Current State of GenAI Deployment
Generative AI (GenAI) has been unavoidable, but the early 2023 hype has now been tempered by concerns around cost, technology challenges and ethics. To keep clients interested, IT services vendors and consultancies have pivoted from art-of-the-possible to business-backed use cases.
Persistent challenges around deploying actual GenAI-enabled solutions at scale have not abated, even as IT services vendors, consultancies and their clients have become more familiar with AI’s potential and limitations.
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GenAI Adoption in 2024
Early investments by technology companies in hardware and software, by IT services vendors and consultancies in skills and business cases, and by clients in trying to understand how GenAI will change their business created a foundation for sustained opportunities around GenAI.
However, accelerated adoption will not happen until costs come down and data management improves. Concurrent with efforts to address early challenges, TBR anticipates a shift by IT services vendors and consultancies from selling use cases to selling outcomes, an approach more aligned with the evolving IT services and consulting value proposition.
As GenAI hype becomes a reality in 2024, outcome-based pricing as a preferred — and not occasional — commercial arrangement will accelerate. Vendors and their clients will expect AI, automation and analytics to provide greater transparency, which is always the most significant hurdle in outcome-based pricing arrangements.
At its core, GenAI depends on good data. Numerous surveys, including TBR’s Digital Transformation: Voice of the Customer Research, indicate that only a small percentage of enterprises sufficiently collect, manage and understand their internal data. Efforts to adopt GenAI-enhanced solutions will persistently run into data issues, opening the door for consultancies and consulting-led IT services vendors to assist with data orchestration. Cleaner data will allow for greater transparency around enterprises’ IT needs and the business results of GenAI-enabled digital transformations.
With greater transparency will come increased pressure — especially from C-Suite leaders sold on the promise of GenAI — for outcome-based pricing arrangements. Those IT services vendors and consultancies that are nimble enough with their business models and financially stable enough to take on risks will begin setting the standard, gradually — and then rapidly — replacing time and materials with an outcome-based pricing model.
To learn more about TBR’s predictions for IT services and consulting markets in 2024, download your free copy of Top Professional Services Predictions for 2024, featuring a look at GenAI pressures and talent challenges in the markets in the new year.