Chapter 7

BUSINESS PERSPECTIVE

Herbert Schorr

HISTORY AND TRENDS

The pursuit of expert systems by Japanese companies has initially been technology-driven. That is, many companies pursued expert systems because it looked like a technology that they shouldn't miss (technology push), rather than the solution to a real business need (demand pull). The Japanese focused primarily on knowledge-based systems initially and often chose a diagnostic problem as a first application. Despite its limited usefulness, this is a well understood entry point into AI and into the methodology of knowledge-based system (KBS) development. Learning the technology has been accomplished largely by on-the-job training rather than by hiring people with formal training in AI or KBS.

When knowledge-based systems was a new area of information processing, it was not clear at first where the high payoff applications would be found. The search for such applications was similar to "wildcatting" in the oil industry, with an occasional big strike and many dry holes. Overall, there was a low initial success rate in finding and deploying applications, ranging from five to 40 percent for the four computer companies that the JTEC team visited. However, with several years of experience in selecting applications, the process has become much more reliable Fujitsu, for example, reported that its current success rate is between 75 and 90 percent in bringing a new application to operational status; the initial success rate was about 5 percent.

Several important business trends came across in our interviews:

1. Japanese computer manufacturers now produce task-specific shells especially for diagnostics and planning. These new shells are intended to allow end users to write their own applications more easily than general-purpose shells allow (see Chapter 3 for more details). Although task specific shells have been developed and marketed in the U.S. for financial planning and risk assessment (among others), the trend is more pronounced in Japan.
2. The need to integrate KBS applications with conventional data processing systems has led to a complete rewrite of shell products in C. This same trend has been in evidence in the U.S. for at least five years.
3. There is a steady migration from mainframes to PCs and engineering workstations for running KBS applications (though both often access mainframe databases). A parallel trend exists in the U.S.
4. The technology of knowledge-based systems has been assimilated within Japanese companies (in contrast to the U.S., where an outside consultant is often used to write such an application), and is part of the tool kit used to solve complex system problems. In fact, in many applications, the KBS is just part of an overall system, as in the NKK blast furnace. In companies where this in-house capability has been developed, we believe they are in a good position to gain competitive advantage. For example, the steel industry seems to be systematically using the technology throughout (NKK and Nippon Steel each have about 25 applications in routine use and more under development) and this, to our knowledge, surpasses anything being done in the steel industry in the U.S.