Disruptive Technologies

Innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market-leading firms, products, and alliances.  Disruptive technology applies to hardware, software, networks and combined technologies.

According to Gartner, by 2020, Artificial Intelligence (AI) is projected to create 2.3 million new jobs worldwide while eliminating 1.8 million traditional jobs.
A computer can beat the world chess champion and understand voice commands on your smartphone, but real artificial intelligence has yet to arrive. The pace of change is quickening, though. Because of new computing technologies, machine learning today is not like machines learning of the past. It was born from pattern recognition and the theory that computers can learn without being programmed to perform specific tasks; researchers interested in artificial intelligence wanted to see if computers could learn from data. The iterative aspect of machine learning is important because as models are exposed to new data they are able to independently adapt. They learn from previous computations to produce reliable, repeatable decisions and results. It’s a science that’s not new, but one that has gained fresh momentum.

A real live example of disruptive technologies set to affect the IT audit profession is ALICE, an audit robot (abbrev: aubot), developed in our own country by Bidvest Audit Services and operational across the Bidvest group.  ALICE is a species of the artificial intelligence kind and born in the cloud. She provides audit-as-a-service in the IT and cyber spaces. She interacts with her audiences through intuitive and interactive reporting techniques coupled with instant messaging when she wants to prompt the client for additional information or inform the client of new threats and/or anomalies detected. Upon her identifying a new trend or anomaly globally, she automatically applies risk monitoring against the entire client base. She possesses cognitive automation, including ML (Machine Learning) and AI (Artificial Intelligence) abilities. She enables management to mitigate and manage the IT risks in a continuous, online and real-time manner. She equips those charged with governance with visibility into the risk, governance and security of the IT environment. In summary, ALICE provides ‘always on’ audit, compliance, monitoring and peace of mind. Her curriculum vitae is available online at www.bidvestalice.com

Will ALICE replace IT auditors? No, not necessarily, but it will mean that IT auditors will need to ramp up their game and adapt to new skills such as cognitive thinking rather than spending time on repetitive activities such as checking sample data, drafting audit reports and performing administrative activities. Auditors will need to hone their analytical skills to extrapolate and interpret data intelligently to be able to take evasive action immediately and to deliver the right message to the right people at the right time.  As Industry 4.0 is embraced, the risk and audit function, which is often considered the poor cousin to operations and finance will be elevated to a critical, core activity, which is not only preventative, detective and corrective in nature, but predictive and suggestive, delivering maximum value to the right people at the right time.

When companies consider the risk of disruption from mostly (at the time) unknown competitors they tend to view it as one large risk. The assessment result is generally that a big bang approach is needed to counter the threat and is most often a non-starter due to exorbitant costs.

For example, in the manufacturing industry assumptions are made that smart manufacturing will be prohibitively expensive and involve retooling and retraining. Rather consider more defined activities to mitigate the perceived risk such as implementing real-time tracking at an acceptable cost on production lines which will provide a digital view of the whole production process.

The production benefits and risk mitigation will be substantial at an acceptable expense. From the factory floor to inspection lines to storage to delivery – all can be tracked and monitored via digital devices. A major added bonus is the value of the data that can be analysed once the production environment has been partially automated.

Small changes can be made to extract greater value and close the gap between the old school companies and the Industry 4.0 smart factories. Whichever method is used to address technological disruption strong leadership is a must and all levels of the organisation need to understand how they will benefit from Industry 4.0.

A perfect example of a manufacturing company that disrupted the automotive industry from their start is Tesla. Tesla factories are fully automated with sensors in the machinery all connected and synchronized. Each machine can perform multiple functions e.g. installing, welding and riveting. The factories run basically 24 hours per day with very little downtime.

Tesla even has some workers wearing Google Glass to access relevant data during the manufacturing or quality testing process. Bug fixes are made over the air similar to smartphone updates – the car doesn’t even need to be taken to a mechanic. The vehicle sensors gather data and sends directly to the factory for identifying required software updates.

Additional links relating to disruptive technologies can be found at:
https://api.barnowl.co.za/info-sharing/barnowl-info-sharing-session-25-october-2018/
https://api.barnowl.co.za/insights/barnowl-info-sharing-session-27-october-2016/
https://api.barnowl.co.za/info-sharing/information-sharing-the-evolution-of-competition-beyond-the-red-queen/

Written by:
Jonathan Crisp and Warrick Asher
BarnOwl GRC and Audit software