AI and the business industrial change complex

In 2007, mobile was a location based industry. Apple flipped the value chain. Telecom operators became low margin utilities. Could AI do the same to enterprise SaaS and big consulting?

Drumochter pass

When the iPhone launched, Apple took on network operators and device makers. In 2007, mobile was a location based industry. Operators and handset makers like Nokia carved up the world country by country. Everyone got a share.

Apple flipped the value chain. Every mobile operator had to have the iPhone. Telecom operators became low margin utilities. All the value flowed to Apple. Could the same happen with AI?

The smartphone revolution was device led and one company dominated. AI is different. Software led with a mix of established players and new entrants fighting to create and win a new market.

Two announcements this week from Anthropic and OpenAI show the same aim: upend a multi-billion dollar value chain.

The press releases describe services businesses designed to deploy AI inside enterprises. Like the old world of mobile, two symbiotic oligarchies dominate enterprise IT. Enterprise SaaS vendors led by SAP, Salesforce and Workday. And big consulting firms - McKinsey, the big 4, Accenture, Infosys. They sell each other’s change. Careers flow between vendor, consultant and client.

Call it the business industrial change complex.

Analysis of the threats to both groups is everywhere. The general point is fair but everything I read is simplistic. Linear extension of current trends. Single points of failure in either the SaaS or the consulting business model.

This is a powerful and capable beast. I watched these organisations embrace the internet, ignore mobile, fight smartphones and pivot to SaaS. Surviving and growing at every stage. The PwCs and SAPs of this world will not simply fade away.

Resilient does not mean unchanged. Expect new offers and new business models, built on relationships they already own.

That will not be an easy road. Change is hard in enterprise businesses. Enterprises have large bases of legacy products, customers and partners to protect. Inside are giant hairballs of technical and human wiring. Thousands of hours of knowledge work and memory live inside every enterprise system.

That will make change much slower than people expect. Maybe too slow to realise value from the trillions sunk into AI.

And AI is not just replacing IT. It is asking enterprises to change deeply. New workflows. Different ways of making business decisions. Total restructure of organisations. Remake whole industries.

Radical change will bifurcate the ecosystem. Legacy software vendors will survive because it is not worth the effort to replace them. AI will bypass legacy systems and leave them clunking away in the background as data processors to feed the machine.

Enterprise software will look like telco does today. Too big to ignore but dull with pressure on revenues and margins crushed. One or two may escape this trap. None stand out today.

That will leave little of value for consultants. These firms will pivot to the wider change agenda. Installing AI is the easy part. Deep change will be hard for enterprises.

Organisational change at this level will be a much larger market than IT implementation. Challenging - but that is where the business value of AI sits.

Anthropic and OpenAI are extending their businesses to go after it. Palantir is already there. The big consulting firms must deliver that value - or follow telco into the utility bin.