Beware the 4IR and AI — Or Should Procurement Embrace It?

Hacking, both Russian and otherwise, has dominated news cycles just as much or more so than any other Tweetstorms — perhaps rightfully so.

As I was began watching the fifth season of “Homeland” the other night (I know, I’m behind), this notion snapped into sharp focus. Responding to a data breach, the middle-aged director of the CIA, Saul Berenson, as played by Mandy Patinkin, growls at an underling at the agency’s Berlin office something to the effect of, “Please tell me how our secure documents got within a thousand miles of the Internet.”

Ahh, the Internet.

The myriad technological and security risks posed by hacking flow all the way from sensitive government agencies on down to less sensitive national political committees, to corporations and even internal departments such as procurement… and the Internet makes it all possible.

I’m reminded of how everyone viewed the Internet — certainly by the time the year 2000 was coming around, but especially earlier in its nascent consumer-facing days in the mid-1990s, when the talk surrounded regulation — much as we’re talking about the Fourth Industrial Revolution (4IR) and artificial intelligence (AI) today.

4IR, and AI in Particular, Make the Top Global Risks List of 2017

The 4IR, as it’s known, poses some intriguing — and as yet unanswered — questions; enough to make it the center of a recently released report.

Earlier this week we covered the World Economic Forum’s Global Risks Report 2017, released just before this week’s gathering in Davos, Switzerland, and its key overall takeaways. (We also gave procurement practitioners some actionable advice on how to tackle some of these risks, as they pertain to management of their supply chains.)

However, a big question from the report unto itself surrounds the 4IR and how the world can or should go about regulating it.

“How to govern fast-developing technologies is a complex question,” the report states. “Regulating too heavily too quickly can hold back progress, but a lack of governance can exacerbate risks as well as creating unhelpful uncertainty for potential investors and innovators.”

The report goes on, “Currently, the governance of emerging technologies is patchy: some are regulated heavily, others hardly at all because they do not fit under the remit of any existing regulatory body.”

According to respondents of the Global Risks Perception Survey (GRPS), which brings together diverse perspectives from various age groups, countries and sectors such as business, academia, civil society and government, two emerging technologies are most in need of better governance: “biotechnologies which tend to be highly regulated, but in a slow-moving way and artificial intelligence (AI) and robotics, a space that remains only lightly governed.”

What makes AI specifically so risky?

Largely Unknown "Risk-Reward" Ratio

According to another fun 2x2 from the report, that’s exactly why AI scares so many people:

... But It Shouldn’t Scare Procurement Folks Should It?

Pierre Mitchell and Jason Busch recently delivered a webinar with Spend Matters’ Top 12 supply risks for this year, and sure enough, digital disruption figured prominently on that list.

Several discrete supply risks appeared on both Spend Matters’ and WEF’s lists for 2017, such as:

  • AI
  • Blockchain
  • Internet of Things (IoT)
  • 3D printing

Here’s a peek at the digital disruption smorgasbord from that webinar, as relates to supply chain risk:

“Think about things like ‘the Amazon effect,’” Pierre said during the webinar. “Supply chains are getting ripped apart, componentized and then reassembled.”

“You’re not going to scare SAP by saying, ‘I’m going to go look at Oracle,’ you’re going to scare the incumbents by [taking a look at other players that could have a new impact],” he continued.

Much of this discussion has big implications not only for the markets you buy from, but equally for those you are selling into.

(For more insight and analysis on all 12 risks, be sure to sign up for a free webinar recording.)

Ultimately, as far as AI is concerned, as long as procurement organizations are willing to take the necessary steps to learn about its potential and harness it strategically, such as in the case of managing contracts, the benefits will — eventually, evolutionarily — outweigh the risks.

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