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We at Greyhound Research addressed over 5000 enquiries in 2024, mostly on GenAI – no real surprises there! Given the interest in the topic, we thought of sharing some key highlights from these enquiries:
One, over the past 12-18 months, those serious about using the latest technology have run, on average, a dozen Proofs-of-Concept (POCs). Those with deeper pockets and a variety of business lines have done more! However, only 25-30% of the dozen POCs will make it to production in the coming months.
Greyhound Standpoint— While GenAI has serious potential to drive additional revenue, most companies (actually executives) are cautious about promising to their board on that front. The first focus is driving operational efficiencies and enhancing customer experience. Of course, we also see GenAI use cases in manufacturing and other B2B industries, but these industries are proceeding with caution and looking for relevant customer examples before taking the next steps. It might be worth noting that customers in highly regulated industries or those with stringent audit rules are wary of touching the business-sensitive areas and starting from low-hanging fruits. Hence, a small proportion of POCs are included in production.
Two, the POCs that aren’t going to production are primarily due to legacy systems that need upgrading, a lack of cohesive and coherent data sources, ambiguity on data privacy and IP protection issues, and sheer internal preparedness to get line-of-business users to use the technology.
Greyhound Standpoint—What might be interesting to note here is that some customers also displayed a comparatively lower level of understanding of the need for technology preparedness to harness the power of GenAI. Many customers have yet to modernise their systems of records and still want to jump on the GenAI bandwagon. If that’s not FOMO, then I’m not sure what is! Some struggle to make the business case financially viable and cannot get the line of business CXOs to fund and sign off. Some are in the early days of modernising their data architecture, the foundational bedrock required to make GenAI work. And, of course, some are ironing out the fine print on how the models use sensitive corporate data and working on the guardrails needed to make it (almost) bulletproof. This takes time, hence the delay in taking POCs to production.
Three, truth be told, not all are believers in GenAI, at least not yet.
Greyhound Standpoint—Some are complete naysayers and don’t value the technology enough. Or at least not yet. This includes those that were sold (read oversold) the promise of bleeding edge technology, invested in it and are far from achieving outcomes. It also consists of those with a more functional and supportive view of technology than it being a game changer. It also includes those who see it from a “time invested vs. value derived” lens and don’t see it as worthy of their time, attention and resources. It’s those who are the hardest to please make the vendor teams work the most. So, against popular belief, these naysayers have immense value in the evolution of any technology, including GenAI.
Four, in addition, many customers Greyhound Research advises have also expressed concerns about trusting vendors who launch half-baked technology under peer pressure or simply using a new wrapper on dated technology. Another top-level concern is expensive licensing and complex contracting. To give a rough benchmark, some vendors are pricing GenAI products at a steep cost of USD 30 per user per month, making them prohibitive and non-starters.
Greyhound Standpoint—While GenAI is the new fancy tool, CIOs and CIDOs must justify many recent “core” modernisation expenses that may be years away from meeting their ROI targets. Hence, additional spending will undergo intense scrutiny and need more than just a tag of fancy technology to get the final sign-off from the board and broader management. Also, just like strategic outsourcing contracts evolved, GenAI contracts are expected to become more nuanced over time. Savvy clients will soon need vendors to put skin in the game and tie their outcomes to the lofty expectations promised while selling the technology. While vendors continue to use expensive GPUs, skills costs, and more as their go-to reasons for explaining steep costs, reasonable pricing is key to achieving the hockey stick curve. Of course, one can also argue that many vendors have not justified the value of their GenAI products and cannot get customers to buy them. CIOs and CIDOs, for the most part, will buy these tools for select power users and still struggle to get them to use them in everyday life. So, it’s a classic chicken and egg situation. But, like the Cloud, consumption will never take off unless the price is right!
Five, the GenAI vendor landscape is complex, and making LLMs work in a production environment requires much engineering effort. While it’s expected that not all buy-side organisations will have the skills to make it work, it is surprising that not all IT services and consulting players are geared up for the opportunity. There’s more to their marketing pitch than they can deliver in real life.
Greyhound Standpoint— The fact is that buy-side organisations need help navigating the landscape, architecture, workflows, integration, and more. And the force with which GenAI is evolving will require more than a handful of players to land on the mission successfully. And to top it all, given the fast evolution of LLMs and the inclusion of data types, these players need to be equipped to handle multimodal GenAI. Given the complexity involved, IT Services and consulting players that offer deep GenAI expertise will come out on top. Also, since GenAI is being actively used across the value chain – from code to apps to business functions – this will severely impact the skills mix needed both at the client and vendor ends. Currently, where we are, both sides are playing catch up, and that’s perfectly reasonable and expected. However, it’s in these times of playing catch-up when most overselling and misselling happen, and this is when CIOs and CIDOs need to tread cautiously.
Lest we forget, technology is like fashion, and one must pick and choose what works best for them and not what’s in vogue. For those who work better with visualisation, please imagine a big, bulky man wearing skinny jeans. Well, technically, he can wear it. But the question to ask is, should he?
Analyst In Focus: Sanchit Vir Gogia
Sanchit Vir Gogia, or SVG as he is popularly known, is a globally recognised technology analyst, innovation strategist, digital consultant and board advisor. SVG is the Chief Analyst, Founder & CEO of Greyhound Research, a Global, Award-Winning Technology Research, Advisory, Consulting & Education firm. Greyhound Research works closely with global organizations, their CxOs and the Board of Directors on Technology & Digital Transformation decisions. SVG is also the Founder & CEO of The House Of Greyhound, an eclectic venture focusing on interdisciplinary innovation.
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