6 Guidelines for Navigating AI Partnerships

The AI wave can be seen as hype, something that needs to mature before money can be made from it. At the moment, everyone is thinking about what they can do with AI -- though many have already started to experiment.

Earnings from the big hyperscalers (Microsoft, Google and AWS) weren't driven by AI services as much as the stock market expected, which hurt valuations short-term. Investors expected the AI hype to have translated into higher revenue by now. But this is the time for us all to make investments, to plant the seeds that will give great harvests.

As I see it, the AI opportunity will not be in standalone siloed solutions; customers will not buy just AI. Instead, they will buy solutions that have AI embedded and that enhance their products. Examples include be any line-of-business (LOB) application, solutions for analysis and forecasting, or something else that is part of the customer's core business.

The whole AI movement is perhaps the first major tech wave where partnerships play a crucial role. In order to successfully build AI solutions, you will need to be really good at what you're doing, and you'll need to use a combination of in-house and external talent to do that. There might be specific tasks that customers require in a fully operational solution that are outside your core IP. These, you can outsource to a partner.

Here are a few observations around strategic AI partnerships based on what I'm seeing right now:

1. Analyzing and determining great business cases for AI: This is where it all starts, with management consultants analyzing what processes and procedures can be enhanced by AI. They will build the business case, determine the ROI, and get buy-in from the senior leadership.
   
   These consultants often come from traditional non-IT management firms, and they need friends in IT companies to partner with. Expect to find them at accounting firms, strategy and management firms, and also at smaller boutique firms focusing on certain industries. They will likely not want to be part of the financial transaction as they need to be independent, but they will refer business to partners that they know will do a great job.
   
   The quid-pro-quo here is in helping them stay up-to-date in terms of technical knowledge, and do a great job so their reputation gets a boost. If you fail just once, it leads to huge embarrassment for all parties involved, but when you're successful and go the extra mile, there's nothing to stop the flow of new business coming from your network of management consultants.
   
   
2. Preparing the customer's data: This is an area that is often forgotten, and it's the roadblock before a customer can move forward. It makes sense to partner with companies that have great knowledge around data analysis, classification, sorting digital information, and setting up boundaries for access. It's also worth looking at ISVs that have special tools that can streamline the work and ease the auditing (i.e., quality assurance).
   
   Finding the most efficient ones, the ones with the most relevant expertise, is the key to success. It's like building a house; you want a solid foundation so your house can withstand even the strongest storms.
   
   
3. Building AI solutions: You don't need to build the solution yourself just because you've sold the project to a customer. There's a monumental need for partnering with custom development practices, which can build the whole solution based on your design and terms of requirements. I also see a great need for ISVs that provide crucial building blocks.
   
   Sometimes, the main reason to partner with a custom development practice is a lack of internal capacity: You want to take on more customers than your in-house team can manage. These types of partnerships can cross geographical borders, as we all know that sourcing talent is hard, but it becomes easier if you are open to finding partners abroad.
   
   
4. Integrating AI solutions with LOB apps: Gone are the days when customers accepted software that worked in isolation, with zero connections to other sources of data or applications. Today, it's all about integration. Younger decision makers, in particular, see integration as crucial and strategic.
   
   But integration requires specialized knowledge, and partnerships with companies that are great at building integrations is a winning concept if you want to please your customers. Integrators are sometimes equal to the ones that have developed or implemented a certain application, or they can be companies that have great expertise building integrations using hubs for information exchange.
   
   
5. Infrastruture implementation: Nowadays, most AI solutions are deployed in one of the Big 3 hyperscalers' clouds, but sometimes they're partly deployed in the customer's datacenter. This portion of an AI project is best left to skilled infrastructure engineers. You will find it more useful to partner with a specialized practice instead of trying to maintain this knowledge yourself. This can often be a roadblock, and having the right specialists involved early in the planning saves time and cost for everyone.
   
   
6. Maintenance and support: Even the best solutions need regular maintenance and support. Instead of old school "break'n fix," your customers deserves decent monitoring, preventive maintenance and immediate action to deal with incidents in real-time. These are often low-margin contracts, and the scope is often 24/7, as many customers wants to cover multiple time-zones. This seldom fits companies with traditional office hours, where the specialists are less interested in waking up in the middle of the night.
   
   Partnering with a specialized maintenance and support partner and making sure that you regularly discuss with them the wellbeing of the solutions that are under their wings are great paths to success with your customers. This also gives you insights into how to further develop your solutions with the customers. These companies might also be great at giving you referrals if you treat them well.

In the era of AI, everything moves extremely fast and it's hard for partners to keep up with the high pace. At the same time, the fast pace provides opportunities for the ones that can best serve their customers and win new ones.

Teaming up with partners is the best way to not lose pace. It gives access to knowledge and customers that you would otherwise not be able find. And the beauty is that you can adjust your team of partners as the market adjusts to the latest variations in the AI hype. With partnering as your strategy, you'll always show up at your customer's doorstep with your top A-team

Good luck, and please share your success stories with me! I love to hear about them.

Posted by Per Werngren on September 03, 2024