Service as a software?
Anthropic and OpenAI as the new consulting frontier
Suzy Lockwood
It was just a few weeks ago that I was reading the Sequoia article which presaged that the next winners of AI will be a software business masquerading as a service firm.
In essence, an offering that sells the outcome, not just the tool to make you faster at your job. With the latter, you are constantly in a race against the model.
Within the last few days, both OpenAI and Anthropic have entered the “autopilot” / services market. OpenAI has launched DeployCo, and Anthropic has launched a parallel offering a few days later; both raising $4bn and $1.5bn respectively. The details so far are light, with the OpenAI deal due to close early this month.
Of course, this immediately triggered the thought - how will a ‘household name’ Consulting house even begin to compete with a provider embedding AI software into your organisation itself?
With this new prediction of the future, it isn’t a surprise to see that Sequoia have jumped in on the deal with Anthropic, along with many a PE firm. OpenAI and Anthropic are both now fully in the consulting world - and capital is very much following suit. I did think there was a slight irony in this, given it wasn’t all too long ago when every VC fund would have a slightly awkward conversation with you should your offering have a substantial human capital component to it.
But this is where the stat that I’ve seen recently comes in handy (and is alluded to in that Sequoia article), for every dollar spent on software, six is spent on services. In that is an opportunity.
What is needed on the ground for AI enablement
Perhaps a more useful thought, though, is what this is starting to indicate for the skills market and what is needed on the ground for AI enablement; it’s not just rolling out Claude on top of legacy tech. We’re often involved in confidential, hushed-voice debates around the rise of AI expertise demanded from consultants today, but there is a lacking internal skillset required to deliver (yet) in these consulting houses.
This raises the question of who will emerge as the winners. Will it be new startups and scaleups in this space - several of which I'm aware of already making substantial, fast gains - that are driving adoption by curating specialist AI talent? Or the more agile organisations sprinting to catch up, bringing in contractors with precisely the right skillsets? Or, perhaps, the technology providers themselves – providing a model similar to that of Palantir in the early days – that proved, broadly, oh-so-successful. And arguably, this would be that, but with substantially more hype.
This model does address the concern we have in conversation with our clients – the shortage of skilled professionals capable of implementing AI at scale. But is this because we simply haven’t yet implemented it fully end-to-end - I’m yet to see the success story of an enterprise becoming AI-native - or because the current players on the pitch don’t quite know how to do it? Maybe an OpenAI or Anthropic service wrapper know exactly what is needed.
Or, maybe it will become a hybrid beast of the two. In February, it was announced that OpenAI is partnering with the likes of BCG, McKinsey and Accenture to sell and implement OpenAI’s new Frontier AI Agent platform. The management consultants will be on hand for the redesign, implementation, change management and industry expertise – good old consulting work – whilst Open AI brings the technology through its forward-deployed engineers. Though, these newer announcements might mean these partnerships will become short-lived – or, the lived experiences of these consultants in implementing software-as-a-service vendors such as Salesforce, Workday, Microsoft and ServiceNow over the past umpteen years will require quite considerable unravelling. The best way to unravel and hand-hold enterprise clients through this type of change is usefully held in the brains of many an MBB or Big Four consultant.
Who will be rolling out AI transformation?
I’d actually hedge my bets on OpenAI and Anthropic winning this one in the long term.
In every Boardroom today, a CEO is on the hook to roll out AI transformation in their organisation, and I’d argue that there is a certain weight and legitimacy that calms Board members in having these transformations led and implemented directly from the source. They have been founded on exactly the premise that most Consulting houses are hoping their customers won’t focus on – that there is a shortage of skilled professionals capable of implementing these systems at scale, because they are so new. It usually takes many months and years to get some legitimate heavyweights from industry, or working on enough client projects, who have “done this before” to then be sold as a consultant. When this isn’t yet on offer, the alternative is going to the provider themselves.
If I were to make a guess, I sense there will be a significant, knee-jerk initial uptake of firms reaching for this option – putting them ahead - which will require the likes of OpenAI and Anthropic needing to hire some of the change, implementation, and industry knowledge from the Big Four and MBB.
They also have the fastest route to success here too, to the dismay of many a consultancy. The PE firms have provided a plethora of portfolio companies that become their reference customers, a captive distribution network that OpenAI has promised a 17.5% return to their investors for. My gut is that the “Frontier Alliances”, the namesake of February’s partnerships, will come to a quiet close as the likes of DeployCo ramp up.
And maybe, this is just what is needed. I sense there is a higher likelihood of only needing to buy once from DeployCo or Anthropic’s version – even if there are a few MBB alumni in there to smooth the edges, especially in the early days. What will be interesting to watch play out are the case studies, and the potential blueprint that follows.
For reactions, comments or to discuss these points: suzy.lockwood@freshminds.co.uk
