Managed service providers face a critical choice in the rapidly evolving AI landscape. They must either become experts by using AI internally first, or they risk being left behind by faster-moving competitors.
That's the message from industry leaders and influencers who spoke at Ingram Micro One last week. Whether they need to become Customer Zero, a Frontier Firm or offer a new type of managed service, MSPs were urged to embrace innovative ways to consume and sell AI.
The AI landscape is rapidly evolving with no end to investment and innovation in sight. For MSPs, the question isn't whether to embrace AI, but how quickly they can internalize it, operationalize it, and demonstrate tangible value to clients.
Customer Zero and Frontier Firms
Nicole Dezen, Microsoft’s chief partner officer and CVP of global channel partner sales, discussed what she thinks it takes for companies to succeed in this AI world. She looked at those serving as Customer Zero by becoming AI experts before selling it to their customers, and those who have become Frontier Firms by entering the third phase of AI.
“I think we can all agree we are living in extraordinary times,” Dezen said. “AI is transforming the tech stack. It seems like every single day, geopolitical volatility is reshaping the way that we all need to think about sovereignty, about trust and about security, and of course, compliance.
“One of the things that matters above all else is speed,” she added. “The partners that are able to move fast, get the skilling and credibility are the ones that are succeeding.”
Dezen described Customer Zero as “a partner that uses AI internally” to make sure it works and they can gain value from it, and then sells that value to customers.
“One of the most powerful tools we see is partners that are their own customer zero,” Dezen said. “These are companies that don't just sell AI, but they’re actually living it. These are partners that move from the inside out. Customer Zero partners start with AI internally, well before taking that first step to go to market with the technology. This builds real world experience, credibility and increased trust with customers.”
Microsoft describes a Frontier Firm as a human-led, agent-operated company that has integrated artificial intelligence into its core operations. More than simply adopting AI, a Frontier Firm has rearchitected its business around AI.
“These are companies that haven't just adopted AI,” Dezen said of AI Frontier Firms. “They internalize it and operationalize it. These companies are stay faster, smarter and, of course, ultimately deliver more value to customers.”
Decision Velocity
Constellation Research CEO Ray Wang said the major value of AI is to make faster decisions.
“The whole point is about decision velocity,” he said. “You and I make a snap decision. How long does it take to get out of management committee? A day, a week, a month, a year? Maybe never. Machines are making hundreds, even thousands, of decisions per second. That's what we're competing with.”
Wang said AI has created a new business model, compared to what he called the Internet age. He said the Internet Age was decentralized with a lot of players and lowered prices. The AI age is centralized with fewer players and more expensive closed systems.
“It's very, very different game,” he said. “And so there are only a few players that are going to win in that age, and it's the ones that are actually putting AI into use.”
Energy as a Service
Tiffany Bova, chief strategy and research officer of the Futurum Group, said AI can offer a new service opportunity for MSPs.
“The bottleneck in an AI buildout is power, energy and the ability to deploy,” she said. “If you have a million GPUs that are called once a year, then you have the technology sitting for six months while we're waiting for power to deploy. And then two months later new technology and innovation comes out. Now you have to start the process all over again. So for me, it's all about energy – energy-as-a-service, power-as-a-service. Watching that and managing it on behalf of your customers, making sure they have enough power facilities.”
A Burst-Proof Bubble?
When Wang said AI is dominated by fewer players, he was referring to massive AI investments by tech’s Magnificent 7. Nvidia, Microsoft, Amazon, Alphabet (Google), Meta (Facebook), Apple and Tesla will probably combine to spend more than half a trillion dollars on AI this year. That spending spree has spurred worries about a coming AI bubble similar to the internet bubble of the early 2000s, especially since those companies will likely take on debt to pay for it.
However, Wang and Futurum CEO Daniel Newman played down the chance of a bubble. Wang said the probability of a bubble is about 10%.
“The Mag Seven all showed 20% to 30% earnings growth year over year, and there wouldn't be [so much investment] if they didn't have the money to spend on this capex,” he said. “The Mag Seven is still growing faster than everyone else. So overall, I don't think we're in a bubble.”
Newman said the mega tech companies will continue to increase AI spending substantially because they can’t afford to stop.
“It’s not where they are today, it’s the fact that they see it as existential, that their business won’t survive if they do not make these investments,” he said. “What they don't want to do is become the next Blockbuster, next BlackBerry, next Kodak, because they didn't bet enough. Mark Zuckerberg said it best – ‘I’d rather overspend than underspend, because if I underspend, it’s existential.’”