What Does Generative AI Mean to the Tech Partner Ecosystem?

What Does Generative AI Mean to the Tech Partner Ecosystem?

Making sense of all the corporate conference AI announcements.

Over the last three months, I was fortunate enough to have a front-row seat (literally) to a collision between the 2023 Generative AI wave and the corporate conference season. I have been very vocal about the importance of actively participating (both as a corporation and a professional) in post-pandemic corporate conferences. Nothing could support this argument more than what has transpired over the last three months. If my math is correct, I have attended eleven corporate conferences and two in-house partner summits (some in the same city in the same week…, so the travel may sound worse than it was). I firmly believe that when part of a high-functioning partner ecosystem, you must directly engage or risk missing out on the planned and random business opportunities generated from these once-a-year events.?

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It should be no surprise that every partner event led with AI announcements or related messages. Every executive meeting during the conference touched upon AI in some way. During the events, I had an opportunity to review the day's announcements with clients, partners, peers, and even some competitors. A pattern started emerging, and you could begin categorizing the company's responses into three categories. Depending on the breadth of the vendor's offering, they could respond across multiple categories. Before I get to my observations and thoughts on how this impacts the broader partner ecosystem, I need to put out a qualifier to position the rest of this article properly… No company was completely ready for the disruption caused by the release of ChatGPT and the placing of generative AI directly into the hands of the consumer. Most of these conferences had been scheduled for over twelve months. ChatGPT only caught fire in January. Everyone was almost equally left scrambling to develop a clear message to their audience on current offerings and product plans and how they will be at the front end of this new generative AI revolution. While I believe most enterprise vendors (including the ones that have long promoted their AI capabilities) had generative AI on their drawing board or working in the background, their external plans quickly accelerated to an announcement and demo at their major annual event.

Category 1. "We Were Already Automating. Generative AI will supercharge our existing offerings".

These companies have invested heavily in designing and implementing highly automated enterprise solutions and were planning to announce a next-generation offering at their conference. By injecting the new capabilities of generative AI services, the existing solutions would offer almost immediate benefits to the users without a full-scale redesign. The demos were the most meaningful, and the audience responded most favorably.

Category 2. "We provide the best capabilities for clients and partners to build next-generation generative AI applications."?

This ranges from a conversational AI service powered by their proprietary large language models and neural network architecture to developer tools and computing infrastructure (chips, supercomputers..). The vendors with immediate experimental sandboxes available tended to get the most immediate attention. Others were stating future availability dates and encouraging private briefings.

Category 3. We will provide a safe environment to build your generative AI apps and protect you from malicious actors with access to these next-generation AI capabilities. A variety of DevSecOps vendors would fit into this category.

So what does this all mean when looking through a tech partner ecosystem lens?

As with every disruptive wave of innovation, you must immediately evaluate your existing strategic partner's strategy and announced offerings to ensure you are aligned both from a business and a technical level. Again, vendors providing access to new services via experimental sandboxes get the most immediate attention. Secondly, a new set of technology vendors has been identified whose stand-alone service may have yet to be on your partner ecosystem radar. But by announcing partnerships with established enterprise-level players, they have suddenly been thrust into the partnering spotlight.?

Based on what I have recently observed, here are my primary partner ecosystem thoughts.

1. System Integrators; The greatest priority must be given to the system integrator community. Global System Integrators provide the most significant immediate opportunity for the adoption of these new generative AI offerings. For example, Infosys has 50 active client projects leveraging generative AI, and we are having active discussions with a further 300 clients. Clients are already actively engaged in AI planning.? https://www.reuters.com/technology/indias-infosys-signs-five-year-ai-deal-with-2bln-target-spend-2023-07-18/
2. ISVs; Solution vendors will be in the market for generative AI services to consume as they refine their products to respond to the demand for conversational AI capabilities and the support of large language models. This is a highly lucrative partner segment for any technology vendor to target as they launch their new capabilities. Given the nature of use, these new generative AI services must be ready and entirely bullet-proof. Otherwise, it will put the ISV's broader solution at risk.
3. Resellers / Distributors; The immediate impact will be low for existing enterprise vendors' offerings. There is no margin in the resell or distribution of a naked web service. It must be wrapped in a solution or consulting services. Any immediate resale opportunities will be incremental to existing products/solutions available for sale today. OEM relationships will take priority. As new stand-alone products/solutions are released, it will become more apparent as to the broader resale opportunity.
4. There has been a partnering "land grab" across the major enterprise vendors to secure generative AI services. We have witnessed significant equity investments, outright acquisitions, and strategic partnerships being announced between big-time vendors and smaller pure-play generative AI players. I feel there was so much early action involving ChatGPT that subsequent vendor announcements started to involve competing generative AI companies to differentiate themselves or perhaps find better cost-efficient ways to get into the space. The CEOs of these smaller generative AI vendors began appearing onstage with the hosting CEO to emphasize the importance and potential of their new relationship.
5. Generative AI is expensive. There is a reason that Nvidia raised its forecast by billions of dollars. Graphics Processor Units (GPUs) are the price of admission to the world of generative AI. They are in huge demand, and they are expensive. It will be impossible to suddenly switch to a world where all existing applications suddenly have full generative AI capabilities. Over dinner, an executive shared with me that entirely replacing today's "search" with conversational AI services would add multi-trillion dollars of annual cost. After the initial hype subsides, it will not be a question of "Can you do it?"… it's a matter of "how can you afford to do it?". For this reason, finding lightweight approaches and narrowing the focus to more limited use cases and industry-specific approaches will become necessary when building any business case.
6. There are no killer "Generative AI Native Enterprise Apps"… yet. Most of the discussion was about injecting generative AI services into existing solution offerings and business processes. Much like the shift to the cloud started with existing workload migrations, I see this as the first step in a journey towards entirely new business models created from generative AI native solutions. Some companies discussed the potential to build killer AI apps and outlined the future where users could simply "have a conversation with your data" but stopped short of describing what a generative AI native app would look like.?
7. Enterprise solution vendors' pricing models must evolve to accommodate generative AI business cases. In turn, the vendor's partner programs will need to respond. For example, suppose a vendor currently prices their solution based on a "per user" framework, and Gen AI services allow the client to reduce the number of physical users. How do you price in the new potentially expensive produce features? Ultimately, this will accelerate the shift to "business outcome" pricing.?
8. Generative AI will accelerate the shift from on-prem offerings to cloud-only SaaS offerings. Albeit a small sample size to date, enterprise business solutions leveraging Gen AI services will only be available in the SaaS version of the solution. This could immediately push reluctant clients to finally transition to the SaaS or completely miss out on these new groundbreaking product features.

?We have entered an exciting period of disruption with Gen AI acting as a catalyst to develop new innovative offerings and create new forms of corporate partnerships. If the last few months are any indication, we will move quickly now, with new announcements almost weekly. More big partner events are on the horizon, including Infosys's Americas Confluence conference on September 13th - 15th at the Omni La Costa Resort in San Diego. A limited number of partner sponsorships remain available.??

I look forward to the opportunities ahead of us. This disruptive innovation comes across only a few times in one's career. 2023 is truly an exciting time to be in the partnership space.

Please note; The views expressed in this blog are purely mine as an individual executive. They do not represent the official position or perspective of my company. The purpose of this blog is to encourage open dialogue on topics related to creating a high-performing partner ecosystem. If you have any questions related to this point, please feel free to contact me directly.