“The tidal wave comes and they see it. They wonder if they’re going to catch it or if they’re going to be overwhelmed,” says Mark Williams, a senior consultant at IPED, the communications consulting arm of The Channel Company.
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These findings are part of a new AI study conducted by IPED, the consulting arm of CRN’s parent company, The Channel Company. The study focused on the commercialization of AI in the channel industry and how solution providers are also using the technology to improve their own businesses.
The study found that 62% of the nearly 250 solution providers surveyed are now seeing a positive impact from AI, with 13% rating the impact as significant.
Looking ahead, 78% of respondents said they expect to see a positive impact from AI technologies on their business over the next 12 to 24 months, with 40% calling this expected impact significant.
“The tidal wave is coming and they see it,” said Mark Williams, a senior consultant with IPED. “They’re wondering if they’re going to catch the wave or are they going to be submerged.”
Williams will discuss the survey data Monday in a session at the Channel Company XChange August 2024 conference in San Antonio.
According to Williams, IPED classifies the 13% of solution providers already experiencing significant positive impact as “AI pioneers.” The low proportion of AI pioneers shows that the field is not too crowded for solution providers who are in the early stages of their AI practices or are still considering whether to launch one.
For AI pioneers investing heavily in AI, the IPED study found that their investment areas include:
- Customer assessments and workshops
- Data validation and modeling projects
- Recruitment (technical and commercial talents)
- Business Process Consulting and Business Transformation Services
The majority of early AI activity comes from larger customers, infrastructure deployments, and business and data consulting.
Solution providers have reported “several large-scale, multi-million dollar infrastructure deployments,” Williams said. “There aren’t many, but they’re happening.”
Williams said he sees AI as more akin to the advent of the internet and smartphones than the proliferation of the cloud.
“It’s going to change the way everybody does things,” he said. “In my opinion, the cloud was just a technology upgrade. (…) The Internet has changed who we are, what we do and how we actually live. That’s what it’s all about.”
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AI ‘is part of every conversation’
Virtusa, based in Southborough, Massachusetts, and No. 20 on CRN’s 2024 Solution Provider 500, is among the solution providers that see nearly every customer experimenting with AI, Surajit Bhattacharjee told CRN in a recent interview.
Virtusa’s senior vice president and global head of generative AI said customers who began intensive experimentation in 2023 have now moved AI products into production.
“We have helped our customers put more than 10 solutions into production” since November, Bhattacharjee said.
Customers have generally focused on ROI from AI projects, with more upstream diligence around AI use cases and working backward from business problems to see if AI can solve them, he said.
For Virtusa, an example of an AI use case in production includes transcribing while a customer is on the phone with a support agent, then the AI program uses the transcription to surface relevant information on the agent’s screens, and then after the call, makes recommendations to the agent for follow-up.
Another AI solution Virtusa is piloting with a customer leverages AI and drone imagery to detect damaged boxes in a warehouse, Bhattacharjee said.
“AI is increasingly present in every conversation,” he said. “More than 90% of conversations involve AI in some form.”
Many opportunities for solution providers
IPED research also showed that 87% of solution providers are learning, experimenting and working largely to identify AI use cases for customers and the associated products and services they can develop and offer.
Bobby Guerra, CEO of Jacksonville, Fla.-based Microsoft partner Axiom, is among the solution providers who aren’t recommending Microsoft’s Copilot AI assistant to all customers.
Guerra remains concerned about data governance and the information aggregated by AI tools like Copilot, he told CRN in a recent interview. The risk that an AI user will discover sensitive business data they shouldn’t have access to is too high, in his view.
“It allows us to answer a lot of questions that we’re not really comfortable with or ready to tell a customer, ‘This is how it’s going to play out,’” he said. “In situations where you run the risk of not being sure and clear about how it might play out, you tell customers, ‘Hey, let’s avoid that for now until we have more clarity.’”
For customers particularly interested in adopting AI, Guerra and his team said, “You can do some sampling and testing, but we don’t recommend deploying it organization-wide yet.”
Inhibitors to AI Success
Partners surveyed by IPED broadly identified cybersecurity and technology accuracy as the top barriers to business success in AI.
Solution providers described by Williams as “AI skeptics” (indifferent or not interested in AI) were more than 50% more likely to cite personal and individual privacy and accuracy as the main obstacles to AI success compared to AI pioneers.
Largest partners and AI pioneers, meanwhile, were 50% more likely to cite the pace of AI change as a barrier compared to their peers. According to these partners, the technology is evolving too quickly to make investment decisions.
According to the study, smaller partners were 50% more likely to cite cybersecurity as a barrier.
AI is coming
A large portion of solution providers told IPED that they believe widespread adoption will come on the basis of effective proof of value, not just proof of concept. Law firms, healthcare providers, researchers, and other potential users of AI want to see how they can save time sifting through large amounts of data and files.
In other words, vendors and solution providers must prove the business value of the technology to customers. The technology’s capabilities alone won’t convince users: Customers “are not going to spend $1 million to increase the productivity of 10 people,” Williams said.
Many solution providers believe that 2024 will be the year when customers can prove the value of AI. The study found that 56% of early adopter AI solution providers believe that the cloud will have a significant impact through partnerships with hyperscalers.
According to the study, about 60% of respondents said they recognize the potential for expansion in application and solution development, but only 42% said they have application development capabilities today.
According to the study, the AI opportunity spans a variety of practices, with solution providers potentially seeing positive gains in security, risk management, analytics services, platform and data management services, industry offerings and infrastructure optimization over the next 12 months.
The technology could also provide “a forcing function around upgrades in many different areas,” including PCs that enable AI use cases, Williams said.
AI is “like the internet. We’re not going to stop it,” Williams said. “The question is, from a solutions provider perspective, how do you make sure you’re positioned to best help your customers? Period.”
Williams cautioned that solution providers should not underestimate the emotional component that comes with companies’ decision to adopt AI versus other areas of technology transformation. The growth of cloud and 5G is “very different than being able to have someone think for you,” he said.
He also cautioned partners against paying too much attention to news about AI’s impact on vendors’ stock prices. “Partners make money on revenue, not stock price,” he said.
For Williams, a lesson learned from a previous IPED study on IoT should apply to AI and should show vendors why investing in their partner program can help drive customer adoption of AI.
“Trusted advisor status is absolutely critical because there’s so much misinformation out there,” Williams said. “Customers want to talk to someone they can trust and who can give them the right answer… That’s why in a lot of our IoT business, the majority of transactions were coming from existing customers who had partner relationships to begin with.”
