Gen AI: Channel Ecosystem Poised for a Multi-Billion-Dollar Opportunity

In the rapidly evolving landscape of Artificial Intelligence (AI), the channel ecosystem is positioned to reap substantial rewards, with Gen AI presenting a multi-billion-dollar opportunity that is still in its early stages.
Generative AI opportunity for channels
A recent report from Canalys highlights that Gen AI’s potential will reach a staggering $15.4 billion within the channel ecosystem in the current year alone, with projections indicating a remarkable growth trajectory to $158.6 billion by 2028.

This report underscores the massive potential that awaits those within the channel ecosystem, emphasizing the need to harness Gen AI to unlock new revenue streams and elevate internal productivity. Notably, two significant avenues for revenue generation stand out within this ecosystem: AI services and AI software development. The potential doesn’t stop there, as advanced data services that either leverage or enable AI, along with the reselling, co-selling, and upselling of AI products bundled with services, also open new doors for revenue.

It’s predicted that the next 18 months will see Global System Integrators (GSIs), Regional System Integrators (RSIs), niche consulting firms, professional services entities, Independent Software Vendors (ISVs), and software/application development companies at the forefront of capitalizing on Gen AI services. Moreover, the integration of Gen AI into internal operations has the potential to enhance productivity across all types of channel partners, automating business processes, enhancing client services, and conferring competitive edges.

Preparation for seizing these opportunities is paramount for channel partners, but a cautious approach to avoid overinvestment is recommended, contingent on individual business models. Partners are advised to formulate their AI strategies and offerings, bolster their expertise, establish strategic AI partnerships, and consistently invest in ongoing development, Canalys analysts Lisa Lawson and Jay McBain said.

Unveiling New Service Avenues in Gen AI

The realm of Gen AI services encompasses four primary categories: AI services, AI software, advanced data services, and the sale of Gen AI products bundled with complementary services.

While these services hold the potential to inject billions into the industry, not all channel partners will experience uniform benefits. The nature of the AI offering, the channel partner’s business model, and the alignment between service offerings, skill proficiencies, and target markets will all play crucial roles in determining the extent of success.

A notable avenue for revenue within this ecosystem centers around AI services, particularly those that facilitate successful Gen AI adoption by companies. This involves services like AI advisory, change management, consulting, design and implementation, architecture design, and integration. These bespoke, large-scale engagements often yield substantial revenue, sometimes reaching the millions.

Early movers within the AI services domain will have a clear advantage. As Gen AI innovation and adoption escalate at unprecedented speeds, the demand for AI services spanning the customer journey will continue to surge. Leading the charge in delivering AI services are GSIs, RSIs, professional services firms tailored to specific industries, and specialized AI consulting firms. These entities are forging partnerships with major AI tech vendors to solidify their presence in this burgeoning space.

Examples of this trend include:

Capgemini’s collaboration with Google Cloud, aimed at leveraging Gen AI to create over 500 industry-specific use cases and accelerate clients’ business transformations.

PwC’s substantial investment of $1 billion to expand its AI practice, with a focus on collaboration with Microsoft’s AI offerings.

Deloitte’s establishment of a Generative AI practice, enhancing their services using platforms like Amazon Bedrock.

Additionally, a significant avenue for channel growth lies in the development of Gen AI software and applications tailored to specific use cases, industries, markets, or businesses. The Gen AI software market is undergoing exponential growth, driven by both startups and established players contributing to a diverse range of innovative products. These offerings span enterprise-grade AI software, AI-enhanced software, vertical-specific tools, applications, chatbots, and custom solutions.

Prominent examples of channel-led Gen AI software solutions include EY Tax’s use of Microsoft Azure OpenAI Service to develop an Intelligent Payroll Chatbot,’s Gen AI customer support application integrated with platforms like Salesforce, and Streebo’s specialized chatbot solutions using IBM Watson.

Partners poised to maximize this opportunity encompass Independent Software Vendors (ISVs), Software-as-a-Service (SaaS) vendors, software/application development companies, agencies, and individual developers.

Elevating Data Services with Gen AI

Moreover, the channel ecosystem is set to thrive in the domain of advanced data and analytics services, where Gen AI’s role is pivotal. These services encompass data collection, integration, management and optimization, data lake and warehousing solutions, custom modeling, and advanced data science, AI, machine learning (ML), and business intelligence (BI) services.

A diverse array of entities are poised to capitalize on these opportunities, ranging from boutique data and analytics firms to AI/ML and analytics agencies, consultancies, Managed Service Providers (MSPs), GSIs, and RSIs. Examples in this realm include Deloitte’s data modernization and advanced analytics services using Databricks, specialized data and analytics firms like AB Data Consulting leveraging Alteryx, and niche consultancies like Pandata with strategic data platform partnerships.

As the Gen AI wave continues to shape the technological landscape, channel partners are poised to take advantage of its lucrative opportunities across AI services, software development, and advanced data services. With an emphasis on strategic partnerships, targeted offerings, and continuous development, the channel ecosystem is gearing up to transform the AI landscape and secure its share of the multi-billion-dollar Gen AI opportunity.