CRN Deep Dive: Partners can make money off AI, but not in the way you think

This month’s deep dive explores AI monetisation and how partners can take advantage of the technology that’s taking over the world.

Channel partners know what AI is, how the technology is set to change the world as we know it and perhaps take all our jobs. They are also aware of the lucrativeness of AI.

Research from McKinsey and Co shows that generative AI could add the equivalent of $2.6 trillion to $4.4 trillion annually across several sectors like customer operations, marketing and sales, software engineering, and R&D.

This sounds promising for partners, but a report from UBS Global Research and Evidence Lab in 2023 highlights that AI features are “table stakes” and expect it to be embedded in products, and are highly unlikely to pay for it.

With the cost of living still high and margins becoming smaller, AI could be a glimmer of financial hope for Australian partners. In this CRN Australia Deep Dive, we investigate how can Australian IT partners take advantage of AI and make a buck off it.

For Kaylene O’Brien, CEO at NRI ANZ said AI is the perfect tool to implement for productivity to ensure they win deals.

It is also used in their quality engineering and testing department.

“It's the very beginnings of what we're calling comparative testing, which is helping to verify AI results that clients want to get more validation, that they're not looking at an AI hallucination, that there is an independent validation of how of the results that their systems are producing,” she explained.

O’Brien said partners need to have a different perspective about monetising AI.

“I wouldn't think about it as, how do you make more money from it? I think about it as, how do I adopt it so that I stay competitive?” She noted.

The great AI expectation

AI is no longer an optional tool, customer are expecting partners to already have it implemented.

O’Brien said AI is no longer a “should” or “could” but a “must”.

“What we are continuing to see is that clients want to see more value and impact from their IT spend from organisations like us,” she said.

“AI is now one of the main techniques for us to achieve productivity improvements in how we provide our services.

She added, “AI is now an expected part of service delivery that in the way that we provide services, that there is automation and that AI embedded is in how we work and across all of our services, from consulting to implementation to managed services.”

For Adelaide-based service provider Blue Crystal Solutions, they offer consulting and managed services, and Daniel Cox chief technology architect said AI is another service they can provide those things for.

“The money Blue Crystal makes as a partner is very much like the money we make supporting databases, Oracle, Microsoft infrastructure is consulting and managed service dollars,” he said.

Relationships matter

The IT channel is deeply a relationship-based community, and that also goes with making money off AI.

Vito Rinaldi, founder and CEO at Blue Crystal Solutions said building trust with their customers is pivotal to AI monetisation.

“It's about building long term relationships, it is about getting the trust, understanding the new version [of ChatGPT], the private LLMs that are coming through, understanding the data and how to make it secure, and having that domestic and sovereign capability for local, Australian partners,” he said.

Rinaldi noted that not every partner will be able to take advantage of AI’s money making capabilities.

“I don't think every partner can monetise AI, it's about the value proposition, how you solve business problems for customers, that's the important part,” he said.

“But when it comes to solving a business problem, not every partner would be able to understand what the what their [customer’s] business driver are. We come in at the level where we can make something complex and turn it simple.”

Not about the products

Partners will make money off AI not through vendor products but advisory and consulting services, according to James Davis, chief strategy officer at TSP Advisory.

“The industry keeps defaulting to flogging products, but the challenge for partners and their clients is there's no one size fits all answer,” he explained.

“If you don't know what challenge you're solving first, you're pretty much bringing a hammer, trying to find nails, rather than be very specific with your clients of what challenges and opportunities they've got, and bringing them solutions.

“And you only can do that through advisory and consulting to understand their business, understand their departments, their systems, and then take them on different journeys of what solutions are out there.”

Taking it further, Davis believes generative AI isn’t lucrative at all for partners, as it is “too generic”.

“Most people that talk about AI, they mean generative AI. And there's not that much money to be made out of it, it's already commodity,” he said.

But, he said the “real money” is focusing on productivity and efficiency, leveraging technology.

“That's the conversation that gets missed in this because we default to AI and all the fantastic problems it solves in the world without the specific use cases and functions,” he said.

“Partners aren't going to make money off the technology. They’re the ones that should be understanding the clients environments, the systems they've got, the integration points, the opportunities and challenges in those businesses, then to help department by department.”

Hurdles for AI monetisation

For those MSPs who are reluctant to use AI or are still in the sceptical stage, Dan Greengarten CEO at Orro Group said expect to be replaced.

“AI is not going to replace the MSP, but MSPs who do use AI will replace them,” he warned.

“If you're going to ignore the trend, it's not a trend. It's a change of environment. It is the IT’s version of global warming, it's happening, so if you choose to ignore it, then select your time of your obsolescence. It's up to you.”

Davis at TSP Advisory said most of the industry doesn't know what AI means in general, which can be a blocker for partners and taking advantage of the technology.

“The fact that we default to the AI buzzword without stopping and going, ‘what do you mean by AI?’ Shows we're still in that unconscious and competent stage,” he said.

“We don't know what we don't know, we're just confident with the information that we do know and have been fed to us by the vendors, but most of us, I'd say, in general, don't understand enough of it.”

Some partners and companies that have made investments in AI tools and products, are still struggling to find out if they’re making money off these investments.

Kirat Khara, director distribution and commercial channel at Lenovo said there is a question mark around companies making money through AI investments, and there won’t be a definitive answer for another year.

“It is investing ahead of the curve, you invest now, you're not going to see an ROI on this for next 12 months. So how do you make sure that you're doing that, and you have enough cash flow to invest 12 to 24 months in advance is what every partner can do,” he said.

Another challenge for partners is finding the right talent, Khara noted.

“If you look at some of the talent moments that we hear globally between Meta, Google and Microsoft, and you read, the amount of money that they're throwing at talent is crazy,” he said.

"There is that issue as well, do we have the right talent and how does market like Australia attract the right talent? Because today, the talent is not does not have much geographical boundaries, if I put it that way.”

Those Aussie IT partners still on the fence about AI, O’Brien at NRI ANZ puts it this way, “It keeps you competitive, it's a critical component to keep you competitive.

“This is a really big breakthrough period in our industry, and adoption is critical, and clients expect it,” she ended.