warning: “We are in the age of AI. Just like the industrial revolution, introduction of computers or creation of the internet, the fundamental changes that AI brings to how businesses operate, mean you must accept and use it to survive.” The question is how best to apply it to a data and insight company with decades of experience of a particular sector, seeking to utilise these new technologies to improve the intelligence its customers value so highly.
This may be at the heart of the hesitation that our survey respondents expressed about the short-term impact of AI. There was common agreement that trying to remove the human element too quickly, or entirely, would jeopardise the sourcing or integrity of information.
“Intelligence sourced from engrained relationships is hard to disrupt. AI can be used to enrich the intelligence, data and even the relationship interaction, but people still have a fundamental role to play,” argued entrepreneur Minaxi Kesra, Co-Founder of CapitalStructure. Another participant agreed: “Insights are derived from the creation of a hypothesis and the testing of that hypothesis – you can’t get that with AI.”
The engrained relationships and industry knowledge that fuel data collection are hard to disrupt. Established and respected data and insight providers retain a powerful lead on emerging competitors. “Credibility is the barrier to entry for new entrants using AI,” noted Neil Bradford, CEO of General Index. “A new company must have a deep understanding of the target market and an established network to be able to persuade customers to buy its product.”
That said, Jonathan Bloch from Exchange Data International counselled: “In a digital age, public data is easier to disrupt, especially if there is high pricing by incumbents – this creates a clear opportunity for AI-based services.”
There was general agreement that established players had a competitive advantage which gave them a head start on the implementation of AI-based applications. The question remained how AI should best be introduced, and what was the ultimate goal of investing in these solutions.
Revolution or evolution?
Most survey respondents rated efficiency in data processing and the improved insights this provides as the main ways that AI can benefit their businesses. That was borne out in the discussion, with one of the biggest drivers to AI adoption seeming to be the cost advantages it brings to data collection, particularly in gathering large volumes of publicly available data.
However, Neil Bradford encouraged data and insight companies to view the change as more fundamental: “The possibilities of AI are greater than better analysis of data or making processes more efficient – they should lead to a cultural change where code and technology are the foundations of the business.” He gave the example of media companies, where many tasks previously undertaken by journalists have been coded and are now performed by ML. Traditional media businesses are fast becoming technology companies.
While introducing smart data is a first step, Sam Herbert described a ladder which data providers will want to climb. The next rung is “personalisation” – supporting workflow and user experience in a way that would not be possible manually. The pinnacle will be generating predictive insights, based on historical data combined with statistical modelling.
Julian Masters, Managing Partner at Bowmark Capital, summarised: “AI is not a replacement for business culture and relationships, and in the data and insight industry there remains a real need for deep domain expertise and human interaction. This is an inherent advantage for established mid-market players.
“The sector is already exploiting the cost advantages and efficiency benefits that AI in data management can deliver. However, at Bowmark, we believe that AI offers even greater potential for those companies that see it as a fundamental business enabler.”
Rather than viewing AI simply as an add-on to enhance profitability, Bowmark suggests that to be most effective, AI needs to drive real change in how businesses are configured, improving their value proposition and user experience. We are helping the companies we have backed, such as IWSR and Pirum, to capitalise on this transformative opportunity. If your business is ready to join them, please get in touch.