The market for generative AI (GAI) applications will grow from $6.2 billion in 2023 to $58.5 billion in 2028, with a CAGR of 56%, according to Omdia.
A new study from IDC reveals that there is great potential in collaboration between start-ups and system integrators or consulting companies to address European enterprises' need for innovation.
The digital era has put innovation at the top of the enterprise agenda, but it is challenging. Initiatives often stall at early stages or create limited business outcomes. Enterprises often want to collaborate with start-ups to tap into the innovation they create but find it difficult because they are so small and new, and are sometimes unable to fit into the working processes in the enterprise.
Partnerships between start-ups and services companies can help: The start-up has the innovative technology, while the management consultant or system integrator has the enterprise expertise, understands industry, business processes, and procurement, has the global resources and presence to deploy and support an installation internationally, and can integrate the new solution with the existing estate.
"The process of establishing collaboration is far from easy, but it must be fast and efficient, or it will waste valuable time for start-ups, services companies, and their clients. It is easy to get carried away by the enthusiasm, but nobody can afford that," said Mette Ahorlu, research director, IDC European Services, and co-author of the study. "Matchmaking is essentially about finding the needle in the haystack, building mutual trust and a shared value proposition and then succeeding with clients.
Consultants and system integrators need to take a systematic approach: first, selecting the few from the enormous number of new start-ups, then vetting the start-up's technology and business models, as well as the credibility of its founders, and building joint value propositions. The third step is testing these with a few clients, before finally taking them into the ecosystem and going to market. Each of these four phases has its challenges.
One challenge is how to balance the interest from the services companies' own client-facing organization in the start-ups: On the one hand, this interest is important, as it is a prerequisite of selling the new solution. On the other hand, too much enthusiasm from the sales people can drown the start-up in pre-sales activities. Employing a contact person, who is also a gatekeeper, is very important in the early phase. But it is also important to keep the client-facing organization engaged and do systematic internal marketing when the solution is ready. Sales people are busy, so the innovation can easily be overlooked.