Businesses that use Artificial Intelligence (AI) and related technology to reveal new insights “will steal $1.2 trillion per annum from their less informed peers by 2020.” predicts Forrester Research.

Although AI has been around since the 1950s, it is only recently that the technology has begun to find real-world applications (such as Apple’s Siri). The investment in AI by both tech giants as well as start-ups has increased 3 folds to $40 Billion as of 2017.

Recent advances in AI have been helped by three factors:

Access to big data generated from e-commerce, businesses, governments, science, wearables, and social media
Improvement in machine learning (ML) algorithms—due to the availability of large amounts of data
Greater computing power and the rise of cloud-based services—which helps run sophisticated machine learning algorithms.
Applications of AI
AI is important because it can help solve immensely difficult issues in various industries, such as entertainment, education, health, commerce, transport, and utilities. AI applications can be grouped into five categories:

Reasoning: The ability to solve problems through logical deduction. e.g. financial asset management, legal assessment, financial application processing, autonomous weapons systems, games
Knowledge: The ability to present knowledge about the world. e.g. financial market trading, purchase prediction, fraud prevention, drug creation, medical diagnosis, media recommendation
Planning: The ability to set and achieve goals. e.g. inventory management, demand forecasting, predictive maintenance, physical and digital network optimization, navigation, scheduling, logistics
Communication: The ability to understand spoken and written language. e.g. real-time translation of spoken and written languages, real-time transcription, intelligent assistants, voice control
Perception: The ability to infer things about the world via sounds, images, and other sensory inputs. e.g. medical diagnosis, autonomous vehicles, surveillance
Here is an infographic by Mckinsey that shows the extent to which AI can be used end-to-end in the retail industry from identifying customers to personalizing promotion to inventory management