Hello. This is Alex Bakker with what’s important in the IT and business services industry this week.
If someone forwarded you this briefing, consider subscribing here.
Generative AI
Last week, we looked at data from our recent study on generative AI that showed which use cases are receiving the most funding from enterprises. The data also shows that, while some of the most well-funded areas from this year are expected to deliver value into 2025, some emerging use cases are expected to contribute significantly despite receiving less funding this year. The fact that as many as five out of the top 10 use cases are new for 2025 highlights the fast-changing nature of GenAI adoption in the market.
Data Watch
Why It Matters
Last week we discussed that many of the highly funded use cases to date are ones that drive value for customer-facing, human-in-the-loop work. This makes sense as efficiency and service quality in customer service processes provide a way to see value, but the context limits the opportunity to scale due to the human being in the loop.
Given that past research has highlighted the importance of revenue growth as a top enterprise objective for the adoption of AI, we expect that the higher-value use cases will be ones that do not involve humans in the loop so enterprises can achieve scale.
What’s Next?
We predict two waves of AI adoption:
- Wave 1: The major use cases in 2024 will still drive significant value in 2025. These are human-in-the-loop processes like contact center and customer experience, where GenAI provides input in real-time to drive faster resolutions and more accurate solutions. GenAI is still limited by the capacity of the contact center or customer service agent.
- Wave 2: The use cases in 2025 will primarily focus on augmenting expertise. Supporting compliance, forecasting, market research, supply chain planning and software development are all domains in which human expertise, rather than human time, can be the limiting factors.
Enterprises expect that Wave 2 will add value quickly. And, based on the investment and funding for those use cases so far, they still expect to be able to achieve significant value over the next year. If they’re right, then GenAI will drive a new wave of productivity that is uncorrelated with hours worked and may reduce bottlenecks for parts of an organization that are currently limited by a lack of information or expertise.
2024 Sourcing Industry Conference
Returning for its 18th year, the ISG Sourcing Industry Conference is designed to address the unique challenges facing technology and service providers, backed by the industry’s most comprehensive marketplace data.
1:1 booking with ISG advisors is now open. As a trusted business partner to more than 800 blue chip clients, ISG thought leaders and advisors offer a unique view into the shifting needs of your market empowering you to innovate and uncover growth opportunities.
Download the State of the Generative AI Market Report 2024 here.
About the author
