Is Generative AI — chatbots that spit out unique content material in response to pure language person prompts — over-hyped?
Consulting companies — competing to assist their purchasers faucet the know-how’s potential to enhance their enterprise — are placing their cash the place their mouths are.
Here are three examples:
is investing $3 billion to double its AI headcount to 80,000.
- KPMG pledged to purchase $2 billion price of Microsoft
Cloud and AI providers by 2028 to unlock $12 billion in incremental income for KPMG.
- PwC is investing $1 billion in a “3-year AI roadmap” and plans to strengthen AI buyer choices, strengthen tech partnerships, and practice 65,000 staff.
Meanwhile — whereas not quantifying their investments — Mckinsey, Boston Consulting Group, and Deloitte and others have printed their ideas on how potential purchasers — with the consultants assist — can profit from deploying Generative AI.
It might take years to seek out out whether or not these investments repay. Yet consulting executives I interviewed this month say they’re seeing sturdy shopper demand for his or her providers.
One trade knowledgeable, Michele Goetz, Forrester Research
The purpose? Through decrease prices and/or increased revenues, purchasers count on Generative AI functions to earn again these consulting charges inside three months of deployment.
Read on for particulars on how a lot firms are benefiting from Generative AI consulting providers, what distinguishes probably the most profitable consultants from their friends, and which new providers consultants count on purchasers to demand sooner or later.
The Return On Investment In Generative AI Consulting
Consulting companies can cost tens of millions to assist purchasers dream up and deploy Generative AI functions. Goetz stated, “The cost depends on the project. They start at $500,000 and go to $2 million to $5 million. For a three phase project, the cost can range from $10 million to $50 million.”
Forrester sees purchasers getting their a reimbursement in effectively beneath a 12 months. “Companies forecast a payback within three months of deployment. In some cases, companies see results in two to eight weeks. In other cases, time to value is three to six months,” she advised me.
Companies obtain this payback by quantitative and qualitative enhancements. “One company reduced its call center costs by $80 million in the course of a year. The benefits included cost savings from shifting responses to level 0 and level 1 questions from human agents to Generative AI virtual assistance and agents using the technology to respond faster and more accurately to customer inquiries. In addition, Generative AI increases customer satisfaction and improves net promoter scores,” Goetz defined.
Generative AI also can add to purchasers’ income. “A cruise ship company used Generative AI to recommend ancillary activities their customer could activate during the voyage — boosting revenue by $1 billion. An Asian bank’s [Generative AI-powered] virtual investment assistance delivered an additional $500 million worth of trading volume,” she advised me.
What Companies Need From Generative AI
Companies rent Generative AI consultants to resolve a wide range of issues. As KPMG National Managing Principal Atif Zaim defined in a September 22 e mail, “Large corporations focus on productivity improvement opportunities. Private equity firms seek to both improve their deal-making process and support their portfolio companies in adopting the technology. ”
In normal, firms rent Generative AI consultants “to help re-shape their strategies, identify new revenue opportunities and stay ahead of competitive risks,” Zaim stated.
While firms started 2023 by studying about and beginning to experiment with Generative AI, now the “fast movers are planning large scale implementations to gain competitive edge and accelerate productivity improvements ahead of others,” he defined.
Companies ask KPMG for assist with initiatives comparable to:
- Ranking Generative AI use circumstances primarily based on how a lot they may enhance shopper processes and operations.
- Developing safe-for-employee inner generative AI instruments.
- Preparing inner proprietary information to securely practice their personalized Generative AI fashions.
- Building a long-term AI technique to scale and seize potential worth.
- Establishing governance insurance policies, frameworks, and instruments for managing threat.
Other purchasers have extra particular wants. For instance, in a September 21 e mail, EY Americas Data, AI and Automation Leader Traci Gusher, stated shopper wants embrace:
- Scaling know-how and information architectures for enterprise-wide Generative AI deployment
- Training board and C-Suite leaders in Generative AI literacy.
- Building excessive precedence generative AI functions to ship “quick value wins.”
How Potential Clients Evaluate Generative AI Consultants
Potential purchasers consider consultants primarily based on the return on their Generative AI funding.
KPMG says purchasers search marketing consultant groups with the various expertise wanted to seize Generative AI’s alternatives and shield towards its dangers. To assist purchasers, Zaim stated KPMG presents expertise in various domains comparable to the next:
- Generative AI engineering.
- Key techniques and information platforms.
- Risk administration and cybersecurity.
- Experience with accountable and moral Generative AI use.
- Knowledge of purposeful and trade “value-levers.”
- Business technique and alter administration.
EY agrees purchasers needs many of those expertise — and extra. “They are seeking providers that can demonstrate execution level experience using the technology, as well as, constantly evolving the how and why of using the technology, given how fast it is evolving,” Gusher famous.
Forrester says shopper executives are keen to belief the consultants which have given them the very best strategic recommendation. As Goetz advised me, “The winners challenge and push clients to do something different. They help clients refine their ideas, focus on the best ones, and build a roadmap.”
Despite their preliminary lack of technical know-how, Forrester sees the strategic consultants having fun with a bonus with potential purchasers. “Clients perceived McKinsey and BCG as great strategic advisors who initially did not do as well on technology. But they had built trust with senior executives after they added new technical capabilities, clients gave them a chance do deployment,” she stated.
To hedge their bets, some purchasers are splitting initiatives and utilizing completely different consultants for every. “Mars — the candy and pet food company— hired two firms. One worked on improving the speed and accuracy of filling bags of pet food, the other on filling boxes of M&Ms,” Goetz defined.
Companies that host such bake-offs select the profitable agency primarily based on effectiveness, confidence, data switch to the shopper, and placing pores and skin within the sport — particularly taking 20% to 50% of their price primarily based on the mission’s price financial savings or income enhancement, she advised me.
Handicapping The Generative AI Consultants
Who are probably the most profitable generative AI consulting companies?
By serving to firms use Generative AI know-how to create worth, EY considers itself to be a robust competitor. Gusher stated EY challenges purchasers to make use of Generative AI as a “transformative accelerator rather than deploying “narrow use cases that are just experiments.”
Moreover, Gusher extols EY’s mix of technical and enterprise experience, its use of the know-how contained in the agency which yields insights for purchasers, and its potential to design Generative AI functions so purchasers can scale up deployment to all their staff.
KPMG sees itself as a robust contender in Generative AI consulting attributable to its historical past in conventional AI and the belief it has received from its threat, regulatory, and cybersecurity practices. Zaim says KPMG — which was first in its discipline to deploy Generative AI for its staff — is “now recognized as an early mover in the Generative AI space.”
KPMG additionally wins attributable to its potential to have interaction with a shopper from technique by implementation and its partnerships with know-how companions “that are now the leading shapers of the Gen AI revolution,” famous Zaim.
Forrester sees the strategic consultants because the trade leaders. “McKinsey — which acquired Quantum Black in 2015 — and BCG are leaders. They used to be seen as good on the executive perspective of how best to deploy AI. Now they are good in the delivery arena as well,” Goetz stated.
Deloitte, Cap Gemini, KPMG, EY, and PwC are good at supply. She credit these companies with “business chops” and the power to “deliver data and AI as well as digital business transformation. They have respectable, scalable approaches with protocols or plans for the C-Suite, senior managers, and developers. They are teaching skills to put into an operationalized environment,” she argued.
Companies like Cognizant
The Future Of Generative AI Consulting
In the longer term, firms are more likely to demand new providers from Generative AI consulting companies. KPMG envisions demand for brand spanking new providers comparable to:
- Cybersecurity to defend firms towards potential elevated publicity ensuing from Generative AI deployment — by Cranium, a KPMG spin-out.
- Human Capital Advisory to assist “an AI-enabled workforce” function extra successfully by modifications to a corporation’s “structure, skills, staff size and culture,” in accordance with Zaim.
- Using Generative AI in R&D to make services extra worthwhile to clients, “by augmenting the R&D and product development process,” Zaim stated.
- Estimating the “Generative AI upside” in M&A transactions by a monetary mannequin that estimates how the know-how might enhance a goal firm’s productiveness.
EY sees different new calls for from purchasers. Gusher stated Generative AI should join with different “AI systems, automation and analytics to drive transformative value.” EY additionally sees firms demand assist “with process re-design, talent reskilling, and broad change management,” she stated.
As lengthy as Generative AI consultants can envision new methods to assist purchasers seize worth from the know-how, their providers ought to stay in demand.