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13 July 2026

Manolito R. Elle

Ten strategic opportunities shaping technology in 2026

In brief:Despite widespread artificial intelligence (AI) adoption, only a few organizations in Asia have the infrastructure, governance and talent required to scale AI and deliver meaningful return on investment (ROI).Success in 2026 will depend on treating infrastructure as a strategic asset, accelerating growth through partnerships and selective mergers and acquisitions (M&A), and designing platforms for agent driven interoperability, physical AI at the edge, and regional collaboration.Organizations must invest in production ready infrastructure to achieve real results.“As AI innovation accelerates, companies that move fast, without compromising interoperability or governance, will be best positioned to capture winner-take-most outcomes." As 2026 unfolds, technology companies are operating in an environment shaped by rapid artificial intelligence (AI) adoption, increasing geopolitical complexity and growing pressure to deliver measurable business outcomes. This urgency is further intensified by what EY describes as a non-linear, accelerated, volatile, and interconnected (NAVI) operating environment, where disruptions evolve quickly and ripple across industries. According to the EY Global Responsible AI Pulse survey, which gathered insights from C-suite leaders on responsible AI adoption, uptake is highest in the technology, media and entertainment, and telecommunications (TMT) sectors. A strong reliance on technology and data to deliver core services makes responsible AI particularly critical in these industries.The survey also found that organizations in these sectors are more likely than others to communicate their responsible AI principles to external stakeholders (80% vs. 71%). In addition, they are more advanced in governance: 74% have established an internal or external committee to oversee adherence to these principles (compared with 61% in other industries), and 72% conduct independent assessments of responsible AI governance and control practices (also versus 61%).Within this complex and fast evolving landscape, there are ten opportunities that represent actions for technology leaders to drive growth, resilience, and trust in this rapidly shifting environment. The first part of this article will discuss the first five opportunities: accelerating growth through partnerships and selective M&A; navigating Southeast Asia’s unique market dynamics; designing for agent‑driven interoperability and physical AI; making AI safety and reliability a core business responsibility; and reinventing pricing and go‑to‑market models to reflect AI‑mediated value creation.Accelerate growth through partnerships and selective M&AVelocity will define success in 2026. As AI innovation accelerates, companies that move fast, without compromising interoperability or governance, will be best positioned to capture winner take most outcomes. To scale and unlock new markets, technology firms are forming targeted partnerships and pursuing selective M&A, particularly with startups offering AI-ready capabilities or proprietary data. Leaders will take an all of the above approach, combining alliances and acquisitions to seize fleeting opportunities. Prioritizing interoperability, clear outcome sharing, and embedded governance from the start will enable resilient ecosystems that deliver differentiated value and adapt quickly to regulatory and technical change.A Southeast Asian perspectiveTechnology companies in Southeast Asia face a more complex landscape: uneven digital readiness, fragmented regulations, infrastructure gaps and limited access to AI capabilities and talent. In 2026, success will go to those who can navigate these constraints, deploy AI and other innovations effectively and securely, and translate them into commercially viable outcomes. Leaders can win by making concrete moves like pursuing targeted joint ventures, embedding sovereignty by design, and building platforms that support agentic interoperability and physical AI at the edge.Design for agent-driven interoperability and physical AIWhat sets leaders apart is interoperability, enabling AI agents to operate seamlessly across platforms, clouds and ecosystems. At the same time, physical AI, such as robotics and edge based systems, is moving from concept to real world execution, allowing companies to connect intelligent software with physical action and unlock entirely new sources of value.An analysis of how central physical AI and robotics are in AI roadmaps over the next 12–24 months shows that 11% of respondents consider it a core strategic pillar, 25% view it as a major workstream, 53% describe it as an exploratory pilot, and 11% say it is not currently included in their AI roadmap.Make AI safety and reliability a business responsibilityAs AI scales across organizations, safety and reliability must be embedded into everyday operations, not treated as separate compliance efforts. This requires empowering functional leaders to own AI governance, strengthening data readiness and integrating controls into product and operational lifecycles. Without these foundations, companies risk fragmented execution, operational failures, and loss of trust, while those that get it right can scale AI confidently and protect long term business value. A survey on confidence in AI strategy shows that 30% of companies are confident their approach effectively addresses ethics and responsible AI, while 44% believe it sufficiently covers safety, security, compliance, and risk mitigation; in contrast, a stronger 65% express confidence that their AI strategy is well aligned with business objectives.Reinvent pricing and go-to-market modelsAI native companies are reshaping how software is priced, packaged and bought. As agentic, AI mediated purchasing becomes more common, traditional subscription and usage based models are increasingly complemented or replaced by secure APIs, instant trials and outcome based pricing. Customers are no longer satisfied with simply paying for access or consumption; they expect a frictionless buying journey and clear, transparent proof of value.By 2026, leaders will need to move beyond pilots and link pricing directly to measurable outcomes and delivered value. GenAI and agentic tools are simultaneously spreading across sales, service, support and financing, enabling bundled, end‑to‑end experiences and accelerating “Service as Software,” where automated platforms handle tasks once done by people. Success will depend on designing for agent‑driven commerce (e.g., secure APIs for product and pricing) and ensuring interoperability so workflows run smoothly across platforms and clouds.Stay flexible across open and closed AI modesThe growing range of open and closed AI models is forcing tech companies to make new strategic choices. Open models typically offer more transparency, customization, and cost control, improving quickly and making them easier to tailor and integrate into proprietary workflows. Closed models often lead on raw performance, reliability and built-in support and safety features, but they can come with higher costs, greater vendor lock-in and less flexibility for localization or strict compliance needs.This shift isn’t only a technical debate; it’s also shaped by business realities and policy constraints worldwide. In regions where proprietary models or infrastructure are limited, open approaches can unlock wider access and faster innovation. For enterprises, the best path is a flexible strategy that balances price and performance, avoids dependence on a single vendor, and aligns with evolving regulatory and data-sovereignty requirements. Organizations that can orchestrate both open and closed models — choosing what fits each workload, region, and compliance need — will be better positioned to capture value, reduce risk, and adapt as the AI ecosystem continues to diversify. Internal AI usage across business functions shows that 41% of organizations primarily use closed models, 27% rely on open models, and 26% adopt a hybrid approach, while only 6% primarily use internally developed AI models.The second part of this article discusses the remaining five opportunities: embedding sovereignty into technology architecture, bringing technical specialists closer to the business, elevating tax from compliance to strategy, turning finance into the engine of AI return on investment (ROI), and moving decisively from experimentation to execution.Manolito R. Elle is the Technology Sector Leader of SGV & Co.This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.

19 June 2026

Warren R. Bituin

Emerging Technologies: The Philippine workforce in the human-machine hybrid economy

In brief:The Philippines must strategically adopt AI, robotics, and emerging technologies to close labor gaps and boost productivity in sectors such as healthcare, BPO, and agriculture.Human-machine collaboration will transform workforce dynamics, lengthening careers and demanding continuous reskilling. Strong governance, ethical safeguards, and ongoing investment in digital infrastructure are vital for inclusive growth and regional competitiveness. “The success of the human-machine hybrid economy will depend on coordinated action across government, industries, and labor markets."Emerging technologies are rapidly transforming the global economy, from artificial intelligence (AI) to brain-computer interfaces (BCIs) to longevity research. These advances are redefining the very nature of work beyond simply enhancing human capabilities. C-suite leaders are increasingly operating in what can be described as a NAVI risk environment — non-linear, accelerated, volatile, and interconnected — where multiple disruptive forces are shaping the global operating environment, including climate change, technological innovation, demographic shifts, and the rising influence of non-state actors. These intersections between primary forces create megatrends, identified as global, cross-sector scenarios that shape how organizations operate, compete and create value.The EY Megatrends 2026 report explores eight megatrends at the global macro level and highlights how each one can evolve in different sectors. The superfluid enterprise infrastructure explored in the previous article discusses how autonomous systems create the foundation for human-machine collaboration at scale. While superfluid enterprises eliminate organizational friction, the human-machine hybrid discussed in this article explores how new technologies will enable humans to expand their capabilities. Augmenting human potentialRecent policy directions from the Department of Information and Communications Technology (DICT) and National Economic and Development Authority (NEDA) between 2025 and 2026 highlight a growing recognition that digital transformation is no longer optional but foundational. AI is already streamlining data analysis, predictive modeling, and complex decision-making across industries. In the banking sector, major banks have expanded AI-driven fraud detection systems, significantly reducing transaction risks while improving customer trusts.Early-stage BCIs, though still largely experimental, are being explored in academic settings like the University of the Philippines for neurorehabilitation research. These initiatives suggest a future where Filipino workers may interact with machines through neural interfaces, particularly in healthcare and assistive technologies.Simultaneously, AI-driven longevity research is reshaping expectations about working life. According to a 2026 study by the Philippine Institute for Development Studies (PIDS), life expectancy improvements combined with better health technologies could extend productive working years by up to a decade. This creates both opportunities and tensions in labor market planning.The Philippine labor paradoxThe Philippines faces a demographic paradox: a young workforce grappling with underemployment alongside an aging population needing extended productivity. As of 2025, youth underemployment remained above 14%, while demand for high-skill roles surged, as reported by the Philippine Statistics Authority.This mismatch is particularly evident in the IT-BMP sector, where companies report shortages in AI specialists and data engineers despite a surplus of graduates. Human augmentation technologies can help bridge this divide. For instance, AI-assisted coding platforms are enabling entry-level programmers to perform advanced tasks, effectively compressing the skills gap.Opportunities here and thereHealthcare stands to benefit enormously from hybrid technologies. AI-powered diagnostic tools are being piloted in rural clinics where access to specialists are limited. These systems assist doctors in identifying conditions such as tuberculosis and diabetic retinopathy with higher accuracy according to the Department of Health pilot programs (2025). Robotic-assisted surgery, though still concentrated in urban centers like Metro Manila, is improving surgical precision and reducing recovery times.In the business process outsourcing (BPO) industry, AI is both a disruptor and an enabler. BPO companies are integrating generative AI into customer service workflows, allowing agents to handle more complex queries while automating routine interactions. According to the IT & Business Process Association of the Philippines (IBPAP) 2026 outlook, hybrid human-AI teams could increase productivity by up to 30%.Agriculture, traditionally slower to adopt to technology, is also evolving. Precision farming tools using technology such as drones and satellite data are being deployed in rice-producing regions such as Nueva Ecija and Ilocos Norte. These tools help farmers optimize irrigation, predict yields, and reduce input costs.Workforce transformation and longevityLonger working lives demand a fundamental shift in career development models. Filipinos may increasingly engage in multi-stage careers, transitioning across industries as technology evolves. Government programs like DICT’s “Digital Workforce 2025” initiative are expanding reskilling efforts, focused on AI literacy, cybersecurity, and data analytics.Longevity also impacts social protection systems. In September 2025, the Social Security System (SSS) implemented a landmark Pension Reform Program (PRP) designed to support Filipino retirees amidst increasing life expectancy and rising living costs. Aiming to maintain the purchasing power of elderly citizens, the PRP provides guaranteed, multi-year pension hikes across three tranches.Sustainability and technologyHuman augmentation technologies can also support sustainability goals. AI-driven energy management systems are being implemented in manufacturing hubs to reduce electricity consumption, aligning with the Philippines’ commitments under international climate agreements. In healthcare, optimized resource allocation through AI reduces waste and improves service delivery.Regionally, competition is intensifying. Countries like Singapore and Vietnam are investing heavily in AI and robotics. Singapore’s National AI Strategy 2.0 (updated 2025) and Vietnam’s aggressive digital workforce programs highlight the urgency for the Philippines to accelerate its own investments or risk losing competitiveness in key sectors like BPO and manufacturing.Regulatory and ethical challengesThe adaptation of human-machine hybrid systems introduces complex regulatory and ethical issues. Data privacy remains a central concern, particularly with sensitive data such as neural signals in BCI application. The National Privacy Commission has begun drafting updated guidelines for AI governance (2026), emphasizing transparency, accountability, and user consent. Another challenge is equitable access. Without targeted policies, advanced technologies could widen inequality between urban and rural areas. Infrastructure gaps, particularly in broadband connectivity, must be addressed to ensure inclusive adoption. On the other hand, liability in hybrid systems also requires clarity. If an AI-assisted medical diagnosis leads to an error, determining responsibility between human practitioners and machine systems is legally complex. Policymakers must establish clear frameworks to address such scenarios.Partnerships will be crucial when drafting policy frameworks and other regulations. Collaboration between academia, government, and private sector stakeholders can accelerate innovation. Equally important are workforce policies. Voluntary enhancement frameworks, that is, ensuring that workers are not coerced into adopting augmentation technologies, will build trust as a starting point. Continuous training programs must be institutionalized, not treated as one-off interventions.A defining opportunityThe success of the human-machine hybrid economy will depend on coordinated action across government, industries, and labor markets. If managed effectively, the hybrid economy can deliver higher productivity, safer workspaces, and more resilient growth, ensuring that technological progress benefits all Filipinos rather than a select few.The next article in this Megatrends series will discuss the concept of the productivity reset, which redefines value when traditional metrics no longer apply.Warren R. Bituin is the Technology Consulting Partner of SGV & Co.This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.

03 July 2025

Kristel Frias

Wat Hafen Vela

Insurers have a unique opportunity to drive innovation and growth by addressing protection gaps in the market. In the Philippines, growth in the country’s insurance penetration rate is at 1.89% in the first quarter this year from 1.78% in the same period in 2024. While the momentum is expected to carry throughout the remainder of the year, it is still below the global rate of 6%. As reflected in the insurance premium expense of each Filipino at P1,094.94 from P965.56, insurance density of the country also improved by 13.4%. Per Statista, the insurance industry’s forecast in Southeast Asia could grow by 3.5% annually until 2029. This optimistic forecast is attributable to the global silver tsunami expected to triple by 2050. he "silver tsunami" refers to the significant demographic shift as the Baby Boomer generation reaches retirement age, which will drive demand for financial planning services, life insurance, and health insurance with integrated wellness programs.Despite promising growth, geopolitical tension and trade wars are also expected to result in economic shocks this year, requiring strategic and operational flexibility from insurers. Coupled with increasing risks from cyber threats, climate change, and demographic shifts leading to a growing retirement savings gap, insurers are called to rethink their strategies. testAccording to the 2025 Global Insurance Outlook, significant protection gaps exist, particularly in cyber and climate-related risks, where a staggering 99% of cyber losses and 60% of natural disaster losses remain uninsured, according to insurance company Munich Re’s Cyber Survey 2024 and research publication Swiss Re Sigma, respectively. In 2024, the World Bank reported that natural disasters shed $3.5-billion Philippine assets yearly while direct losses to both public and private assets have reached more than 1% of the gross domestic product (GDP). Additionally, the growing retirement savings shortfall presents further avenues for value creation. A strategic focus on enhanced data utilization and modernized technology is essentia

12 June 2023

Not available

The role of micro transformations in organizational growth

The global market and economy continually grapple with various disruptions and crises, and it has become imperative for chief information officers (CIOs) to maintain day-to-day operations with a reduced margin of error. It is incumbent on CEOs to balance technological investment with budget constraints while executives continually face the pressure of showing their clients and stakeholders the value of their operational strategy.The burgeoning demand for investment value underscores the importance of micro transformations in businesses. Micro transformations are incremental yet substantive initiatives that target an organization’s key performance indicators (KPIs) based on their overall business strategies. Compared to traditional projects, micro transformations can help identify bottlenecks and strengths of pre-existing processes. CIOs can use this agile methodology to generate value for their companies.Organizations can effect sustainable change across their people, processes, and technologies by focusing on gradual changes rather than larger-scale and time-consuming efforts. Micro transformations can help businesses adapt to and address disruptions while targeting their most valuable KPIs.Launching a new feature such as an automated customer service chatbot to address customer-specific pain points and adopting the cloud to streamline internal processes are examples of micro transformations. Another example of a micro-transformation project is the implementation of an online deposit account opening solution. In a remote world, financial institutions benefit from a completely digital, user-friendly and seamless customer experience. We see this demonstrated in some digital banks that allow the opening of deposit accounts with only a mobile phone. The ability to open a deposit account at any time and place provides immediate customer value.It should be noted, however, that micro transformations should also be guided by an overall transformation strategy to ensure that all micro transformation initiatives are cohesive. The small victories resulting from smaller, bite-sized technology upgrades can create instant value for organizations while paving the way for more robust digital initiatives, projects, and solutions later on.ADDRESSING DIGITAL TRANSFORMATION FATIGUEDigital transformation can be a cumbersome and intimidating process that may appear promising at the start but fail to deliver results. On the other hand, micro transformations can target benchmarks that would be most impacted by a new offering or service, reducing the time it would take for businesses to realize gains. Organizations can further develop operational efficiencies, risk mitigation, and resource optimization by clearly delineating KPIs.For example, an up-and-coming startup envisions a new strategy after having difficulties with launching its first product offering. This strategy involves interfacing with potential clients and investors while bolstering the former with recent market research. Getting fresh perspectives can help management focus on and refine critical areas most relevant to their strategic priorities. Considering the customers’ needs is vital in formulating a sustainable business plan, which organizations can do via smaller-scale initiatives.If one were to dissect a micro transformation, one could say that it is underpinned by more than just the solution and execution of the work. It also goes beyond automation and changes because it entails continuous improvement and deep process design efforts. This process incentivizes organizations to think big while creating an agile, scalable plan to materialize gains. By returning to the drawing board, companies can identify market opportunities and streamline their day-to-day operations, even if it means upending pre-existing processes. Micro transformations involve adapting to change with a data-substantiated, systematic approach coherent with the organization’s business strategy.REDUCE COMPLEXITY, ADD CONNECTIVITYTraditionally, an organization focuses on initiatives involving collaboration platforms, feedback mechanisms, and workflow plans. While these could yield positive results, siloed efforts often require considerable micromanagement, which could introduce more variables to an already complex system.Micro transformations take a more systematic approach by focusing on project-centered priorities. Data is fed to the appropriate teams, ensuring that the same workflow plan governs everyone. Knowledge is provided to the digital system, which continuously evolves with each project stage. This consolidated approach gives organizations a level of connectivity that would have been a challenge had they abided by standard and traditional practices. Micro transformations assist businesses with streamlining their day-to-day operations to adapt and respond to different risks, which could boost client and customer confidence.As companies pivot into the digital space, micro transformations allow them to capitalize on value-driven core capabilities and identify market opportunities without immense commitments. This streamlined process allows management to deconstruct silos and test the waters with less risk than traditional, larger-scale transformations. In this case, end-to-end digital transformation may be able to help businesses materialize value faster with minimal disruptions to day-to-day operations.ELEMENTS OF MICRO TRANSFORMATIONS1. Processing of data and identification of KPIsIdentifying and articulating KPIs are vital to micro transformations. Organizations can strengthen their overall strategy using analytics-driven data by focusing on metrics that directly impact the business.2. Optimization of KPIsOnce the organization has identified its KPIs, management can identify opportunities and pain points of the company. Consequently, they can refine their product offerings and address underlying areas of improvement.3. Engagement of clients and stakeholdersCommunicating with stakeholders at different points of the project is essential for the success of micro transformations. Organizations should align initiatives and engage interest to foster investor confidence.4. Identification of appropriate technologiesTechnology underpins successful micro transformations, and the former is requisite for implementing changes on an organization-wide scale. By leveraging suitable technologies, businesses can engineer KPI-specific solutions and implement agile application frameworks for various strategic initiatives.GETTING STARTED WITH MICRO TRANSFORMATIONSMicro transformations are holistic approaches that create business value based on their strategy-related benchmarks. This manifold process allows companies to enhance their operating models based on insights-driven data. Management must select projects carefully, delineate the appropriate KPIs, and focus on customer experiences and needs to boost confidence.While micro transformations can yield immediate gains, instant gratification is not the end goal. Ultimately, it is a systematic approach that can help organizations position themselves in the global market and pave their way toward bigger digital transformation agendas. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Armand N. Cajayon, Jr. is a technology consulting principal of SGV & Co.

15 May 2023

Not available

ChatGPT: A versatile AI model (Second Part)

Second of two partsWhen ChatGPT 3.5 was released last year, it made global headlines for its ability to perform tasks such as analyzing professional contracts and complex spreadsheets. ChatGPT is a rapidly evolving text-based artificial intelligence (AI) that facilitates “human” interactions via its natural language responses. Despite its nascency, ChatGPT has already solidified its presence in various industries. Its myriad of functions (e.g., content creation, data analysis, and code generation) can help organizations enhance their products and services, streamline work processes, and refine customer service.However, many are also deeply concerned about its use in business, education and various other sectors. In the first part of this article, we discussed the science behind Generative Pre-Trained Transformer (GPT), hot topics regarding its human aspect, its response biases, and potential business applications. In this second part, we discuss the practical ways ChatGPT can be used in business and the potential risks it presents.PRACTICAL BUSINESS USE CASESWith the ability of AI to automate several tasks, businesses can reduce their labor costs while simultaneously enhancing workflows. ChatGPT’s flexibility can support and possibly even enhance various corporate functions such as customer service, data analytics, sales and marketing, and finance.Customer service. Given its text-based nature, ChatGPT can leverage its ability to customize responses based on user prompts to facilitate a seamless user experience. The program’s versatility means that it can be incorporated into different platforms such as chatbots, e-mail, and SMS. ChatGPT can provide round-the-clock support, potentially becoming instrumental in the banking, healthcare and information technology (IT) industries. Small- and medium-sized enterprises (SMEs) can capitalize on AI by setting up a chatbot that can interface with customers without needing human moderation. Since the AI will continue to evolve through repeated customer interactions, the company can make use of the data for continuous improvement.Data analysis. ChatGPT has a wealth of information to draw on, potentially making it an asset for tasks such as market research, research and development, and financial forecasts. Businesses will be able to analyze data more efficiently given its comprehensive set of information. A practical example would be ChatGPT’s capacity to break down complex code and generate bug fixes.Sales and marketing. Sales and marketing are corporate functions that require a more personalized approach, and ChatGPT can address this by utilizing its natural language model to create bespoke solutions. Apart from generating SEO-friendly keywords to outlining drafts, ChatGPT can also produce personalized e-mails, blogs and video ideas.BUSINESS RISKSDespite ChatGPT’s potential for streamlining operations, it can pose risks for organizations. Given the nature of this AI and how it can evolve (i.e., it analyzes large data sets on the internet before generating a response based on the user prompt), security, accuracy and fairness are paramount concerns.A potential pitfall for the AI lies in its primary competency — that it can facilitate more “human-like” interactions since humans are prone to error and subject to different biases. Its very strength can prove to be its weakness, since the conveniences it affords can also facilitate the spread of disinformation, ethical issues and copyright disputes.Data accuracy. OpenAI, the company behind the program, acknowledged that the software produced erroneous and/or biased content. One of the program’s limitations is that its learning model was programmed in 2021, which means that it has little-to-no knowledge of developments since then. It is also worth mentioning that not all online information is accurate, proving to be a substantial constraint for ChatGPT. People have even claimed that the AI can “hallucinate” because it has populated user queries with false information, such as listing down incorrect credentials for public individuals.Cybersecurity and data privacy. Its online nature makes ChatGPT vulnerable to cybersecurity attacks that make it a potential risk to businesses. The program can endanger one’s privacy because it can sift through a vast range of data accessible online. Businesses will have to deliberate whether the technology’s benefits outweigh its potential security risks. They must also be vigilant when it comes to the security of both themselves as well as their clients.Bias. In the first part of the article, we discussed how ChatGPT has a category of answers that consists of subjective responses. This inherent bias may deter corporations from assimilating it into their established work systems. There was a case wherein ChatGPT was asked which airline passengers could pose a risk, and it asserted that individuals who traveled to North Korea, Afghanistan, Iraq and Syria were the more prominent dangers. The learning model is continuously evolving, but it still needs some form of arbitration to avoid ethics and bias-related issues.Ethics. In academia, there have been longstanding, divergent opinions when it comes to technological advancements, ranging from the archaic decision of whether smartphones should be allowed in class, to more current concerns, such as the ethics of using AI to accomplish assignments and/or examinations. The jury is still out as institutions have varied responses, with some universities mandating the return of in-person exams to safeguard against cheating, whereas others have started to delineate AI-specific guidelines. Plagiarism, however, remains a principal concern. The convenience of AI may exacerbate issues when it comes to the originality of work, whether in academia or corporations.Intellectual property and copyright. In light of ongoing discussions that ChatGPT can replace, or at the very least, assist with certain types of work, it is vital to understand the legal repercussions. With copyright protection, the US Copyright Office will not register work that was generated by an AI. In accordance with US law, AI-generated output will either be a claimless work available in the public domain or considered a derivative work of the tools that the AI was developed upon. This raises the question as to who the true owner is — the creators of ChatGPT or the user for whom the output was generated.AI IS HERE TO STAYAs one of many developing AIs, ChatGPT offers advantages and risks for personal users and organizations. It is also apparent that human intervention is necessary to truly leverage its benefits and mitigate its intrinsic shortcomings.With the current technological climate though, it seems that businesses will no longer be able to turn a blind eye to the program. Similarly, OpenAI is not the only company making headlines when it comes to artificial intelligence as other companies are racing to develop their own versions. One thing is clear — AI is here to stay.Technology is at the forefront of business change and learning how to leverage it is critical. ChatGPT has jolted the corporate landscape, presenting both challenges and opportunities for organizations. For companies considering the use of AI, it is vital to evaluate its role in their respective ecosystems. Ultimately, the biggest question is whether hypothetical returns will be enough to mitigate the potential risks. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Randall C. Antonio is a technology consulting partner of SGV & Co.

08 May 2023

Not available

ChatGPT: A versatile AI model (First Part)

First of two partsIn November, ChatGPT 3.5 was released — and took the world by storm. ChatGPT touted its ability to create essays, write computer code, pass board exams, create business plans, and many other tasks such as, but not limited to, analyzing professional contracts and complex spreadsheets.The ChatGPT 3.5 architecture follows ChatGPT 3, which was launched in 2020 and is now being used by many large organizations such as Microsoft Corp., Google LLC, and Amazon.com, Inc. for chatbots, virtual assistants and other AI-powered applications.ChatGPT, or the Chat-Generative Pre-Trained Transformer algorithm, was developed by OpenAI. OpenAI is an artificial intelligence (AI) research laboratory based in the US established in late 2015. It aims to promote and develop friendly AI, running on the fifth most powerful supercomputer in the world.Close to six months after the launch of ChatGPT 3.5, OpenAI also launched ChatGPT 4. It promises to be even more powerful and versatile than its predecessor, improving on the weaknesses and limitations of ChatGPT 3 (which uses a relatively small database to train on). ChatGPT 4 uses a much larger 50 terabytes of high-quality training data through a combination of automatic and manual curation methods. This allows ChatGPT 4 to deliver better conversational AI applications, understand context, and generate more natural-sounding text. It is powerful enough to detect and respond to changes in tone and sentiment, and unlike ChatGPT 3, can also make images.THE SCIENCE BEHIND GPTGenerative Pre-Trained Transformer (GPT) is a type of large language model (LLM) neural network that can perform various and complex natural language processing tasks. It is a type of a deep learning algorithm that uses a transformer network (a sequence to sequence translator architecture used for language models and computer vision), specifically developed to train from large quantities of unlabeled text using unsupervised learning, analyzing patterns in the data set to generate human-like text in response to input.LLMs need access to large datasets of text called training data. Such data come from a variety of sources including books, articles, websites, academic papers, social media posts, blogs, news articles, and other online and offline text sources — without any explicit supervision or guidance on what to learn, except to automatically discover patterns and relationships in the data and use them. ChatGPT uses this data to generate more natural-sounding text.THE HUMAN ASPECTWhile there are many positive opportunities presented by ChatGPT, ongoing debates in the tech community center on the threats posed by the larger AI. ChatGPT is indeed revolutionary, but it also gave us a taste of the real risks and dangers.Some of these hot topics relating to the human aspect include social manipulation, job losses, social surveillance, gender and race biases, socio-economic inequality, weakening ethics and goodwill, financial crises, and a dangerous arms race of AI-powered weaponry.RESPONSE BIASESChatGPT responses can be categorized into those that are mathematically or scientifically accurate, i.e., the answer to 1 + 1, or that water is liquid at room temperature. The other category consists of subjective responses, i.e., whether red is a better color than maroon, or whether certain politicians are performing better than their predecessors.It is worth noting that there have been concerns about the potential biases in the training data sets used for language models like ChatGPT. Biases in the data can lead to biased outputs, which could have negative consequences in real-world applications. ChatGPT, just like humans, can still provide subjective, inaccurate, or wrong answers that are biased. When these biases cross ethical boundaries because of the quality and manual curation of the training data, this means that such biases can sometimes cause more societal harm than good.BUSINESS APPLICATIONSRest assured, ChatGPT (and AI) will be here to stay, continuing to evolve and advance at lightspeed. It will continue to highlight that the world we live in will be significantly different as early as next year. Many businesses are scrambling to understand both the implications and opportunities provided by ChatGPT to their organizations.ChatGPT as applied in business could, in a lot of ways, improve the bottom line, enhance efficiency, and transform customer experience while reducing costs. Some use case examples for ChatGPT are chatbots, content creation, code development, fraud and abnormality detection, language translation, voice assistants, and hyper-personalization for recommendation engines. There are also potentially vast opportunities, along with accompanying risks, in sectors such as education, creative services, professional services, content creation, and many others.Many more technically adept companies are already finding amazing use cases of ChatGPT and AI that end up disrupting traditional businesses.TRANSFORMING THE FUTURE THROUGH AIThere is no doubt that ChatGPT is still in its infancy stage, which simply means that there is much more to expect. Our lives will change, and the rapid rate of this change will be like no other compared to all human history. Just like electricity and water, ChatGPT is also expected to become a mainstream utility. It will be much faster, cheaper, more accurate, and eventually, some even say it will be sentient. It will become a necessary and unavoidable part of our daily lives.According to a report from Opus Research, 35% of consumers would like to see more enterprises incorporate AI tools like chatbots, whereas 48% of them are indifferent as to whether an AI or a human were to assist them. While not the majority, a considerable percentage of people are seeing the benefits of AI. As this technology only continues to get better, many jobs and traditional businesses will need to transform or be at risk of being displaced. Industries and processes will be disrupted, and new opportunities and applications will surface. The only question will be: are we ready for it?In the second part of this article, we discuss the practical ways ChatGPT can be used in business and the potential risks it presents. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Randall C. Antonio is a technology consulting partner of SGV & Co.

20 March 2023

Not available

Accelerating sustainability with emerging technology (Second Part)

Second of two partsThe most recent EY Reimagining Industry Futures Study, which examined executive attitudes and intentions toward 5G, IoT, and other emerging technologies from respondents across 1,325 global firms from various industries, found that organizations are increasingly relying on these emerging technologies to advance their sustainability initiatives. The study offers Chief Information Officers (CIOs) crucial solutions and steps to help their organizations rethink their future and demonstrates that emerging technologies provide advantages that include improved measurement, increased efficiency, and the capacity to create virtual goods and processes.Findings from the study demonstrate significant convergence between business technology and sustainability strategy. The first part of the article discussed emerging technology as sustainability drivers, sustainability-related benefits of modern technology, environmental, social, and governance (ESG) as a key factor in emerging technology investments, enterprise sustainability strategies already benefiting from 5G and IoT, and how sustainability imperatives are changing perspectives towards industry ecosystems and technology suppliers.The second part of this article discusses differing industry perspectives on emerging technology and sustainability, and considerations organizations can make to ensure expectations translate into long-term value creation.DIFFERING INDUSTRY PERSPECTIVESEnergy efficiency and business circularity expectations at the sector level showed notable differences when respondents were asked how they perceive the sustainability benefits of emerging technology. Despite the fact that 46% of respondents across all industries cite decreased energy usage as the top benefit, only 38% of the healthcare sector mentioned this benefit compared to 54% of the automobile sector. Only 35% of executives in government organizations mentioned reduced waste output, compared to 50% of executives in the manufacturing sector.The two industries most likely to point to benefits from emerging technology in gauging the environmental effect of their organizations were government and healthcare with both at 44%. However, evaluating the environmental impact of suppliers is seen as significantly less critical in government and healthcare but as a significant advantage among manufacturing and energy respondents.This is because reporting Scope 3 emissions makes it more necessary than ever. Industries are aware of the potential for new technologies to aid in measuring performance and advancement, but the scope of their ambition varies depending on whether they are concentrating on their own organization or expanding to include their supplier chain.CONSIDERATIONS FOR LONG-TERM VALUE CREATIONESG factors are already influencing the technology investment decisions of several businesses, and sustainability requirements are expected to overpower other considerations when selecting technology vendors.However, CIOs are able to do more to ensure that high expectations result in the production of long-term value through the following points of action:Long-term sustainable advantagesAlthough businesses are aware of the variety of sustainability advantages offered by emerging technologies, it is crucial that technology leaders concentrate their ambitions. Technology leaders have to carefully consider the combined impact of many technologies before prioritizing and phasing the important ESG outcomes they are seeking and selecting the best technologies that can deliver them. Another consideration is including ESG risks as part of the assessment, as ESG risk should be embedded in a company’s enterprise risk management process. In certain instances, these ESG risks can be resolved by utilizing appropriate technologies.Assessing environmental implicationsOrganizations can examine the carbon footprint and energy efficiency of their portfolio of emerging technologies, and make sure their approach directly ties into the overarching goals of the organization for lower IT energy use. They will have to be sure to consider how upgrading their IT to newer standards and technologies will improve sustainability, particularly in how it will impact their carbon footprint and energy efficiency.Sustainability agendas informed by techWorking closely together with other leadership roles and responsibilities will make sure that everyone in the organization is aware of how new technology can accelerate ESG goals. Discussions with the Chief Sustainability Officer (CSO), or equivalent role, will contribute to the proper assessment of the acquisition and use of new technology. This will ensure that existing digital transformation roadmaps continue to serve their intended purposes while sustainable principles take on greater significance as motivating factors.Sustainability as a guiding concept for relationships with technology suppliersCIOs are already giving sustainability capabilities priority when looking for qualities in technology companies. It is critical that businesses prioritize sustainability in their conversations with wider partner networks. Although decisions about vendors and technology investments are currently being made with sustainability in mind, there is still room for more cooperation in the future regarding circular business models and shared ESG objectives.Technological use cases created with sustainability in mindSeveral firms already have established IoT projects, and the rapidly expanding deployment of 5G and edge computing is progressively enhancing these initiatives. Sustainability-aligned results must be incorporated into use cases and deployment methods. To do this, CIOs must think about how new technology use cases might benefit partners, customers, and employees alike. They must also establish the proper feedback loops with technology vendors to make their vision a reality.Using emerging tech to drive sustainable outcomesWith sustainability goals coming under even more intense scrutiny, organizations will have to keep prioritizing the sustainability capabilities and credentials of their technology vendors in the future. CIOs will have to assess the benefits and drawbacks of developing technologies in achieving sustainability goals, creating long-term value and ultimately building a better working world. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Joseph Ian M. Canlas is a consulting partner and part of the Climate Change and Sustainability Services team of SGV & Co.

13 March 2023

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Accelerating sustainability with emerging technology (First Part)

First of two partsWith sustainability and digitalization increasingly becoming a business imperative, organizations are relying more and more on 5G, the Internet of Things (IoT), and emerging technologies to advance their sustainability initiatives. The advantages these technologies provide include improved measurement, increased efficiency, and the capacity to create virtual goods and processes.These are some of the key findings of the most recent EY Reimagining Industry Futures Study, which examined executive attitudes and intentions toward 5G, IoT, and other emerging technologies from 1,325 global firms across a range of industries. The study offers Chief Information Officers (CIOs) crucial solutions and steps to help their organizations rethink their future, with findings demonstrating significant convergence between business technology and sustainability strategy.EMERGING TECH AS SUSTAINABILITY DRIVERSMore than half of surveyed businesses at 54% believe that emerging technology can significantly speed up their path toward sustainability, while 41% agree that new technologies play a mostly positive function but with some risks. This knowledge of potential drawbacks is in line with a 2021 study by Science Direct indicating that information and communication technology (ICT) as a whole accounts for 1.8% to 2.8% of greenhouse gas emissions and an even larger percentage of electricity usage.Interestingly, organizations in Asia are more likely to emphasize the importance of new technology than businesses based in Europe (62% versus 49%, respectively). This regional variation may be a result of the historical attention paid by European governments to the potential energy consumption problems posed by data centers and cloud computing.SUSTAINABILITY-RELATED BENEFITS OF EMERGING TECHRespondents believed that emerging technologies such as AI, automation, 5G and IoT can provide a variety of beneficial contributions to long-term sustainability plans. Topping the list of these benefits are decreased energy use, improved measurement and planning, and decreased waste output. The use of virtual services and workforce tools is another significant trend.Only around a quarter of respondents highlighted the advantages of adopting circular business models and renewable energy sources, suggesting that these might be areas that require more attention from the CIO community in the future. Nonetheless, the variety of positive results highlights the multifaceted potential of these technologies from a sustainability perspective.ESG A KEY FACTOR IN EMERGING TECH INVESTMENTWhen considering all emerging technologies, 35% of respondents identified environmental, social, and governance (ESG) as a leading factor in their decision-making, while 41% saw it as important. 5G investments were most likely to involve ESG as a key factor, with IoT close behind.ENTERPRISE SUSTAINABILITY BENEFITING FROM 5G, IoTCompared to other emerging technologies, the ESG implications of 5G and IoT tend to weigh more heavily on business investment decisions. Organizations investing in these two technologies are more likely to already see current benefits compared to other organizations who looked at a broader scope.As a result, 5G and IoT are even more directly tied to many of the ESG advantages associated with emerging technologies as a whole, with 48% highlighting the increased productivity benefits from 5G and IoT, compared to just 22% for all developing technologies. More than half (55%) of those currently investing in 5G and IoT said that these investments assist in improving sustainability planning and forecasting compared to 39% of organizations who believed that the same could be said of emerging technologies in general.SUSTAINABILITY IMPERATIVES CHANGING PERSPECTIVESThe qualities that businesses are looking for in their IT vendors are evolving as sustainability takes center stage in the technology strategy of many CIOs. More than 75% of businesses claimed to give priority to vendors who can explain how emerging technologies affect the environment. Companies also considered that suppliers need to do more to include sustainability into their service offerings.These viewpoints are reflected in the qualities that businesses look for in their technology vendors, where respondents prioritized speed of deployment and execution, end-to-end solution capabilities and sustainability credentials and capabilities. However, corporations predict that sustainability credentials and competencies will be even more sought-after in the future.Business ecosystem strategies that facilitate the acquisition of new skills and competencies through partnerships with vendors and other businesses will also be able to provide sustainability benefits. Eighty percent of businesses concurred that, over the next five years, working with other groups and sectors to develop circular business models will become significantly more crucial.The second part of this article will discuss differing industry perspectives on emerging technology and sustainability, and considerations organizations can make to ensure expectations translate into long-term value creation. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Joseph Ian M. Canlas is a consulting partner and part of the Climate Change and Sustainability Services team of SGV & Co.