Digital Labor, AI’s ‘Halo Effect’: IPED Study Captures Emerging Technology’s Channel Impact

'We think it's a way for us to be able to scale without necessarily adding a ton of headcount,' Alvarez Technology Group CEO Luis Alvarez said.

When one of Alvarez Technology Group’s dispatchers recently left the company, CEO Luis Alvarez decided to leverage digital labor in the artificial intelligence era.

“Let’s not hire another one,” said Alvarez, whose Salinas, Calif.-based company is a member of CRN’s 2025 MSP 500. “Let’s see what we can do with AI. Let’s see what we’re going to get to in terms of the customer experience in being able to bring in tools that can do that triage, interact with clients, talk to them, do all that sort of work. So now that’s the next big thing we’re looking for. We think it’s a way for us to be able to scale without necessarily adding a ton of headcount.”

Alvarez shared his story as part of a panel on AI’s impact on the channel in year three of the emerging technology, held Monday at XChange March 2025, which is hosted by CRN parent The Channel Company and being held this week in Orlando.

[RELATED: GenAI’s Year Three: Solution Providers Zero In On ROI, Industry Use Cases]

AI In The Channel

During the panel, Mark Williams, senior consultant with IPED, The Channel Company’s channel consulting arm, shared new survey data around AI’s growing presence in the channel based on a survey of about 370 solution providers.

The survey showed a 33 percent increase year over year in optimism around the technology.

The number of survey participants who are not doing anything with AI–25 percent–fell from 37 percent last year. Williams predicted the number falls to around 10 percent next year.

“The concept of, ‘We're not going to do anything, it’s not interesting’--we’re well past that,” Williams said on stage. “It's not about ‘if’--it's about when and how.”

Solution providers reported higher shares across the board for internal processes they expect to be impacted by AI use over the next 12 months.

Marketing still led the pack at 44 percent of survey participants. That’s a higher share from the 24 percent in 2024 who answered marketing as an area impacted by internal AI use.

For other internal processes facing impacts from AI:

• 41 percent of participants named sales, up from 19 percent in 2024
• 36 percent said customer support, up from 15 percent in 2024
• Application development and operations each received 33 percent shares of responses, up from about 15 percent in 2024 for each
• 32 percent said service delivery, up from 13 percent in 2024

Providers shared what AI solutions they currently offer clients, with AI consulting capturing the highest share at 48 percent.

• Integration services was 43 percent
• AI training and education was 31 percent
• Custom AI solutions was 30 percent
• AI software development was 17 percent

As for the portions of a solution provider’s business they expect AI technology to positively impact in the next 12 months, every category saw a larger share of responses, showing the channel’s growing interest in the emerging technology.

Professional services and managed services each saw more than 75 percent of respondents say those portions of the business will see positive impact from AI in the next 12 months. More than a quarter of respondents said each of those businesses will see “significant” positive impact.

A year ago, about 60 percent of respondents said managed services and professional services will each see a positive impact from AI technology, and less than a quarter called the impact “significant,” according to IPED.

As for other parts of a solution provider’s business and the AI impact:

• In the latest survey, about 75 percent of responders said cloud services, application development and product resell will each see a positive impact from AI in the next 12 months
• That represents growth from the 2024 survey, wherein closer to 50 percent of responders said each of those business practices will see a positive impact from AI in the next 12 months
• In the latest survey, 25-plus percent called the impact for each of those businesses “significant”
• That shows growth from 2024, wherein the share of solution provider responders calling the impact “significant” for each of those business practices was closer to 13 percent

Williams also noted that an important element for AI vendors to understand is that solution providers and their customers continue to see the same inhibitors with AI adoption as they saw last year, with the top concerns including cybersecurity, accuracy and intellectual property infringement. “Human in the loop is still a major piece of this,” he said.

AI’s Halo Effect

Kirsten Craft, chief revenue officer of Prolifics, an Orlando, Fla.-based solution provider and another member of the AI panel, told the room of solution providers that her company has seen what Williams calls the “AI halo effect,” with AI bringing new attention to her company’s data, systems integration and orchestration practices.

“AI has really helped us put our offerings in a sexier light,” Craft said. “When we are going and selling to our clients, we are talking to the end users. We are talking to the line of business as far as what is a problem you're trying to solve. And AI every single time will help us open up a conversation. That is the No. 1 topic that our clients want to talk about.”

Prolifics has engaged customers with briefings where they can create around 10 potential AI use cases the solution provider demonstrates. The company’s smaller customers have actually adopted AI faster than larger ones due to fewer internal hurdles, she said.

To cut down on the number of customer AI proofs of concept (POCs) that don’t reach production, Prolifics has developed a framework to formalize the AI experimentation timeline.

“We've seen a lot more of our clients move into production,” she said. “We’ve got about 25 of them now that have actually moved significant AI projects into production, which is great. So we see revenue there.”

Within the solution provider, Prolifics has leveraged AI to improve marketing content generation, save time on statement of work (SOW) drafting, accelerate sales and conduct contract reviews.

ATG’s Alvarez told the crowd that he has found revenue opportunities in the services and data governance engagement with customers more so than in money from the licenses.

“The consulting piece is what is helping us push AI into those environments, and as they get more exposed to the possibility and the art of the possible, then there's going to be more opportunity for us,” he said.

As for the digital dispatcher ATG is looking into, Alvarez’s larger prediction for his company is that by the end of 2025, everyone in his company will have a digital assistant or developer to help track time and perform client work. Solution providers shouldn’t feel fear with experimenting with new AI vendors, he said.

“We are looking for ways to improve the service delivery that we offer our clients, and we know AI is going to be a significant contributor to that,” he said.

AI is starting to see trends similar to the early cellphone era where executives want to bring a tool they use in their personal lives–their iPhone or ChatGPT, for example–into their workflow.

“If you aren’t, at least spending some time understanding AI and how it can help your clients and how it can help your business help your clients, then you're going to be left out because somebody else is going to fill the void,” he said. “Just like in cybersecurity … if you're not doing cybersecurity, somebody else is going to do it for your clients. Same thing with AI, except this is going to go way faster.”