New Report Highlights Impact of Generative AI on the Channel

Generative AI promises to accomplish a plethora of tasks, from increasing automation to handling service requests. Ultimately, it will radically change the way commerce in the information and communications technology channel is done. The channel stands to benefit from implementing AI in a variety of ways, according to a new report titled, “Generative AI: A Channel Impact Analysis,” issued jointly by the JS Group and the ANS Group.

There are three key themes to the report.

That research is bolstered by other studies. A recent Channel Futures survey showed that 33% of technology agents are using ChatGPT or other large language models (LLM) for parts of their business operations. A clear evolution has begun in the channel.

Improving Outcomes

How are channel businesses benefiting from generative AI? Those that used AI for sales prospecting and customer acquisition experienced a 50% increase in leads and a 52% increase in conversion rates, the report cites. Additionally, effective personalization through AI integration can reduce acquisition costs by up to 50%.

Ultimately, partners and their customers can use generative AI to lower costs and improve outcomes. However, figuring out how to do that without exposing the partner to excessive risk is a “hot topic,” the report said.

Generative AI technology such as ChatGPT is no longer new, but the technology continues to learn, expand and evolve, offering new uses cases now almost daily. While there is much press about the risks to security, identity, work quality and a myriad of others for the channel, not understanding how this technology can be used in partner business and then implemented for logical use cases is a significant problem. That’s according to Ashlyn Szilva, VP of partner ecosystem strategies and research at the JS Group, and lead author of the report.

JS Group’s Ashlyn Szilva

“For every partner that tells me generative AI won’t be a game-changer for their business, I can find a more cutting-edge partner that thinks just the opposite. That risk is followed by the other big risk, which is using generative AI and not checking or editing the work AI does to ensure quality, accuracy and functionality. This is a common mistake I see made in the channel,” Szilva said.

Generative AI and Compensation

The increased output achieved through AI-based tools and technologies and its positive impact on channel partners’ margins could lead to some vendors discussing adjusting compensation rates or reward structures.

Janet Schijns, JS Group CEO, said the reality is that the compensation schema in the channel always evolves.

JS Group’s Janet Schijns

“We have seen numerous examples of this in our industry over the past decade: some good, some bad, some ugly,” Schijns said. “While generative AI will have the potential to lower costs for things like marketing, sales and support, it is not yet fully clear how it will impact compensation across the ecosystem.”

She added that there are reduced labor costs when prospecting to robots and higher ROI marketing at a lower total cost. This allows vendors to pull back some MDF funds on prospecting and routine marketing in the channel. There’s the potential for vendors to compensate differently once partners broadly adopt this technology.

“An example of that may be a vendor offering up more compensation for customer life-cycle management over the life of a customer usage of their solution vs. a heavier compensation on net-new customers,” Schijns said.

Saving Time

Channel marketers who take advantage of generative AI have two to three times faster revenue generation than those that do not use AI. Moreover, AI-based tools have been demonstrated to save marketers approximately five hours of work weekly, resulting in significant time and cost savings.

The report mentioned an Accenture study that suggests that AI-based models could increase business productivity by up to 40% by 2035. This is primarily due to eliminating repetitive and non-creative workflows that typically exploit resource time and eat up profits. As a result, the increased output achieved through AI tools may result in a different view on compensation within the channel and throughout the technology industry.

Gathering leads can take a significant amount of time. But AI can change that. One example the report outlines is that of a partner who has closed 20 security deals from 400 leads in the past six months and can now use AI to mine the lead data and close deals to find commonalities. In addition, the partner can now use generative AI solutions to determine the best leads for the future.

Lastly, AI may be able to help partners with the massive “paper trail” they typically create for cloud migration projects, collaboration workflow and security documentation for customers. Reviews during the research were mixed as to the efficacy of AI in this area currently.