Generative AI poised to be a game-changer for channel growth

S Mohini Ratna, Editor, VARINDIA

As we approach the end of 2023, the transformative power of technology has been evident in steering industries through various challenges. The year 2023 witnessed the resilience of technology during crisis, and the next year promises to be a continuation of this technological revolution. Following the remarkable year, the convergence of existing technologies and ground-breaking innovations will reshape the landscape of organizational operations. 

Gen AI is a multi-billion-dollar opportunity for the channel ecosystem that is still early in its lifecycle.  This report underscores the enormous opportunity for the channel ecosystem where the partners have to leverage Gen AI to unlock revenue for new services and enhance internal productivity.

The worldwide total addressable IT market is forecast to grow 3.5% to reach US$4.7 trillion this year despite cautious spending due to ongoing economic issues, as per Canalys. Partner-delivered IT technologies and services will exceed US$3.4 trillion in 2023, accounting for more than 70% of the global total addressable IT market. 

Generative AI is poised to be a game-changer for channel growth, which will amount to a US$15.4 billion opportunity for the channel ecosystem this year alone and is expected to grow to US$158.6 billion by 2028. The channel IT spend will reach nearly $5 billion by the year end, defining 70% of IT spending in 2023. The projected growth of generative AI and its potential impact on the channel ecosystem are impressive.

This report underscores the enormous opportunity for the channel ecosystem where the partners have to leverage Gen AI to unlock revenue for new services and enhance internal productivity.

The rise of AI presents a significant opportunity for channel partners to expand their offerings and reach new customers. Channel partners can capitalize on this opportunity by offering AI services, developing AI software, offering advanced data services, and reselling, co-selling and upselling AI products with services around them.

Technology, particularly Generative AI (Gen AI), is rapidly transforming industries (specially Healthcare, Finance, Manufacturing, Retail etc.) and helping them navigate complex challenges.

The two largest new revenue opportunities for the channel ecosystem are in offering AI services and AI software development. Other new revenue opportunities include advanced data services that use or enable AI, and the reselling, co-selling and upselling of AI products with services around those products.

The rise of generative AI presents a treasure trove of new revenue opportunities for the channel ecosystem. Moving ahead, a significant new revenue opportunity for channel partners is around AI services, or more specifically, services that help companies adopt Gen AI successfully. This includes AI advisory and change management services, consulting, design and build, architecture design, implementation, and integration.

Channel partners should prepare today to capitalize on these opportunities while safeguarding against over-investment, depending on their business model. To do this, partners should determine their AI strategy and offerings, while also building expertise and strategic AI partnerships and continue to invest in ongoing development.

Channel partners should begin by defining a clear AI strategy that aligns with the organization’s goals, strengths and target markets. Partners should conduct a thorough analysis of the AI opportunity and perform a total addressable market (TAM), serviceable addressable market (SAM) and serviceable obtainable market (SOM) analysis to identify the scope of their opportunity.   

Partners should then focus on identifying their value proposition and competitive differentiation, carefully identifying their strengths, weaknesses, opportunities and threats, as well as opportunity costs given limited resources and capital.  For Long term, the channel ecosystem should continue to monitor the market, adapt its strategies and capitalize on emerging opportunities.

Channel partners can develop a robust AI strategy that positions them for success in this rapidly growing market. To achieve the opportunity, channel partners should commit to acquiring ongoing certifications, deep AI competencies and working closely with their partners to bring innovative and tailored solutions to market. 

The rapid advancement of generative AI presents both immense opportunities and challenges for the channel ecosystem. Those who adapt, innovate, and evolve are poised to become the frontrunners in this transformative era. Partners who foster a culture of innovation and encourage their teams to think outside the box will be the ones driving the future of AI adoption.

Gen AI is rapidly advancing and the partners who are able to adapt, innovate and evolve with the industry will win.

Let's all expect a fruitful year ahead.....wish you all a very Happy and Prosperous New Year 2024.