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“Laws and regulations affecting algorithms and data will be key factors in determining how effectively each nation’s firms will be able to compete in the global algorithmic economy. In particular, the GDPR, the EU’s new privacy law, has diminished, and will continue to limit, Europe’s ability to develop and use AI,” are the findings of a report from the Center for Data Innovation.
Just what is the Algorithmic Economy?
Peter Sondergaard, now executive advisor at the Sondergaard Group, said that “the algorithmic economy will power the next great leap in machine-to-machine evolution in the Internet of Things. Products and services will be defined by the sophistication of their algorithms and services. Organizations will be valued, not just on their big data, but the algorithms that turn that data into actions, and ultimately impact customers.”
Vala Afshar, Chief Digital Evangelist at Salesforce, said that “people say the most valuable resource in the world is no longer oil, it’s data. But … oil is just thick goop until it goes through a refinery and becomes fuel. Artificial Intelligence (AI) is your refinery.”
Algorithms are hot and 250,000 patent applications were filed last year that were based on algorithms, a tenfold increase from five years ago. Gartner expects the number to rise to half a million by 2020.
R. Martin Chavez, Chief Financial Officer at Goldman Sachs, said that “in 2000, we had 600 humans making markets in U.S. stocks. Today, we have two people and a lot of software. One in three employees at Goldman Sachs now are engineers. The future of the financial industry lies in virtual machines and strong API contracts. We are redesigning our businesses around those principles.”