Companies of all types have begun to adopt generative AI as a way to increase productivity and possibly even replace some workers. But the base technology has been around for decades. For the past 5 to 10 years, large enterprise software companies have been incorporating AI into their platforms without the same level of “hyping or showcasing” that we are seeing right now.
The problem has always been placing the AI. It hasn't helped that there has been a tendency for early adopters to personify it and turn it into a product, even if it wasn't really a product. Salesforce called it Einstein; Adobe, Sensei; and IBM, Watson. But AI is not something that you can specify and call a product, per se. These companies don't necessarily sell AI like they would a CRM, Photoshop, or health records software. Instead, they infused AI into different parts of the product line, making the products they sell potentially better.
Since generative AI burst onto the scene late last year with the release of GPT-4, the hype machine has been out of control. Suddenly, AI was in front of everyone like never before. But even with the highest profile, it's not clear that this is a real market, and it's even less clear how many companies are actually deeply embracing it despite all the hype.
However, it is clear that companies and individuals are curious about what AI can do. Enterprise software vendors have been adding functionality and trying to get the most out of their marketing. New companies have also emerged: Cohere, Anthropic, Writer and Jasper are among those trying to build businesses around generative AI technology, either by creating basic models or tools to leverage generative AI in a business environment.
As we find ourselves in the middle of this AI-induced frenzy, it might be useful to take a step back and see what we're dealing with here. Is there really an AI market in the pure sense, or is it an enabling technology that will soon be incorporated into everything, making the way we view it less of a product?
Some data
Everyone talks about AI, but what do Fortune 500 and 2000 companies really do when it comes to AI? It would seem that while there is clearly a lot of interest (to put it mildly), the big companies are jumping in lightly, as they tend to do.
Morgan Stanley, in its quarterly survey of large enterprise CIOs, found that 56% of respondents indicated that generative AI would have an impact on IT budgets this year, but only 4% said that is translating into projects. "significant", which suggests that they are still in the exploratory stage.
Insight Partners recently published their Annual Report on the State of Enterprise Technology for 2023 and found results similar to those of Morgan Stanley. But George Mathew, CEO of Insight, cautions that the company conducted the survey late last year, just as generative AI was bursting into our consciousness.
At the time of the survey, about 15% of companies with more than $10 billion in revenue had plans to invest in generative AI, but Mathew says that over the course of this year he has seen much more interest from Global 2000 companies with Insight surveys.
“A lot has changed between the end of 2022 and the first two quarters of 2023, especially around the question of generative AI,” Mathew said. “And what we're seeing now, even after some of the survey data was reanalyzed… is that that investment in generative AI is actually accelerating, and it's accelerating at a pace we've never seen before in software.” business”.
“I think the nuance I would just say is that you're still in the mode of trying things out, testing, working on the initial training runs of what you'd like to build as far as generative AI applications go,” he said.
Constellation Research found similar results in its H1 CxO Business Confidence Survey of the first semester, and 56% of respondents said they plan to launch a proof of concept around generative AI this year.
Product or part of a platform
To some extent, the question of where AI fits doesn't matter, simply because it will permeate the software regardless of where it is placed. But it's still a question worth exploring, especially for startups that might consider it as a category, rather than an enabling technology.
Gartner analyst John-David Locke leans firmly on the platform side despite the message we might hear to the contrary. “There are certainly a lot of people with really bad research, saying that AI adoption is at 4% and that it will represent 6% of total IT spending. All that is nonsense. First of all, there is no AI market. AI is a technology that will spread. “It’s part of a platform,” Locke said.
Still, he said it will be ubiquitous. “The difference with AI is that every piece of technology we have now is a driver market for AI. Every device, every printer, every server, every piece of software, every web application can have AI sprinkled on top; like sugar in cereal, it will taste better with AI.”
But it may not actually be a simple matter to specify. “To me, AI is an enabling platform AND a product if you have a business graph. To be a product, you need to have cheap computing, massively updated data sets, large network interactions, and cheap power,” said Ray Wang, founder and principal analyst at Constellation Research.
"Only a few companies will be able to turn AI into a product, but because of that, there is an unfair power dynamic with digital giants and big tech startups, governments and individuals."
Mallun Yen, founder and partner of Operator Collective, also sees it as something that will be integrated into everything, but will disappear as a category as it becomes ubiquitous. "There are companies today offering AI products, but as was the case with mobile, most ultimately won't sell 'AI products' as 'mobile products' isn't really a category now," Yen said.
“Instead, products will integrate and leverage AI both in terms of functionality but also in how they are built and developed. “Some of the most interesting startups we are seeing today anticipate how the world will develop, manufacture and deliver products in an AI-native world.”
It's clear that AI has captured our imagination like no other technology has for a long time, and will eventually impact every business and software application.
As it takes over, AI will likely take a backseat. Like 1960s TV shows that boasted about being broadcast “in color,” before it became a fact, apps will simply have AI running under the hood without having to say so explicitly.
