2024 will be a pretty good year to be an AI vendor. Following a year of innovation, research and development in AI across cloud computing, SaaS, embedded end-to-end, semiconductors and hardware, the market is now expected to start paying off for the most advanced players. The companies that have invested the most (at least $2 million) are expected to as much as triple those stakes, new research from enterprise and industry insights firm Futurum Intelligence finds—and about half of all users who outsource their services are planning to change vendors this year.
The firm’s inaugural survey of the AI market independently ranks 159 vendors of AI deployments across tech enterprises, aiming to learn the current state of preferences towards products and vendors in near-term (12 months) buying plans—revealing that enterprise decision makers intend to make some surprising changes in 2024.
Who’s changing vendors, and why?
Some of the most surprising power shifts can be found among the enterprises insourcing their AI deployments for AI Cloud Compute. In 2023, AWS ranked highest as a select vendor (22 percent), followed by Microsoft, Google and IBM. Going into 2024, companies who’ve indicated exploring new vendor entries rank Google as their top new vendor for AI Cloud Compute (11.1 percent) followed by AWS and IBM.
In the AI Development Tools and Platforms category, insourcing companies who seek new vendor entrants rank Google as top choice (7.2 percent), while leap-jumping AMD as the second highest ranked new paid vendor entrant (up from 5th place), followed by AWS and IBM.
“Given all the media attention to DIY-AI, I was a bit surprised at the percentage of organizations that are currently leveraging outsourced AI services,“ said Marc Beccue, AI research director at The Futurum Group, in a news release. “Fifty-two percent are outsourcing in this way today, while 48 percent are primarily pursuing in-house development of AI. Our data clearly indicates that organizations are going to spread their AI investments in 2024, there are strong metrics for keeping vendors but also adding new ones.”
Key highlights from the study:
- Of those who outsource, 45 percent plan to change their vendors this quarter or early 2024
- For those who insource, 47 percent plan to change vendors
- Top decision criteria as well as criteria for ‘excellence in meeting requirements’ was found to be expertise and experience with AI (40 percent and 35 percent respectively)
- Failure criteria to meet requirements was found to be implementation speed and timeline and projected time to value (23 percent and 22 percent respectively)
- Among those who outsource, Accenture is selected as primary consultant / integrator by far (25 percent), followed by Deloitte (14 percent), CGI and KPMG
- Among outsourcing companies who deploy (paid) SaaS / Embedded for AI deployments, select vendors are Microsoft (21 percent), followed by Google (14 percent), AWS and IBM (13.5 percent and 10 percent respectively)
- In 2023 Microsoft leads as primary vendor in SaaS / Embedded AI (21 percent), followed by Google (14 percent)
- Within SaaS/Embedded, select vendors for End-to-End AI Applications rank AWS as primary vendor (21 percent), followed by Microsoft (19 percent), IBM and Google (15 percent and 10.5 percent respectively)
- Among companies who seek to change their choice of AI deployment vendor in 2024, Google and Microsoft rank almost evenly at 9.6 percent and 9.2 percent respectively, for SaaS/Embedded solutions while AWS and Google are the select choices for End-to-End solutions newly integrated in 2024 (7 percent and 5.5 percent)
“Not surprisingly, the market for SaaS/Embedded AI applications is highly competitive and fragmented,” said Keith Kirkpatrick, research director for enterprise applications at The Futurum Group, in the release. “While Google (10 percent) and Microsoft (9 percent) were the top two choices for organizations seeking to add new vendors in late 2023 or 2024, 13 other large SaaS vendors are each expected to garner interest from buyers, reflective of the variety of quality, enterprise-grade solutions that are successfully integrating AI within their platform.”
Marc Beattie, head of Futurum Intelligence, believes the market is exceptionally dynamic, and the benefactors are customers and integrators. “AI vendors have been seeking credible intelligence on the plans and preferences of enterprise buyers that is both relevant and accessible,” he said, in a news release. “The AI Decision Maker IQ service enables competitive and market intelligence professionals to dig in at the vendor level or zoom out to the market level to learn critical insights to make better decisions on building and deploying their own products and services.”
The survey was fielded in Q4 2023 between the week of September 25th and October 2nd, 2023. Responses were received and accepted online by 1,009 participants, reviewed and qualified by two expert Futurum Group AI analysts and a survey specialist.
