AI - is it such a big deal and what does it mean to the IT Channel?

It’s impossible to read any IT news in 2024 without seeing AI mentioned. Cloud providers, PC manufacturers, chip makers and software vendors – their marketing departments seem obsessed with AI. In this blog we will consider this ‘new’ phenomenon. We will explore if AI is actually such a big deal and if so, what it means for the IT channel and society in general.

The History of AI

Our synopsis of the history of AI starts in 1950 when Alan Turing proposed the Turing Test, as he foresaw the day when computerised intelligence could be indistinguishable from Humans (¹). Over the next thirty years, the mechanics of how these systems could work were hammered out. During the 1980s, the fundamental approaches were fleshed out, including the back-propagation method that is used by all Large Language Model (LLM) AI systems today (²). It took until the late 1990s for IBM to demonstrate AI in the real World using their supercomputer mainframes. Deep Blue beat the World Chess Champion Gary Kasparov in 1997, and in 2011 their Watson system won the Jeopardy show in the USA.

In the last ten years, the power of the public cloud computing infrastructure has provided the brainpower, and the massive amounts of information available on the internet has provided the knowledge needed to train LLM systems, enabling companies to make significant progress. Open AI was founded in 2015 and in just 9 years has grown to be the leader in the field. Microsoft invested $1bn in the company in 2019 and is benefitting from the integration of Open AI technology in the form of Microsoft CoPilot across its solutions.

Is AI really such a big deal ?

Of course, as IT professionals, we are bound to be caught up in the maelstrom of AI marketing from the large vendors in the industry. With global issues like war, disease, famine and refugees also in the headlines, is AI is it really a threat (or opportunity) on the same scale?

Looking for evidence outside the IT village, we studied the World Economic Forum Global Risks Survey 2024. As an organisation whose goal is to improve the state of the world, is AI even on their radar?

The forum was asked which 5 risks were most likely to present a material crisis in 2024 and over half their members said AI generated misinformation, placing it in second place behind severe weather. The largest increase in rankings of threats were technical power concentration, and misinformation and disinformation, which jumped above armed conflict. The World Economic forum is as concerned if not more concerned over deep fakes and misinformation than war. (³) It’s fair to say that the IT community’s excitement over AI is not misplaced: the potential benefits and risks appear to be very real and are expected to accelerate through 2024.

With AI accelerating so fast, what are the impacts on our business and social world?

Sustainability

We know that data centres are major electricity users and right now, are the biggest hurdle for public cloud companies to overcome to meet their net zero targets. There is a predicted increase in data centre capacity as a direct result of AI that will have a carbon impact. On the positive side, AI is being used to try and solve some of our climate issues, including modelling weather patterns and helping manufacturing organisations move to a more circular economy model. (^4,5,6,7)

Security

Security is an area where cyber criminals are already harnessing the power of AI to deliver new types of attack. The World Economic Forum Global Cyber Security report (⁸) highlights a cyber-attack where criminals gained access to a corporate network using social engineering, which is common, but they combined this with dep fake text and voice messages. When you can receive voice and video messages from friends and colleagues which appear genuine but are fake, keeping safe online is very difficult for individuals, corporations and even countries.

One situation called out by the WEF is a growing divide between large companies who are increasingly cyber resilient and smaller companies who are falling behind in their cyber security readiness. The number of smaller companies who are under-prepared jumped from 5% to 37% over the last two years. This is an area where the SMB and mid-market customers of MSPs will need help and support like never before in the coming months and years.

Jobs

A lot of focus around AI is the impact on the job market. The impact on jobs will not be felt evenly, with a few jobs that will be replaced, many that will be augmented, and few will be unaffected. (^9,10) For the vast majority of people, if they are replaced at work it won’t be by AI, it will be by another person who is more skilled in using AI to be more productive in that role. Jobs most likely to be impacted include clerical positions and telemarketing. Jobs least likely to be impacted include teaching and career guidance, clergy and healthcare workers. The departments most likely to be hit are IT, finance, sales and operations.

When it comes to the channel, there will be two ways that you can use AI, and we suggest that you start to explore both. For customer-facing AI, channel firms are already using it for areas including data analytics, customer support, and sales and marketing. For internal use, most channel providers are still in the research and experiment stages (¹¹). This research indicates that the IT channel is being customer driven on AI rather than being proactive.

To get an idea where large organisations are using AI and the results they are seeing, we recommend the World Economic Forum, Global Lighthouse Network (¹²) where many of the World’s largest manufacturers are publishing the results of their leading edge IT projects, including 200 AI ones. The 40-> 104% increase in throughput for process optimisation is an area where even non-manufacturing customers could take some lessons in making their businesses more efficient using AI.

AI considerations for the IT Channel:

Vendor selection

AI will have a significant impact on your organisation and customer relationships with deep access to your critical data. Ensure you partner with an AI supplier you trust and one that has solutions your customers are likely to deploy.

Data privacy and security

Consider what data you allow an AI model to access and what happens to it.

AI impact on cybersecurity

AI is already disrupting the cyber-security market and, as protecting customers from online threats is a key role of the IT Channel, service providers will need to keep pace with AI developments and how they are impacting security.

Mitigating AI accuracy issues

AI models will produce some anomalous results, how will you spot these and correct them ?

Legal compliance and regulations

Consider the legal implications around data privacy and access for your organisation and your customers, who may also have specific industry regulations to comply with.

Integrating AI with existing systems

Will you sandbox your AI initiative of integrate it fully with existing systems ?

Staff acceptance and training

Staff will need education on AI and any fears overcome.

Cost benefit and return on investment

Weigh up the ROI of an AI project carefully including any potential risks.

AI impact on the Cloud Market

The reliance on the public cloud network to develop and deliver AI is having an impact already. Microsoft has been closing the market share gap to AWS for years. Microsoft’s compelling-end-to-end story around cloud, including Copilot AI, has helped the market share gap close drastically in the last few quarters, with the potential to draw level and even overtake AWS as the leading cloud platform in the next year or two.(¹³) Synergy Research Group (SRG) are predicting that AI will have a near exponential effect on the need for more data centre capacity with the hyperscalers looking to almost triple capacity in the next six years. Unconfirmed reports that Microsoft and OpenAI are planning a $100bn AI computer in the next 5 years lend some credibility to the SRG report. (^14,15,16)

The LLM / Generative AI Market

In terms of models, GPT-4 is the market leader with its Microsoft integration; Google Gemini and Amazon Olympus are receiving huge investment to catch up. These are the dominant players along with specialist Anthropic. Apple seems wedded to the concept of AI in devices rather than the cloud, so no clear LLM strategy is evident right now. Samsung are developing a generative AI solution called Gauus and we expect more vendors to follow suit. IBM relinquished their early lead in AI but remain one of the largest investors in Quantum computing which may be the trigger for them to start gaining traction in the AI space when Quantum computing matures. From a commercial perspective, the clear leader right now is Microsoft. With the majority of customers running some form of Microsoft Office, server and cloud solutions the regular launches of Copilot across the Microsoft portfolio makes this a no-brainer investment area for channel partners.

Channel Actions

– Formalise a program for continual AI education across the business.

– Identify a core internal and customer application for AI and start trials.

– Select a vendor with an ethical approach to AI, such as the ‘AI for Good’ message that Microsoft uses within the Microsoft Partner Pledge.

– Be sensitive around marketing AI, focus on process improvement not job replacement.

– Take small, deliberate steps with continual learning and iteration.

– Lean on your distribution partner for education and resources.

– If you have customers using Microsoft, Copilot should be your go to solution for your initial foray into AI.

AI – is it such a big deal and what does it mean to the IT Channel?

Vendors

Categories

With AI accelerating so fast, what are the impacts on our business and social world?

AI considerations for the IT Channel:

AI impact on the Cloud Market

Channel Actions

References