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A survey of 1,000 business leaders in North America and Western Europe conducted by Endava, a provider of managed services, finds a full 81 percent are optimistic about where the economy is heading, with 75 percent planning IT spending and budget increases.

In addition, nearly a third (32 percent) are placing a greater emphasis on technology innovation, with 81 percent ranking artificial intelligence (AI) as being a priority, followed by big data (75 percent), predictive analytics (75 percent), 5G networks (74 percent), digital ecosystems (68 percent) and edge computing (64 percent).

However, the amount of time that IT services providers are being given to realize the benefits of an IT investment remain all too finite. Well over two-thirds (69 percent) of survey respondents noted the average lifespan of a contract for consulting partners is 12 to 24 months.

Innovation is driving IT spending

This time last year the economic outlook for IT spending was considerably more pessimistic as the governments around the world raised interest rates to curb inflation. While those actions generally achieved the desired results, it became difficult to borrow funds that could be used to drive new IT projects. Most of the focus for the past year has been on achieving and maintaining IT stability.

However, once generative AI platforms such as ChatGPT captured the popular imagination, the strategic importance of AI has been elevated. Organizations are not entirely sure how to apply AI in a way that provides them with a sustainable competitive advantage, but they all fear being left behind. As such, projects ranging from using vector databases to extend AI models to embracing best practices for managing the data used to train an AI model, are all being funded.

MSPs need to focus on AI business outcomes

The challenge is IT services providers are being required to put more skin in the proverbial game. Compensation is typically tied to an outcome. The days when IT services providers could simply charge clients based on the amount of time and effort put into a project are all but over. IT services providers need to carefully assess to what degree the client has both the technical capacity and business culture required to achieve some level of success in 12 to 24 months.

IT service providers will also need to be a little circumspect in terms of the projects they take on. AI may be of the most interest to a client, but the expertise required to succeed is often hard to find and retain. IT services providers that have expertise in data management, for example, might be better off collaborating with a team of data scientists they have contracted or established some type of partnership. One of the clear ways to lose any client is to underdeliver on a promise involving a high-profile IT project that everyone in the organization is anxiously monitoring.

Regardless of the level of risk, the important thing is there is an increased appetite for investing in innovative IT projects. The challenge for IT services providers is, as always, determining which of these projects has the best chance of succeeding at a time when IT projects are becoming increasingly complex.

Photo: PreciousJ / Shutterstock

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Mike Vizard

Posted by Mike Vizard

Mike Vizard has covered IT for more than 25 years, and has edited or contributed to a number of tech publications including InfoWorld, eWeek, CRN, Baseline, ComputerWorld, TMCNet, and Digital Review. He currently blogs for IT Business Edge and contributes to CIOinsight, The Channel Insider, Programmableweb and Slashdot. Mike blogs about emerging cloud technology for Smarter MSP.

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