Will AI break the business model for some channel partners?

This morning, some writings on the web made me "compelled" to think about AI and how it might impact channel partners. To give some context to my thoughts, I should give some background.

I have lived and breathed the channel for 30+ years within the software industry. My boutique consulting company, TELLUS International , has been the foundation for my work for 19 years now. I provide my interim management services for software companies of different sizes and end-user organizations that need help defining their solution strategy, such as building document management solutions using platforms such as SharePoint. Besides this, I have helped 300+ channel organizations and their business models and envisioning IP.

I wanted to give the information above as the context for this article so that the reader can understand the exposure I have to channel partners, their lives, and how technology companies work with their channel partners. I am currently working with an exciting global ISV that is explicitly focused on channel partners and reaching out to both their channel partners and country organizations around the world. The insights are invaluable as they give me an idea of how an organization, for example, in Australia, views the market vs. organizations in the US.

This morning, when I woke up and read an?article from Channel Futures, ?I felt compelled to share my thoughts about the article "Turning Innovation Into Revenue: How Partners Can Lead the AI Conversation."

When working with end-user organizations, especially in the SMB sector, there is a huge opportunity for channel partners to teach and coach leadership teams what AI truly means, what the most typical use cases are, and even do some prototyping to help these organizations to see the potential value of AI. But let me tell you, there is so much hype around the AI topic that I fear that lots of organizations don't get on the AI bandwagon because they have heard from other organizations that they have had issues in defining the ROI.

It seems that most of the writeups in the media are about increasing the productivity of individual stakeholders, which is true, but having worked with customers within software and IT, the biggest challenge is to get the organization to transform itself to be AI-driven where stakeholders, including leadership teams and employees truly embrace AI.

I use both OpenAI ChatGPT (subscription) and Microsoft 365 Copilot . Both have their own role. The question that I would like to pose to organizations that have deployed, for example, Copilot, have the employees been trained on it, and did the organization have an onboarding process of the technology that allowed employees to be part of the journey and infuse excitement within the teams?

What we have done in a company where I am an interim CTO is to have a stakeholder team from each corporate function that acts as "leads" for the rest of the function. So, if you represent the legal department, a person from within the legal department will be the "sponsor" to move things along.

The?Channel Futures article ?suggests that channel partners can help customers innovate and "calm" the AI storm for their customers and, therefore, can become leaders in their customer AI journey. The article states the following:

Vendors compete to implement AI, customers are inundated with news and claims about its potential. This is true not only with communications technology, but across the entire enterprise stack. With so much noise, many organizations want to harness these new technologies, but data, privacy, trust, compliance, ethical, and accuracy considerations all give IT leaders pause.

I fully agree with the statement above and what we can do for our clients is to serve as "Chief Educators. That is exactly what Mikko Peltola from A-CX and I have done as part of the TELLUS International platform. We have run over 10 "Approachable AI webinars," which you can view on the A-CX YouTube Channel . I have taken the time to write educational content here on LinkedIn and the TELLUS International blog . I have two Newsletters on LinkedIn, one that is focused on business models in the AI area , and the other is focused on sharing book reviews (Dr. Salonen Book Reviews ), which has become popular based on the subscriptions that I have on the Newsletter.

You might ask yourself why we are doing it. Mikko and I have the same motivation. Sharing information is also about caring about our customers so they will know that we follow the market and know what we are doing. I love doing research and staying on top of things, and AI and business models have been my focus for a long time. I also focus on software pricing and packaging of AI solutions, an area where software vendors are currently struggling.

My advice is to focus on real business and use cases where it is easy to demonstrate the value AI will bring to the organization. A-CX and TELLUS International take a gradual approach to AI when introducing it to customers. Let's first understand what the needs are, then prototype to ensure that the use case or scenario is what is expected, and then build/deploy the solution.

I am excited to reveal that soon, TELLUS will be able to offer an AI-driven solution for use cases from which each of us will benefit. It is a solution that "makes sense" without the user organization having to invest arms and legs in implementation. I am truly excited about the solution and will also be offering it to channel partners globally. The solution is consumed by different user interfaces such as Microsoft Outlook, Microsoft Teams, and many other means. I let my wife?Rita Salonen ?test the solution out, and she said, "Wow, this makes sense." Stay tuned for that. More information on the opportunity very soon.

When I reflect on the software industry (ISVs), organizations that are not entertaining the use of AI within their solutions will fall behind and eventually lose the interest of potential buyers. Channel partners, the Technology Services Industry Association (TSIA) , categorizes these organizations to be level 1 or level 2 suppliers within their Supplier Operating Model. The TSIA operating model is based on four levels as follows:

The market is moving towards outcome-based offerings. It is still very new for most organizations, but the expectation is that it will become more common in the future.

Channel partners need to decide where they want to be on the spectrum of levels. Levels 1 and 2 are the more traditional partners, and their path for growth will become harder with time unless they move towards the right on the spectrum.

This past year, I have been part of a project where I evaluated managed service providers for a client, and it was very interesting to see the uneven portfolio offerings that these MSPs represented. Cybersecurity will become the center for most MSPs, and I have firsthand experience leading multiple IT and cyber due diligence projects for private equity firms. The world has become crazier with cyber incidents, and even the organization that provides cyber security training for clients (KnowBe4 ), based on the article in Dark Reading , explains how the organization hired a North Korean hacker as their engineer. If it happens to KnowBe4, it can happen to anybody.

The AI market will be amazing in the coming years because of the opportunity to infuse AI-related training and implementation, either part of an ISV solution or tailored solutions. Big cloud vendors such as Microsoft, Amazon, Google, and others are pouring billions into training models that channel partners can consume and build IP.

If you are a channel partner or ISV, where are you with your AI journey. It would be interesting to hear your views. As always, please reach out to me if you have any questions.

Yours,

Dr. Petri I. Salonen

PS. If you would like to get my business model in the AI Era newsletters to your inbox on a weekly or bi-weekly basis, you can subscribe to them here on LinkedIn https://www.dhirubhai.net/newsletters/business-models-in-the-ai-era-7165724425013673985/