AI with data is vapourware. Data without AI is a nice report. There's so many use cases. Some of them are real and some of them are not real. It reminds me of being in the 1990s, when RFID was going to take over the world.
A pragmatic assessment of the current hype around Artificial Intelligence from Steve Rempel, Senior Vice President and International CIO at retail giant Walgreens Boots Alliance (WBA).
As well as Walgreens stores in the US and Boots stores in the UK, WBA has a pharmaceutical business, the No7 beauty brand, and operations across 16 countries, including Chile, Mexico and Thailand. Rempel’s responsibilities cover digital, data and technology outside the Walgreens stores in the United States.
One of Rempel’s biggest challenges in his role is dealing with the demand for technology-led business change in the post-pandemic age. Following the COVID crisis, “everybody wanted everything”, he explains:
That's hard. If you just think about Boots, this year we’re going to replace Boots.com, we're going to start replacing a warehouse system, we’re on a huge swing to the cloud, we're going to replace the forecasting engine, and we're going to roll out SAP S/4 HANA – and that’s just in the UK.
It’s a similar story across business units in other countries. He says sales are growing across Europe, so there's big appetite for change and budget to support that demand for transformation:
When those two come together, and we held demand down for about three years, everybody wants something. And I think that's going to be a tough challenge for us.
WBA launched partnership management groups a year ago to help the business break away from traditional and restrictive IT contracts. Rempel says this “courageous approach” involved tough conversations with key partners, which meant sharing the things his team was going to work on and also the things they were keen to avoid:
There is a difference between need and want. We were very open and honest with each other to say, ‘Here's what I mean. I know you have needs and I have needs.’ And we had a very open dialogue with BMC. We were lucky because it worked well. We took advantage of that approach and now we're in year one of a very long-term deal.
Those challenges will include getting to grips with AI. Going back to his RFID comparison, Rempel says there was an expectation at one point that every item was going to have an embedded RFID chip. Today, he says RFID has some “really cool use cases”, but it has never lived up to its hype – and digital and business leaders must be cautious about similar issues with AI and data:
We're very deliberate in what we're using across our businesses – and the use cases are not the same. What we're using in pharmaceutical wholesale is completely different than what we're doing in retail. But it's all about using AI and data in a proportional way because you can get skewed and get caught up in the hype.
One example of how the company is using AI and data in the retail space can be seen at Boots, which has 2,200 stores, a series of warehouses and lots of moving parts. Across the organization, Black Friday is a huge operational challenge and opportunity, particularly when it comes to customer service. Last year, the average speed to answer a call through the helpdesk on Black Friday was over two minutes and there was an abandon rate of over 20%.
This year was different, says Rempel:
We took service management and we threw AI, chat and all the intelligence at it. We didn't hire any more agents. We didn't spend any more money on the helpdesk. Last week on Black Friday, our average speed of answer was 14 seconds and our abandon rate was 0.4%.
Another example of how the company is using AI and data involves WBA’s large wholesale pharmaceutical operation which has 28 warehouses in Germany that service thousands of pharmacies. The scale of this operation means the business can see what pharmaceuticals are being prescribed because it sends pills from warehouses to local pharmacies.
Two years ago, the company used data from these operations to prepare for the spread of flu across Germany during a five-week period. Rempel explains:
We could make sure we had the drugs available. That approach really helped all these pharmacies be in stock for when a patient came in and said, ‘I need healthcare.’ Now we're looking at how else we can share this data as Walgreens and Boots moves more into healthcare.
Rempel’s advice for other digital leaders is to avoid the hype and focus on business requirements. Don't just do technology for technology’s sake – be purposeful:
Especially with AI and data, we talk about how we're going to measure the benefits. Because then I can prove that it's a worthwhile thing to do. You have to be focused and have an inkling of where you want to go.