The AI Transformation ‘Tidal Wave’ Is Coming

Many solution providers are already seeing a positive impact to their overall business from AI with more 10 percent of solution providers calling the impact “significant,” according to a study from IPED, the channel consulting arm of CRN parent The Channel Company.

Many solution providers are already seeing a positive impact to their overall business from artificial intelligence, with more than one-tenth of solution providers calling the impact “significant.”

These results are part of a recent AI study from IPED, the channel consulting arm of CRN parent The Channel Company. The study focused on the commercialization of AI in the channel and how solution providers are also using the technology to improve their own business.

The research showed that 62 percent of approximately 250 solution provider respondents are seeing a positive impact today from AI, including 13 percent who classified that impact as significant.

[RELATED: CRN’s 2024 AI Special Issue]

Looking ahead, 78 percent of respondents said they expect to see a positive impact from AI technologies for their business in the next 12 months to 24 months, including 40 percent who classified that expected impact as significant.

“The tidal wave is coming, and they see it,” said Mark Williams, a senior consultant with IPED. “They’re worried about, ‘Am I going to catch the wave or am I about to get swamped?’”

IPED classifies the 13 percent of solution providers that are already experiencing significant positive impact as “AI pioneers,” Williams said. The small share of AI pioneers shows that the field isn’t too crowded for solution providers early in their AI practices or still debating whether to start an AI practice.

For AI pioneers aggressively investing in AI, the IPED study found that they are putting their money into:

• Customer assessments and workshops

• Data validation and modeling projects

• Hiring (both technical and business talent)

• Business process and business transformation advisory services

The majority of their early AI business comes from larger customers, infrastructure deployments, and business and data consulting.

Solution providers reported “a number of large-scale infrastructure deployments that are multimillions of dollars,” Williams said. “There are just not tons of them. But they are happening.”

Williams said that he sees AI as more akin to the advent of the internet and smartphones than the proliferation of the cloud.

“This is going to change everybody’s way of doing everything,” he said. Cloud “was just a technology refresh, in my opinion. … The internet changed who we are, what we do and how we actually live. That’s what this is.”

AI ‘Part Of Every Conversation’

Virtusa, based in Southborough, Mass., and No. 20 on CRN’s 2024 Solution Provider 500, is among the solution providers seeing just about every customer experiment with AI, Surajit Bhattacharjee told CRN in a recent interview.

The senior vice president and global lead for generative AI at Virtusa said that customers who started heavy experimentation in 2023 have now moved AI products into production.

“We have helped clients move upward of 10 solutions into production [since November],” Bhattacharjee said.

Customers overall have been emphasizing ROI on AI projects, with more up-front 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 a call with a support agent and then the AI program using the transcript to surface relevant information on the agent’s screens—and then after the call, making recommendations to the agent for follow-up.

Another AI solution Virtusa is piloting with a customer leverages AI and drone footage to detect damaged boxes in a warehouse, Bhattacharjee said.

AI “is becoming part of every conversation,” he said. “Upward of 90 percent of conversations are having AI come up in some form or other.”

Plenty Of Solution Provider Opportunity

IPED’s research also showed that 87 percent of solution providers are largely learning, experimenting and working to identify customer AI use cases and the related products and services they can develop and offer.

Bobby Guerra, CEO of Jacksonville, Fla.-based Microsoft partner Axiom, is among the solution providers that are not recommending generative AI tools to every customer.

Guerra remains concerned about data governance and the information AI tools aggregate, he told CRN in a recent interview. The risk of an AI user learning about sensitive business data they shouldn’t be privy to is too high in his view.

“It really unlocks a whole bunch of questions that we just aren’t really very comfortable or feel prepared to be able to tell a client, ‘This is how it’s going to be,’” he said. “In those situations where you’ve got risk that you’re unsure and unclear about how it could be, you tell clients, ‘Hey, let’s steer away from that for right now until we get some more clarity.’”

For customers especially interested in AI adoption, Guerra and his team have said, “You can do some sampling, testing of it, but we’re not recommending rolling it out organization wide yet.”

AI Success Inhibitors

Solution providers surveyed by IPED overall called cybersecurity and technology accuracy the biggest inhibitors to AI business success.

Solution providers described by Williams as “AI skeptics”—indifferent or not interested in AI—were more than 50 percent more likely to cite personal and individual privacy and accuracy as top inhibitors to AI success compared with AI pioneers.

Larger and AI pioneer solution providers, meanwhile, were 50 percent more likely to cite the rate of change for AI as an inhibitor compared with their counterparts. The technology is changing too quickly to make investment decisions, according to these solution providers.

Smaller solution providers were 50 percent more likely to cite cybersecurity as an inhibitor, according to the research.

AI Cometh

A large share of solution providers told IPED that they believe widespread adoption will come based on effectively establishing proof of value—not just proof of concept. Law firms, health-care providers, researchers and other potential AI users want to see how they can save time going through large amounts of data and files.

In other words, vendors and solution providers need to prove the business value to customers. The technology’s capabilities alone won’t win over users—customers are “not going to spend $1 million to get increased productivity of 10 people,” Williams said.

Many solution providers believe 2024 is the year customers will determine proof of value for AI. The research showed that 56 percent of AI pioneer solution providers believe the cloud will have a significant impact due to hyperscaler partnerships.

About 60 percent said they recognize the potential for expanding application and solution development, but only 42 percent said they have application development capabilities today, according to the research.

The AI opportunity cuts across a variety of practices, with solution providers potentially seeing positive gains in security, risk management, analytics services, platform and data management services, industry-based offers and infrastructure optimization in the next 12 months, according to the research.

The technology could also provide “a forcing function around upgrades in a lot of different areas,” including PCs that enable AI use cases, Williams said.

AI is “like the internet. You’re not going to stop it,” Williams said. “The question is, from a solution provider [perspective], how do you make sure you position yourself to help your clients the most?”

Williams warned that solution providers shouldn’t underestimate the emotional component that comes with businesses deciding to adopt AI compared with other areas of technology transformation. The growth of the cloud and 5G are “way different than, ‘We have the ability to have someone think for us,’” he said.

He also warned solution providers against getting too absorbed in news around how AI affects vendor stock prices. “Partners make money on revenue, not stock prices,” he said.

For Williams, a lesson from a prior IPED study on IoT should hold true for AI and should show vendors why investing in their partner program can help with AI adoption by customers.

“Trusted adviser status is absolutely critical because there’s too much misinformation out there,” Williams said. “Clients want to talk to someone that they can trust to give them the right answer … that’s why, in a lot of our IoT work, the majority of the deals were coming from existing customers that had existing relationships with partners in the beginning.”