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PRODUCT MANAGEMENT ARTIFICIAL INTELLIGENCE

The AI Maturity Model: How to

Move the Needle of Digital
Transformation Towards an AI-
Driven Company?
MATEUSZ ŁACH - APRIL 12, 2022

Inside this article:

1. The Reasons to Implement AI

2. What Is the AI Maturity Model?
3. Why You Need an AI Maturity Model?
4. Barriers to AI Adoption
5. What Maturity Models Are There?
6. The Dimensions of the AI Maturity Framework
7. The Levels of AI Maturity Framework
8. Next Steps?
9. How Adopting AI Can Increase Business Value
10. Conclusions

To properly implement AI, businesses need to have a structured process to ensure that
they can fully take advantage of it. The AI Maturity Model is a framework that can help
any company understand at which stage of organizational maturity they are and what
steps they need to take to become an “AI-driven” business. The first step in becoming
an AI-driven business is understanding what it takes to become one.

In this post, we’ll explore the five stages of the AI maturity framework and how you can
implement them for your own success. We will also look at AI problems and ways to
adopt AI to mature your AI strategy and application.

The Reasons to Implement AI

Organizations are investigating AI as a way to enhance existing applications and
processes. For example, artificial intelligence can automate decisions, bring
actionable insights, or classify complex data. And while human intervention and
investment would still be needed, enterprises can accelerate their processes using AI.

To establish a strategy, you first need to measure how your organization performs on
the AI maturity framework. This model (aka framework) can help you identify where
the organization is on the potential growth curve. This gives you the much-needed
data to then speak to the management and decide what steps to take.

No matter where your organization is, ensure that strategies are highly adaptive, with
ample room for experimentation.

The Diverse AI Capabilities and Use Cases

No matter the industry, almost every organization can adopt AI to some extent. AI
capabilities can be applied to sectors like logistics, pharma and life sciences,
chemicals, telecommunications, and many others. Look at the below use cases just
from our portfolio to get an idea of the everyday use of AI technologies.

AI-powered chatbots can bring intelligent automation and answer consumers’

questions or direct the customer to the right person if no response is found in the Privacy - Terms
 database. They can also be used in healthcare products e.g. an AI-powered chatbot
supporting mental health.
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Predictive models can forecast when stocks might run low, or highlight and respond
to patterns in supply chains,

AI can be used to identify fraud loan applications based on a business’s loan

repayment behavior and credit usage.
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Intelligence technology? AI tools can aid customs control in advanced image analysis for the detection of
prohibited items. Image classification can be also used in the travel sector by
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booking engine providers to classify and tag hotel images for the best user
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AI capabilities can help segment data and make proper recommendations to
customers. For example, a corporate traveler can benefit from a dedicated,
personalized offer for travel inventory. On a social media platform, through AI tools
get a personalized stream of content to browse.

In last-mile logistics, AI plays a crucial role in route and schedule optimization.

No business is too small to utilize readily available AI-powered tools or develop its
own AI strategies. If you’re curious about the difference between off-the-shelf AI
products and custom AI models development we recommend our recent article. For
general advice on artificial intelligence, projects head over to our guide on AI for
Business Leaders and Executives for more.

What Is the AI Maturity Model?

In layman’s terms, an AI maturity model provides an
organization with a framework for assessing its
current AI readiness and capabilities. The data and
analytics maturity model gives the organization
valuable and actionable data to prioritize
investments toward AI technologies, skills, and
processes needed to develop, manage, and
maintain AI-based systems, including mitigating any
potential risks associated with their development
and use.

An
org
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to
understand AI before successfully harnessing its potential and gain a solid
understanding of its AI readiness and capabilities before investing big bucks.

The reasons for not exploring AI initiatives include badly chosen pilot projects, wrong
assumptions about the availability of data and readiness of teams to deploy AI-based
systems, and the results the technology was expected to deliver.

The AI maturity model can help you avoid these failures that may lead to the potential
loss of confidence in AI from the organization’s leadership and other key internal
stakeholders, leaving the program dead in the water.

Why You Need an AI Maturity Model?

When considering the use of AI in the organization, it’s important to remember two
things: not every task seems to need to be automated, and automation becomes
valuable in the long term. Without automation in place, the only option for growth is
hiring more team members.

Machine learning algorithms help process data in ways impossible to achieve before.
Of course, mathematics has been there for years, but the lack of relevant data and
computing power rendered it viable.

Barriers to AI Adoption
Demand for AI and market growth is closely tied to organizational AI maturity levels.
Organizations continue to demonstrate a strong interest in AI, with 48% of CIOs in the
2022 Gartner CIO and Technology Executive Survey responding that they have
already deployed or plan to deploy AI and machine learning technologies within the
next 12 months.

The reality of AI deployment is much more limited. Gartner’s research found that
organizations commonly experiment with AI but struggle to make the technology a
part of their standard operations. Organizational maturity must be at a certain level
to enable proper AI adoption across the whole business.
 Gartner also estimates that it will take until 2025 for half of the organizations
worldwide to reach what Gartner’s AI maturity model describes as the
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“stabilization stage”.

Advances in AI maturity will boost AI software revenue due to increased spending,

particularly in data analytics. However, a lag in maturity caused by reluctance to
embrace AI, lack of trust in AI, and difficulties delivering business value from AI will
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CIOs should definitely set realistic expectations, identify suitable use cases and create
new organizational structures. Organizations should thus set realistic timelines for AI
projects and ensure the desire to follow trends doesn’t overrule realistic drawbacks
and planning. The unnecessary push for AI can be a problem in itself, resulting in other
strategic challenges.

AI projects face specific obstacles due to their scope, misperceptions about their value,
and the nature of the data they touch.

Time to Market

Many organizations plan to launch and finish an AI project within two years. However,
once past the initial planning process estimate, the time usually extends to four years.

Being first to market with products, whether it’s a digital MRI machine, an autonomous
cab, or an automated trucking fleet, is important to gain a competitive advantage in
AI. The faster you can train your model, the faster you’ll be able to get to market and
have a better chance of becoming number one. This means that every second, minute,
hour, and day is significant. Because training models for autonomous vehicles can take
years, cutting it down to days has a significant financial impact and competitive
advantage. This will necessitate infrastructure with the best performance and lowest
latency (the secret time killer of machine learning projects).

The size of the training model data set is also important because more data means
stronger models and thus a faster time to production. ‘It’s not who has the best
algorithm that wins,’ said Andrew Ng, VP and Chief Scientist of Baidu, Co-Chairman
and Co-Founder of Coursera, Adjunct Professor at Stanford University, and online
learning pioneer. It all comes down to who has the most information.’ The greater the
training data set, the more accurate the training model will be and the faster it will be
able to reach the market. Large data sets necessitate a shared storage system with
enormously high bandwidth and low latency.

ROI

It is hard to determine an AI project’s return on investment because most organizations

are too early in the process to see any return. Most ROI will result from cost reduction
and increased efficiency, as that’s how AI is currently used. However, as organizations
evolve their AI expectations and projects, AI will eventually have a more
transformative and strategic impact.

To understand the metrics of the ROI of AI and to find out how to reduce the risk of
investment in artificial intelligence projects, head over to one of our in-depth articles
on AI investments.

What Maturity Models Are There?

There are many artificial intelligence maturity frameworks, but they share many
similarities. For example, most of them have five stages, and some limit them to just
four maturity levels.

The first stage covers undefined and unpredictable processes with no analytics in place

The second level describes repeatable and reactive processes and analytics

The third level covers defined and proactive processes and analytics maturity

The fourth level describes managed processes that are measured and controlled, the
analytics maturity is at an advanced predictive level

The highest level strives for continuous improvement and a prescriptive approach

While the models use different names to refer to capability, there is overlap in the
actual capabilities they cover. About half the models provide a detailed description of
each maturity level per capability, which can significantly improve the homogeneity
across organizations and assessors. The other half provides a general description of
the maturity levels based on CMMI and lets assessors define their definition per
capability. Finally, all but one model provides specific recommendations for the
defined (sub) capabilities.

Almost every model provides specific recommendations, while only Gartner’s model
provides general recommendations. An overview of all variables regarding model
structure can be found below.
 The Dimensions of the AI Maturity Framework
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AI maturity can be achieved in several dimensions or areas and stages expressed as a
chart. Let’s look at them briefly.

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AI Maturity Dimensions

Data

Data is the foundation for the successful application and scaling of AI technology in a
company. High-quality organizational data and a dedicated data warehouse are
required to realize AI solutions’ full potential in an organization. Therefore, a holistic
view of the organizational data is essential during AI maturity identification. Due to
overwhelming data accumulation, bad data quality, and frequency of data input, data
analytics maturity is the most significant operational challenge for many organizations
instead of being considered an important strategic asset.

Use Cases

The ability to identify and develop potential value-adding use cases for artificial
intelligence is crucial. It is important to be aware of the limitations and possibilities of
AI and transfer that knowledge to practical business problems. Processes for
identifying and prioritizing AI use cases based on feasibility and success criteria are
important in the scaling phases when various departments are utilizing AI for their
business problems.

Team and Skills

A successful build-up of AI capabilities in a company is highly dependent on internal AI

know-how and related skills. It is thus important to have the right AI talents available
before implementing AI. Building maturity in this dimension is vast and can range from
meaningful job advertisements to suitable training concepts for upskilling internal
employees.

People ecosystem supporting AI Adoption - It is not only about having a great data scientist on
team but also culture and co-operation with decision-makers and all other stakeholders,
employees, clients and users.

ML Infrastructure

IT infrastructure forms the technical foundation for the development of AI applications.

AI experts need to have the right tools to develop their applications and make them
accessible within the organization. Cloud technology adaptation is also becoming an
important indicator in determining AI maturity. AI projects can not only be deployed in
the cloud. Many large cloud providers also offer AI microservices.

Governance

Various factors play a role in the governance of AI projects. The risks connected with
AI must be identified, and compliance with regulations as well as internal policies must
be monitored in the solutions. After KPIs and metrics have been agreed upon, frequent
reports should be made to ensure the successful steering of AI initiatives. Other
important factors in this context are AI ethics and the explainability of AI.

Organization

The benefits that AI teams generate often depend on how well they are integrated at
the organizational level and if the organizational conditions are adapted to it. The
adoption of an agile, AI-oriented approach and the change in the culture’s mindset
also contribute to the initiative’s success.
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The Levels of AI Maturity Framework

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In each dimension, a company can be in a different maturity stage.
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The different stages of AI Maturity Framework

According to Gartner, these stages are:

1. Awareness

Companies in the awareness stage know about AI but haven’t really done anything
about it yet. They may talk about it. They have ideas, but not strategies, for using AI in
their businesses. Because the company is aware of the existence of AI and its potential.
They analyze raw data manually without any intelligent tools and data storing
methods but are aware of the potential to use AI to support these processes.

2. Active

Most organizations are at this level of AI maturity. They are just playing around with
AI. For example, there is little knowledge and awareness of AI technology, and raw
data is mainly stored in fragmented systems. Planning and decision-making are rarely
data-based, along with simple training initiatives.

Organizations enter the Active (also known as Exploring) stage of the AI journey when
they shift from general awareness to targeted questions about what problems or
opportunities they could potentially help address.

What these companies share is a lack of experience in judging a good AI opportunity

from a bad one. For example, data scientists can run Tensorflow with GPU
acceleration using a toolkit but don’t know where to go next after tutorials. Likewise,
business leaders aren’t sure how to help.

Techniques for closing this gap vary for different teams and organizational structures.
For example, business and technical leaders usually need help separating hype from
reality for AI techniques like deep learning, reinforcement learning, and transfer
learning. On the other hand, data science teams might need less help understanding
these techniques at a technical level, but still, need to know what cooperation is
needed to deliver models in production.

Progress in the Active stage tends to be driven by ambitious individuals or teams who
focus on building informed interest and buy-in.

3. Operational

Companies in the operational stage have adopted machine learning as part of their
day-to-day functions. They have a team of ML engineers and could maintain models,
create data pipelines, or version data. They have the ML infrastructure set up, and
they are using ML to assist with some information processing tasks – hence the Artificial
Information Processing approach to measuring value.

However, a central platform for AI in the organization does not exist here. Tools and
know-how are only available at an operational level to a certain extent. Nevertheless,
a few stakeholders push for AI initiatives, and in some cases, AI models have made it
to the near-production stages at a departmental level.

4. Systemic
 Companies are using machine learning in a novel way to disrupt business models. So,
hype at the awareness stage can say that they are disruptive, but the difference
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between a Level 1 and a Level 4 company is that the Level 4 company has feet on the
ground, with the ML infrastructure in place.

At this level, AI is applied in most company areas and integrated into existing
products, services, or processes. As a result, AI has become a standard technology
Want to unlock the full potential of Artificial
Intelligence technology? within the organization, and rules for the governance of AI models are defined and
followed. At the same time, AI serves as a basis for decision-making and is centrally
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5. Transformational
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It’s the last stage of AI maturity. Unfortunately, few organizations have reached this
stage, and few deliver on their full potential.

Organizations that are at this level use ML intentionally regularly. In many cases, it’s
the distinguishing value offered to their customers. They rely on AI to do the significant
heavy lifting for the business.

In this stage, AI is part of the company’s business model and is firmly embedded into
the organization and corporate strategy. For example, companies like Google,
Amazon, and Netflix use machine learning to tweak their algorithms, adjust their
product offering, and optimize their systems infrastructure (i.e., Netflix experiences
low latency in specific time zones).

AI competencies and training are commonly and systematically cultivated.

Data is given a high priority and is seen as both raw material and product. AI is also
fully exploited in compliance with regulatory and ethical standards.

Teams have central access to data and AI solutions are managed in the organization’s
own AI platform.

This stage of AI maturity is where the promise of AI for business and society meets the
biggest impact.

At the transformational stage, companies have transformed to work smarter with AI.
As a result, they operate more safely and cleanly than before while creating more
value for society and tackling problems that seemed overwhelming before.

How different stages of AI maturity overlap various dimensions

Data scientists and data analysis experts and researchers are still debating what this
looks like in practice. For example, organizations that transform with AI are expected
to leverage intelligence systems to augment human intelligence and unleash collective
intelligence between humans and machines — but each of these terms is still being
actively defined.

Next Steps?
Once the organization’s AI maturity level has been identified, the next question is: how
to increase it? It takes three stages to implement the outcome to boost your AI
maturity.

Today, most companies fall under the Awareness stage – their businesses only benefit
a bit from artificial intelligence. At the same time, few companies are in stage five, and
few are both ready and can integrate AI through every one of their processes.

How Adopting AI Can Increase Business Value

Adopting artificial intelligence shouldn’t be a move organizations take on just because
of the hype. It should rather provide strategic, measured value to the business. There
are some important questions to ask:

What decisions does my company make?

What data does my company collect?

AI is useful when making data-driven decisions. However, adopting AI is an ongoing

two-step process consisting of exploring current practices and brainstorming new
decisions to boost the company value.
 It works best when the data is already collected and a decision needs to be made. If
you have the data, ask yourself a question: what decision exactly can be made from
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it? And then, if you make decisions, what data is necessary to make that decision?
Finally, how can you start considering every daily activity as a data-driven decision?

Explore Current Business Practices

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Intelligence technology? Start exploring the business areas which can use AI. Even if a task seems so easy that it
doesn’t need to be automated, automation may turn out to be more economical in the
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in your business.

Brainstorm Decisions That Make Your Company More Valuable

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After examining current business processes, think about all the ways the organization
can conduct business. The center point of attention – all your attention – should revolve
around data-driven decision-making.

AI can help any organization make decisions. By looking at your existing teams and
processes, you might pinpoint the areas which lend well for AI implementation. For
example, look at your sales team. Sales teams can also use AI to segment customers
into types. Then, a sales agent can negotiate a deal better or offer a more appropriate
service. AI must be fed with data like customer age, email, location, purchasing habits,
and user habits to do this. This frees the sales team to move their attention to more
urgent matters.

Rank a list of items in an eCommerce store. For example, a particular color is better
liked than another.

Recommend items. If a customer likes X, they will also like Y.

Discover anomalies and regularities. Detect inefficient supply chains and customers
who are most likely to come back and most likely to buy another product.

Sort populations into types. Segment your population of customers into top users,
occasional users, and one-time users. Alternatively, divide your population into risk-
averse and risk-seeking personalities.

Artificial intelligence can also be used to detect e-commerce fraud.

Conclusions
As you use AI in applications, goals around the maturity of the AI are critical to:

ensure that you deliver value to your clients,

use the appropriate level of technological sophistication,

ensure that the AI is trustworthy and easy to use by your targeted line-of-business
users,

have an AI operating model in place to manage the AI you’ve deployed in the field
along with strong data management and data governance practices.

AI is still in its infancy, but numerous studies have shown that companies who are
adopting AI are reducing costs, improving efficiency, and delivering bottom-line profit
to the company. AI can help with problems as basic as setting a maintenance schedule
for a factory floor, all the way to targeting the right product to potential buyers and
improving sales closure rates."

If you are ready to discuss how we can support your organization, assess its current AI
maturity and support your business through its AI journey, feel free to contact us.

About the author

Mateusz Łach
AI & Digital Business Consultant

Mateusz is a digital strategist and innovation enthusiast. He enjoys building

new products and concepts, often with the help of AI. Mateusz joined
Nexocode with the mission to consult startups, mid-size companies, and
enterprises on their digital transformation journey and help them benefit
from custom artificial intelligence solutions.
Responsible for overall business development and sales activities. A geek
of new technologies.
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Becoming AI Driven

Artificial Intelligence solutions are becoming the next competitive edge

for many companies within various industries. How do you know if your
company should invest time into emerging tech? How to discover and
benefit from AI opportunities? How to run AI projects?

Follow our article series to learn how to get on a path towards AI

adoption. Join us as we explore the benefits and challenges that
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