[S1.03] AI Consultant Business Model

“My greatest strength as a consultant is to be ignorant and ask a few questions.”
– Peter Drucker
an Austrian American management consultant, educator, and author, whose writings contributed to the philosophical and practical foundations of modern management theory.

IT consultant is totally different from a management consultant, especially in AI. So everyone may see that becoming AI Consultant is something like an impossible mission. However, AI is a very huge domain, so there are still some fields in AI domain that are not difficult to explore. This topic is the 3rd topic of our series of AI Business Models, with a detailed guide and explanation.

AI Business Model Blog Series

After years of serving our clients in the AI domain, we are impressed by many different AI approaches to products/services from our clients. So we love to classify them as a Blog Series for AI Business Models, our 1st Blog Series (S1) to bring a summary on this topic and share it with any of AI founders or entrepreneurs out there who dream of building their own AI kingdom. Some may already have their own business but they can also refer to market research to grow their AI business.

Series name: AI Business Models, a detail guide and explanation
Series blogs:
- S1.01: AI Business Models Overview
- S1.02: AI Education Business Model
- S1.03: AI Consultant Business Model (this blog)
- S1.04: AI Development Agency Business Model
- S1.05: AI Software as a Service (AI SaaS)
- S1.06: AI Platform as a Service (AI PaaS)
- S1.07: AI Infrastructure as a Service (AI IaaS)
- S1.08: AI Business Models transition possibilities

The 1st AI Consulting firm

As discussed in the blog on Business decision-making with AI-led transformation, we all know that IBM is the 1st AI consulting firm, with IBM ^® Deep Blue ^® (1997) and IBM Watson (2011), seems like there is no competitor for IBM in this business at that time. With these strong technological advantages, we have thought that AI will be applied in many fields and start to have a large impact on the community. But this dream did not come true, we did not see much of the impact on our lives until ChatGPT was launched in November 2022, more than 10 years later.

Apart from technological advancements, the pivotal contribution that ChatGPT introduces to the market and catalyzes a global "AI wave" is Simplicity and Cost.

Launched in November 2022, ChatGPT gained 1 million users within the first 5 days since launch (compare with Spotify - 05 months, Facebook - 10 months, Netflix - 3.5 years).
In 3 months since its launch, the chatbot from OpenAI already had 100 million monthly active users.

The number says everything. This simplicity and very low cost (target to individual customer B2C) help ChatGPT become the leading AI product, but the impact it bring to the market is huge. Hundreds of AI products follow the game and make the wave seem to be infinitive.

AI Vertical, Horizontal, and Hybrid approches

There are many different approaches to operating an AI Consulting service, but we can categorize them into 03 following:

• AI Vertical consulting: split by technologies
• AI Horizontal consulting: split by applied domains, specified user cases
• AI Hybrid consulting: mix between Vertical and Horizontal

AI Vertical consulting

AI Vertical focuses on technologies, some companies offer consulting services on specific technologies. AI technologies are so big, but we can classify them vertically as 04 big themes:

• Machine Learning (Predictive AI):  consulting data analysts and AI models that can help to learn from data and provide output from data like forecasting, and classification, ... There are 03 types of Machine learning which are: Supervised learning, Unsupervised learning, and Reinforcement learning.
• Deep Learning: consulting big data analysts to acquire knowledge from big data, consulting how to use publicly trained AI models to apply in to the specific business user case.
• Robotics: consulting on robot design, construction, and operation, this links both to hardware and software consulting.
• Expert Systems: consulting on a high level of AI that can replace humans 100% (Example: Self-driving car)

AI Horizontal consulting

AI Horizontal Consulting focuses more on business user cases and how AI empowers digital products. So some of the companies can only focus in consulting AI solutions for fintech business. Or even, if the domain is still big, some companies can only focus on typical user cases, such as AI chatbot consulting, focusing on one user case and applying to multiple business domains.

So we can see that AI Horizontal consulting approaches may focus on:

• Specific on the selected domain(s): follow 01 or multiple domains in-depth and provide all AI solutions applied in that domain. (Example: fintech, ed-tech, mar-tech,...)
• Specific on user case(s): follow one or multiple user cases in depth and provide all AI solutions/options applied in that user case. (Example: chatbot, product recommendation, investment recommendation,...)

AI Hybrid consulting

AI Hybrid consulting mix 02 above approaches, flexible depending on the request from the client. In the consulting domain, no matter what which approach you are applying, the most important thing is you must find the best niche-zone which you have a very competitive advantages to use as unique selling point.  

Highlight on market

Referring to the high-level statistics of this business model, we can see a big CAGR (considering as market growth rate) of 37.46%, not as big as 47.2% in AI Education, but the value estimated $630.61B in 2028, forecasted about $1,190.4B market value in 2030. This value is more than 20 times the value of AI Education market in 2023, value of $55.4B.

There is no doubt that IBM, Infosys, and Deloitte are the big giants in this AI Consultant Business Model, we can see clearly from their capacities and investments in AI. From Clutch.co, the IT listing company, we are also seen to see a lot of listed companies serving AI Consultant services.

Red Marble AI is one of the samples of a strong AI Consulting based in Australia, led by Dave Timm, CEO since Jan 2017, cum Head of AI. Starting his career path as an AI Project Manager in 2016, he recognized the trend of AI technology and quickly found Red Marble AI successfully in Australia. This is an example of 100% AI Consulting focus example.

At Investidea, we are now at the rank 84/1404 Clutch global rank for AI Consulting services. We are an example of AI adaptation and injection, we offer AI Consultant services besides our strong experience in IT Consulting & Developing services.

As the need for the AI consultant services is huge, so there is a "trend" of creating AI Consulting firms to provide the service. With a quick search, we can easily find thousands of companies but the quality of the consultant service is still a big question. We tried to contact some of the companies to partner by email from their website but no reply, we connected to the founder of the company on LinkedIn but no reply, we have not seen any activities from the company like blogs, or posts on social media for more than 06 months. This is not a piece of good news, but we may indeed see some "fake AI Consulting firms" in the market.

Action Recommendation

AI is again very large topic, so AI Consulting Firms working in this field always face a very large challenge in this domain.

• Condition to start: just need to have deep knowledge about at least 01 AI technical or 01 AI business user case, or even AI tool/product. From here you can provide a consulting service to share your expertise with other people, or companies.
• Condition to scale: find your consulting approach (Vertical, Horizontal or Hybrid) and go very deep in that field, and turn it into your unique selling point in the market.
• Condition to success: having your great client pipeline, and network where you can generate a lot of requests for consulting with scale. Thus, we have a great recognized brand in the consulting field.
• Skill needs: a lot of soft skills are needed to understand the client's expectations, the client's business user case, clear explanation skills, communication skills,...

Ready to start your own AI Consulting Business? From Investidea, we would love to talk more with other AI Consulting firms to open an AI Alliance. Together, we can fulfill the diversification of technologies, domains, and user cases, which can help us to grow together, and serve our clients better.