The realm of technology is undergoing a significant transformation with the advent of generative AI. Gartner® latest report, “How Generative AI Technology Impacts Offering Strategies for Tech CEOs,” shared key findings, recommendations and analysis on the topic. The report shares how you can use generative AI market categories to identify the opportunities best suited to your strengths in this fast-growing market.

Generative AI today is dominated by some of the largest tech companies and a wave of well-funded startups. Simultaneously, hundreds of small early-stage application providers have been selling generative AI-enabled software for over a year.

Most enterprises and technology vendors that serve them are curious about the technology and have initiated adoption. However, Gartner’s interactions indicate that their current plans are slight and incremental. Gartner has engaged in over 3,000 conversations with clients on this topic in the last three months. So tech CEOs need to not only plan to adopt this technology, but also prepare to seize opportunities or to invest to avoid disruption. 

Gartner expects four major market approaches to materialize within the next six to 12 months. Currently, text-based LLMs are more popular, and enterprise uptake for text-based LLMs is high compared with code, image or other modalities of LLMs. 

Four Market Approaches Driven by Generative AI Technology

1. Foundation Models

Foundation models are AI models that are trained on a broad set of unlabeled data, which can be used for different tasks with additional fine-tuning. The landscape of providers here includes big tech giants, VC-funded startups, and open-source organizations. This category has three subcategories:

“Foundation models: Fine-tuned models: Domain models” 

Tech CEOs should closely monitor this space for potential leverage through APIs or partnerships to embed such foundation models in their products.

2. Applications

Generative AI applications have two broad subcategories:

i) Embedded applications: These are enterprise software applications with embedded generative AI capabilities. 

ii) Native applications: These are SaaS-based apps that have generative AI as their core proposition.

Both these generative AI market categories offer opportunities for tech CEOs to leverage one or more underlying generative AI services enabled by foundation models.

3. Enabling Tools

Enabling Tools comprise a variety of tools that facilitate building effective generative AI solutions and those tools needed to leverage those solutions effectively.

i) Build tools: These are tools needed to create a generative AI solution.

ii) Use tools: These are used when generative AI solutions are applied to real-world scenarios. 

Tech CEOs who currently provide tools in other areas of AI technology should consider if they can extend into either of these tool areas.

4. Custom Services

This category primarily comprises services from firms offering strategic advice, business consulting, system integration, software development, and similar services. They offer these to enterprises and other technology companies.

Enterprises are likely to use a variety of ways to adopt generative AI. Custom projects can involve many other categories highlighted above. Examples of such services span helping enterprises fine-tune models and test them, turning in-house enterprise applications into generative AI embedded applications, and modernizing legacy applications using new code generation capabilities of generative AI.

Both these generative AI market categories will provide a rich source of innovation to enhance products with new or better features and/or to expand into adjacent areas. This market is rife with new entrants, and new techniques and will be subject to turbulence for a few years to come. 

Investing in the Future of AI: Recommendations for Tech CEOs

So, what should tech CEOs do? 

i) Invest in developing your own offering or partner with LLM providers leveraging their API services by first identifying which, if any, of the four generative AI market approaches best suit you. Engage with your teams, brainstorm, and evaluate the business viability of the new offering/feature leveraging generative AI. The opportunities are vast, and so are the risks. Therefore, a comprehensive analysis is crucial.

ii) Envision your offerings 18 to 24 months hence by looking beyond today’s business, products and services and be ready to pivot immediately to your new product/service propositions and business model. Although generative AI is still in its  and prone to many errors and threats, like AI hallucinations and security and privacy risks, it provides a range  of capabilities that can be applied across various scenarios. It offers glimpses into how it can upend the status quo of many technology products and services.

Identifying Opportunities and Pivoting: The CEO Playbook

Tech CEOs should utilize generative AI market categories to identify the opportunities best suited to their strengths in this rapidly expanding market. Assess  the four categories based on your current business and financial situation, and their likely fit to your business. 

Mobilize funding immediately if you are developing your own generative AI technology (foundation-model-based) addressing a very specific problem or use case as that may require heavy investments from a resource standpoint (both skills and compute infrastructure. 

Once you’ve ascertained which category offers the best business fit and growth potential for you, it’s time to pivot. This could mean adopting a new business model, launching new products and services, or enhancing the capabilities and functionalities of your existing products and services.

In conclusion, we think generative AI offers an exciting frontier of opportunities for tech CEOs. It’s time to harness the potential of this transformative technology and pivot towards the future.

Gartner, How Generative AI Technology Impacts Offering Strategies for Tech CEOs

Published 11 July 2023 – By Analyst(s): Arup Roy, Rajesh Kandaswamy, Eric Goodness

GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.


Manisha Mishra

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