COLUMN: First-Mover AI Roadblocks

CRN's Steve Burke says underinvestment in enterprise sales incentives and go-to-market engagement is the biggest threat to AI sales growth.

For those looking to capture the all-important first-mover advantage in the fast-growing, fast-moving AI enterprise solutions market, the future is now.

While blockbuster AI deals with systems integrators have become de rigueur, there has been far less investment in the bread-and-butter enterprise AI channel.

Those enterprise-focused solution providers and vendors dragging their feet on the big investments necessary to drive AI adoption are already late out of the starting gate.

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This points to the biggest threat to enterprise AI adoption: underinvestment in the basics that have driven every big technology transition for the more than four decades of the modern-day solution provider sales channel, including sales incentives, MDF for lead generation, strong co-sales field engagement funding and support to drive new technology adoption.

The fact is, many vendors have moved to a broader and deeper partner ecosystem model, encompassing every solution touchpoint from hyperscalers to ISVs to service providers. In many cases, that has resulted in a smaller pool of funds going into sales incentives and even critical MDF for solution providers generating demand and integrating AI solutions in the field.

In a number of cases, the move to a one-size-fits-all partner ecosystem model is not just short-changing solution providers and their sales reps actually generating AI deals in the field. It even has the potential to hurt the profitability of solution providers that are making the big AI bet given how much they are investing to win these hard-fought deals.

A big part of the problem is that AI requires a larger up-front investment by solution providers and their vendor partners. By some estimates, the sales investment necessary to get into the AI game is conservatively more than double what it took to play in the cloud market. The AI sales cycle, meanwhile, is much longer. In some cases, multimillion-dollar infrastructure deals can take as much as a year to close.

Beyond that, there are the usual account control and sales conflict issues snuffing out the channel incentives. Because the stakes are so high with AI, a number of vendors are favoring account control over market-share gains driven by a hand-in-hand channel co-selling model.

The heart and soul of the channel model is the ability to quickly scale a business and drive market-share growth, especially in new emerging market segments.

But AI is not just another market segment shift. It is a complete reset for every business, bigger than either the advent of the internet or cloud computing. Getting this AI market transition right means putting in place the investments that ensure the channel will once again be the economic engine that drives another big wave of game-changing, technology-driven productivity gains.

Without that channel economic engine, the drive to make businesses successful in the AI era is going to stall, putting in jeopardy big gains in productivity and revenue growth for vendors, partners and the customers they serve.