Software vendors aiming to monetize AI face significant challenges, as highlighted in McKinsey & Company’s report “Upgrading Software Business Models to Thrive in the AI Era.” Companies must be cautious, as failure to demonstrate actual cost savings can inflate IT expenses without reducing workforce demands. The report identifies three critical barriers: a lack of quantifiable ROI from real-world deployments—only 30% of firms report benefits—scalability issues due to inadequate change management (requiring $3 in change management for every $1 spent on AI development), and unpredictable pricing models that complicate cost forecasting. Vendors need to adapt by exploring hybrid pricing strategies, balancing per-user fees with consumption-based models. The report emphasizes the importance of engaging line-of-business leaders, who are shifting focus from IT to value-driven outcomes, especially in light of diminished early AI trial productivity. As costs to deliver AI services decline, vendors must rethink pricing to align with evolving customer needs and market dynamics.
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