85% see generative AI as important, but wary of risks, are exploring applications carefully

ISG unveils new advisory service for generative AI, previews next-gen sourcing platform at ISG Sourcing Industry Conference

Energized by the hype around generative AI, enterprises are aggressively pursuing practical applications of this new technology while remaining cautious about the risks, a new research report from Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm, has found.

ISG presented the findings of its ISG State of Applied Generative AI Market report here today at the 2023 ISG Sourcing Industry Conference (SIC), the industry’s premier annual event for service and technology providers. The first-ever report details generative AI trends, use cases, solutions and challenges, and offers data-driven insights and actionable recommendations for adopting generative AI at scale.

ISG research shows 85 percent of companies surveyed believe investments in generative AI within the next 24 months are important or critical. However, rather than taking a “blank slate” approach, companies are asking their providers to devise ways that generative AI can be applied to providers’ existing services, such as call center operations.

“Our research shows a real sense of urgency in the market,” said Prashant Kelker, partner and chief strategy officer with ISG. “However, despite the top-down imperative to embrace generative AI, most enterprises lack the focus to identify the right use cases. Right now, the market is being driven by specialist providers that are actively engaging with enterprises to brainstorm and co-create innovative solutions.”

Kelker said enterprises currently lack an AI architecture to support generative AI at scale. Early efforts to apply generative AI are focused on creating domain-specific models built on proprietary datasets, further expanding those datasets to improve model training, developing customized adoption platforms, and creating solutions that unite analytics, AI and generative AI.

“The initial focus for generative AI is on knowledge management, the ability to extract data from vast unstructured data sources for business decision-making, and functional process optimization, in areas such as marketing and sales, finance, HR, IT and DevOps,” said Kelker. “As enterprises grow more comfortable with generative AI, and use cases become more mature, companies will begin to imagine more transformative possibilities leading to new products and service offerings and complete business transformation.”

Before they make that leap, the ISG report notes the hurdles enterprises need to overcome – include security, copyright issues, ethical considerations and legal concerns.

“Enterprises are cautious about pushing the capabilities of generative AI too far, too soon – especially in customer-facing interactions,” said Kelker. “The quality of legacy data is an issue, which may be addressed by using synthetic data, as are so-called AI data hallucinations caused by missing or inaccurate data. Enterprise leaders also want to see clear ROI for their investments before proceeding. Then, of course, there are the security, legal and ethical implications. Guardrails will need to be established before generative AI can be adopted at scale.”

Generative AI Use Cases

The ISG report shows financial services, including banking and insurance, is the leading industry for generative AI adoption, with 24 percent of total use cases, followed by manufacturing (14 percent), healthcare and pharma (12 percent) and business services (11 percent). However, when it comes to mature use cases, defined by ISG as solutions that are already in progress, with well-defined KPIs and ROI, business services leads the way, at 39 percent of mature use cases. The report notes this is driven primarily by code-generation use cases, accounting for half the use cases in this sector.

From a functional perspective, the ISG report shows predictive analytics is the top use case, with 57 percent of all mature use cases, followed by code generation or DevOps (50 percent), data extraction and analysis (30 percent) and performance analysis (24 percent).

In presenting its research findings at SIC, ISG unveiled a new generative AI advisory service to help enterprises effectively benchmark use cases, plan early-stage adoption, select collaborative partners, and create an infrastructure and roadmap for enterprise-scale deployment. More information about this new service can be found on the ISG website.

ISG Previews Next-Gen Sourcing Platform

Also, at SIC, ISG offered a sneak peek of its next-gen sourcing platform to the provider community with this video and a presentation by ISG Partner Clay Calhoun. The platform is expected to be commercially launched in the first quarter of 2024.

The SaaS solution will digitize all elements of ISG’s market-leading sourcing transactions business to better serve clients, improve transaction speed and efficiency and allow ISG to expand into other market segments. It will draw on ISG’s unmatched data assets, intellectual property and proprietary tools – supported by AI to provide real-time insights and predictive analytics and streamline the entire transaction process to accelerate time to agreement.

“ISG continues to lead the way in the sourcing transaction space, advising on more than $200 billion of IT and business services transactions in recent years,” said Todd Lavieri, vice chairman of ISG and president of ISG Americas and Asia Pacific. “Our next-gen sourcing platform takes our proprietary tools, intellectual property and total addressable market to the next level in a collaborative, highly interactive space that brings all parties together for the most efficient process-to-value delivery possible.”

The two new ISG capabilities were showcased in front of an audience of hundreds of sourcing industry leaders gathering here this week at the Westin Dallas Stonebriar Golf Resort & Spa. Dozens of ISG advisors are delivering keynote presentations and hosting panel discussions, breakout sessions and one-on-one meetings, as they share insights from real-world client engagements and the industry’s most comprehensive marketplace data.

About ISG

ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,600 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.

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