Contracts specifying generative AI (GenAI) surged from 7 percent in the first half of 2023 to 38 percent in the latter half of the year, according to Omdia’s Enterprise AI Contracts Database.
Annually, the number of GenAI-specified contracts rose from one in 2022 to 96 contracts, constituting 23 percent of the total contracts in 2023. This trend underscores the increasing adoption of GenAI by enterprises, indicating its expanding presence in the AI market. However, these contracts also reveal that some enterprises are still in the exploration phase of GenAI utilization.
While contracts offer insights into market activities, they primarily serve to communicate the intentions of vendors and end-users to investors, customers, and competitors. Vendors seek to highlight the sales of new GenAI products, while end-users aim to showcase their digital proficiency in deploying cutting-edge technologies and position themselves as pioneers in the GenAI revolution. Notably, announcements related to contracts with cloud service providers like Google and AWS indicate various areas where GenAI could be deployed.
Neil Dunay, Principal Forecaster at Omdia, commented on this approach, stating, “This may suggest some enterprises are experimenting with GenAI to identify its optimal applications. However, it could also indicate a misallocation of investment resources if enterprises fail to properly define GenAI use cases that align with their needs.”
Analysis of the contracts data reveals sectors with the highest interest in GenAI. Information technology emerges as the most enthusiastic adopter, with over half of IT industry contract announcements mentioning GenAI. Healthcare, business services, media and entertainment, retail, and financial services also exhibit above-average interest in GenAI.
Among the various GenAI use cases identified in the contracts, virtual assistants emerge as the predominant application, primarily deployed to enhance customer service and engagement. Intelligent process automation ranks as the second most prevalent use case, focusing on improving efficiency and productivity. Other GenAI use cases with multiple contracts include sports video and stats analytics for fan engagement, automated report generation, and digital experience marketing for personalized marketing efforts.
Omdia’s Enterprise AI Contracts Database, initiated in 2020 and now comprising over 1700 records, tracks approximately 100 contracts and related vendor announcements each quarter. Each record outlines the chief AI use case covered by the contract, the industry of the end user, and their geographic territory, providing contract summaries and hyperlinks to original announcements for comprehensive insights.
