AI is trending; SMEs aren’t buying

In June we sent out a survey to 363 North American partners to see if they agreed with the results of our 2018 Business IT Trends report. Not too shockingly, most of our partners were in general alignment with what our buyers thought regarding IT budgeting priorities. When it comes to expectations for VR/AR and AI verticals, however, we see a remarkable rift between the two. First, let’s take a quick look at the overall observations about the IT spend.

The channel agrees, IT spending is on the rise!

52 percent of channel partners are currently observing an increase in IT spending in the North American market in categories ranging from hardware, software and services to the cloud.

These numbers surpass the earlier expectations from buyers that we find in the Business IT Trends report. In that report, we read that only 37 percent expected at the time (December 2017 - February 2018) to increase their spending in 2018. Strong economic growth seems to have fueled a general uptick in IT spend, which was not necessarily forecast to be as significant six months ago.

High expectations for VR/AR and AI but SMEs are not buying (yet)

There is tremendous optimism from IT channel partners when it comes to VR/AR and AI sales in the near future. Channel partners expect that VR/AR and AI products will be bought within the next 12 months by 67 and 71 percent of their customers respectively.

Channel Partners:
Usage of VR/AR & AI over the next 12 months (by their SME customers)

Source: OneAffiniti 2018 Business IT Trends Report, May 2018, Responses, n=~998 - Business IT Trends for 2018

Those numbers are impressive, but they are a far cry from the actual adoption intent that we see in the IT business Report: the expected spend from SME buyers for both categories is much lower. (9 and 8 percent for VR/AR and AI, respectively).

IT Buyers:
Usage of VR/AR & AI Over the next 12 months

Source: OneAffiniti 2018 Business IT Trends Report, May 2018, Responses, n=~998 - Business IT Trends for 2018

What might the challenges for VR/AR and AI channel sales be?

It is evident that emerging technologies such as VR/AR and AI have created a great deal of buzz in the trade and general media in recent years. Both vendors and channel partners are convinced of the benefits that these technologies can offer SMEs. But that sentiment alone does not make for robust sales just yet. The technology still has to catch up to the buzz, but it is clear that customers and partners are very intrigued by the potential, and are curious to see where this technology will lead and how it can impact their business.

As mentioned, in some instances the product / market fit of some of these solutions is still not completely right, meaning that vendors will need to continue to pivot the technology till they have a more compelling case for adoption. In other cases the product messaging is not yet sufficiently clear for either the channel, which needs to sell the product, or the end-users, for whom the product is made, or both.

The discrepancy could also arise from the fact that many brands don’t yet see a direct correlation between the new technology and their bottom line. It’s still unclear what the main benefits might be -- and how that will translate into ROI. Not surprisingly, this is closely related with the aforementioned possibility, in that the technology just isn’t quite where it needs to be yet.  The former needs to happen before it will become more obvious to brands what the benefits might be. Naturally, when the benefits are more closely aligned with company goals and desired outcomes, those ideas and technologies will pass down the line to partners, and eventually end users.

What are you seeing?

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