Gartner Predicts Over 30% of API Demand Boost by 2026 Due to AI and Tools Using LLMs

STAMFORD, Conn., March 20, 2024 — More than 30% of the increase in demand for application programming interfaces (APIs) will come from AI and tools using large language models (LLMs) by 2026, according to Gartner, Inc.

Analysts Discuss the Evolving Role of Tech Service Providers due to GenAI at the Gartner Tech Growth & Innovation Conference 2024, March 20-21 in Grapevine, Texas. Image Credit: Shutterstock.

“With technology service providers (TSPs) leading the charge in GenAI adoption, the fallout will be widespread,” said Adrian Lee, VP Analyst at Gartner. “This includes increased demand on APIs for LLM- and GenAI-enabled solutions due to TSPs helping enterprise customers further along in their journey. This means that TSPs will have to move quicker than ever before to meet the demand.”

A Gartner survey of 459 TSPs conducted from October to December 2023 found that 83% of respondents reported they either have already deployed or are currently piloting generative AI (GenAI) within their organizations.

“Enterprise customers must determine the optimal ways GenAI can be added to offerings, such as by using third-party APIs or open-source model options. With TSPs leading the charge, they provide a natural connection between these enterprise customers and their needs for GenAI-enabled solutions.”

Tech Service Providers Must Maximize GenAI Investments for Future Growth

The survey found that half of TSPs will make strategic changes to extend their core product/service offerings to realize a whole product or end-to-end services solution.

With this in mind, Gartner predicts that by 2026 more than 80% of independent software vendors will have embedded GenAI capabilities in their enterprise applications, up from less than 5% today.

“Enterprise customers are at different levels of readiness and maturity in their adoption of GenAI, and TSPs have a transformational opportunity to provide the software and infrastructure capabilities, as well as the talent and expertise, to accelerate the journey,” said Lee.

Throughout the product life cycle, TSPs need to understand the limitations, risks and overhead before embedding GenAI capabilities into products and services. To achieve this, they should:

• Document the use case and clearly define the value that users will experience by having GenAI as part of the product.
• Determine the optimal ways GenAI can be added to offerings (such as by using third-party APIs or open-source model options) and consider how the costs of new features may affect pricing decisions.
• Address users’ prompting experience by building optimizations to avoid user friction with steep learning curves.
• Review the different use-case-specific risks, such as inaccurate results, data privacy, secure conversations and IP infringement, by adding guardrails specific to each risk into the product.

Gartner clients can read more in “Research Roundup: Enhance Products and Services With GenAI.”

Gartner Tech Growth & Innovation Conference

Gartner analysts are providing additional analysis on how technology service providers can accelerate growth, drive product innovation and leverage emerging technologies at the Gartner Tech Growth & Innovation Conference, taking place March 20-21, 2024 in Grapevine, Texas.

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Source: Gartner