European CISOs Drive Increased IT Security Investment

The Chief Information Security Officer (CISO) role has gained new importance, due to increased cyber threats. Moreover, the COVID-19 pandemic has had a significant impact on security-related IT investment in Europe, which will continue to grow rapidly in 2021.

During the pandemic, organizations have been re-architecting their IT security perimeters to protect operations and critical data. The pandemic, and measures to curb it with remote working, have pushed the enterprise network outwards and heightened the risk for CISOs.

According to the latest worldwide market study by International Data Corporation (IDC), overall investment in IT security within Europe is projected to exceed $35.6 billion during 2021 with a compound annual growth rate (CAGR) of 8.8 percent between 2020 and 2024 -- now forecast to reach $46.4 billion in 2024.

IT Security Market Development

The banking sector traditionally has the highest spending on IT security due to the particularly sensitive customer data that is integral to the industry. Besides, financial service organizations are eager to optimize their IT infrastructure via digital transformation.

The COVID-19 pandemic also increased focus on remote servicing of clientele, making data protection and identity and digital trust solutions even more invaluable. Additionally, the European banking sector is leading in terms of spending on services for integration, consulting, support services, and more.

Spending on IT services in the sector is projected at 7.3 percent year-on-year growth in 2021 to reach $4.8 billion. The second-place vertical market is discrete manufacturing with 7 percent projected to reach $3.8 billion, followed by process manufacturing with $3.1 billion in spending based on 7.6 percent growth.

IT Security spending also varies according to regions. In Central and Eastern Europe (CEE), for example, the second-largest vertical is federal or central government, with discrete manufacturing in third place.

In Western Europe, conversely, banking is still the largest industry by IT security spending, followed by discrete manufacturing in second place and process manufacturing in third.

Broken down by services category, security services are projected to comprise the greatest share of IT security investment in 2021, with spending expected to accelerate further as organizations in Europe accelerate their digital transformation and migrate systems and workloads to the cloud. However, security software and hardware investments are expected to grow at a slightly lower rate.

"After the initial response to the pandemic, organizations in Europe began to plan more strategically for an increasingly digital future, where interactions between businesses, their employees, partners, and customers (or citizens) are predominantly digital rather than physical," says Mark Child, research manager at IDC.

According to the IDC assessment, this transition will require secure infrastructure and processes, and not every organization has the resources and expertise in-house. This is also driving strong growth in security services -- particularly public cloud services, managed security services, and IT security consulting.

Outlook for IT Security Investment in Europe

CEE governments invested heavily in IT security during 2020 and are expected to continue doing so through 2024, owing to the need to provide digitalized services to citizens and businesses, and to enable remote working, distance learning, or other operations in which a physical presence is not possible.

IDC analysts believe that Central and Eastern Europe are catching up to Western Europe when it comes to the maturity of IT security spending in the government sector, and the current spending levels of verticals illustrate these trends.

That said, I anticipate that the adoption of Hybrid Workforce models will motivate all CIOs to reassess their organization's secure network access requirements. Home-based workers will likely need to reach software applications within a managed data center, plus a variety of public cloud-based SaaS apps.

Cloud Edge and IoT will Improve Pharma Manufacturing

The global COVID-19 pandemic has accelerated changes in many industries. One of the most impacted was the pharmaceutical sector that had to reimagine business processes and rapidly adopt new technologies. It's yet another example where applying cloud computing had become a strategic imperative.

Today, next-generation pharma concepts are fueling ongoing innovation. In particular, the industry’s unique characteristics are driving investments in Digital Transformation by forward-looking pharmaceutical manufacturers. 

According to the latest worldwide market study by ABI Research, digital factory revenue will top $4.5 billion in 2030 with spending by pharma manufacturers on data analytics forecast to grow by a 27 percent CAGR and reach $1.2 billion in 2030, as these companies evolve to boost productivity.

Pharma Digital Transformation Market Development

That said, the industry’s competitive dynamics require pharmaceutical firms to optimize their production lines to maximize yield for the time a drug has patent protection. After patents expire, generics companies will produce similar products.

According to the ABI assessment, the utilization of data analytics can support each type of effort to increase yield. Moving from manufacturing drugs and vaccines in batches, to optimizing the manufacturing process with 'continuous production' can dramatically increase yields.

"But the active pharmaceutical ingredients are susceptible to changes in their immediate environment. The batch must be scrapped if the condition of the ingredients or formulation falls outside accepted parameters," says Michael Larner, principal analyst at ABI Research.

Therefore, pharma manufacturers can choose to invest in analytics that aid in the development of 'digital twins' of their operations, so that they can prepare their production lines for more predictable continuous manufacturing.

Another digitization focus for pharmaceutical firms is to remove paper recordkeeping. "Collecting and storing data via paper-based processes risks reducing productivity and increases the likelihood that errors happen on the production line due to administrative errors," Larner points out.

FDA 21 CFR Part 11 is one way the U.S. Food and Drug Administration is encouraging the adoption of digital technologies by publishing the criteria for submitting electronic records to the organization and the treatment of electronic signatures.

The prevalence of paper records illustrates the progress yet to be made by pharmaceutical firms regarding digital transformation. ABI Research has offered a five-stage 'digital maturity' model, outlining the progress made and steps required by drug manufacturers to optimize their operations.

Larner explains, "Currently, pharmaceutical manufacturers are at Stage 2 in that they have modern factory but lack foresight and struggle to adjust production, or Stage 3 where they have started to implement digital transformation but lack expertise reconfiguring production lines."

In the coming decade, many firms will upgrade their existing facilities or build new 'greenfield' manufacturing sites, and their operations will be digitally transformed (Stage 4) or operate without humans on-site (Stage 5).

A notable example of advanced manufacturing facilities is Sanofi’s digitally-enabled, continuous manufacturing facility in Framingham, Massachusetts where all processes are paperless with plant operators using digital collaboration tools, data analytics, and Augmented Reality (AR) solutions so they can make decisions and adjustments in real-time.

Outlook for Digital Transformation in Pharma

ABI analysts say that there is already a myriad of suppliers helping the pharma industry to digitize and optimize processes by moving from the pre-digital stage (Stage 1) to connecting their manufacturing plants (Stage 3).

Moreover, I believe that the introduction of advances within the Internet of Things (IoT) arena -- and the introduction of fifth-generation (5G) wireless infrastructure and cloud edge computing solutions -- will enable the development of automated production processes and eventually new business models.

It's estimated that the COVID-19 pandemic has already fast-forwarded the digital transformation of the pharma industry by more than five years. Cloud computing and cloud-based IT security solutions helped CIOs and CTOs to adopt 'remote working' and perform decentralized clinical trials of vaccines.

Indeed, the path ahead for continued progress looks bright. And, I'm encouraged by these latest research findings. I'll share more insights on this topic as they're announced by the leading industry analysts.

Why Government Leaders Invest in New IT Infrastructure

Across the globe, savvy government leaders within developed nations are investing in much-needed infrastructure for the 21st Century. In many cases, that will include a variety of new technologies that will be required to effectively participate in the Global Networked Economy.

As an example, according to "The American Jobs Plan" fact sheet: Generations ago, the federal government recognized that without affordable access to electricity, Americans couldn’t fully participate in modern society and the modern economy.

"With the 1936 Rural Electrification Act, the federal government made a historic investment in bringing electricity to nearly every home and farm in America, and millions of families and our economy reaped the benefits."

Broadband internet is the new electricity. It is necessary for Americans to do their jobs, to participate equally in school learning, health care, and to stay connected.

Meanwhile, worldwide government Information Technology (IT) infrastructure investment is forecast to total $483 billion in 2021 -- that's an increase of 5.1 percent from 2020, according to the latest market study by Gartner.

Government IT Market Development

"Government organizations continue to be challenged with the appropriate level of interventions to respond and recover from the COVID-19 pandemic," said Irma Fabular, senior research director at Gartner.

According to the Gartner assessment, public health and safety measures, including vaccinating citizens are of paramount concern, which necessitates that governments continue to accelerate their Digital Transformation journey.

Three segments are on pace to exceed the overall Government IT market growth in 2021. The software segment, which includes application, infrastructure, and vertical-specific software, will experience the strongest growth in 2021.

"Governments are innovating at a quicker pace by adopting commercially available technology solutions for operational and mission-critical needs," said Ms. Fabular. "We are seeing innovative use of technology and data to control and respond to the pandemic, as well as provide financial and humanitarian assistance."

As government organizations continue to embrace 'remote work' and hyper-connected public services, spending on devices is expected to grow 5.6 percent in 2021 -- that's up from 1.6 percent growth in 2020.

"The COVID-19 pandemic exposed weaknesses in the ability of government organizations to quickly respond, scale and secure essential services," said Ms. Fabular. "Lessons learned from the responses by government organizations provide the impetus to increase resiliency and build for a stronger future for its citizens and businesses."

Outlook for Government IT Investment Growth

In 2021, government budgets will continue to address the recovery and growth needs of communities and businesses. In addition, investments to address digital equity and access to remote government services will be prioritized.

As I look at the current trends, I anticipate that telecom service providers will become inspired to collaborate with government agencies that seek new ways to bring more affordable internet access to all homes and businesses in their communities.

Of course, there are still uninformed groups of legacy politicians that continue to oppose any and all changes that are beyond their own understanding of today's key economic development drivers.

That said, commercial leaders within the technology sector should support progressive measures that will result in meaningful and substantive progress. It's time to move beyond partisan rhetoric and embrace collective future upside opportunities that are enabled by ongoing digital transformation.

Regtech Solutions will Transform Regulatory Compliance

The emerging concept of regulatory technology (Regtech) has taken on new importance within the financial services ecosystem and beyond. During the COVID-19 pandemic, regulatory compliance has become more complicated. Today, Regtech is a highly dynamic and rapidly evolving market. 

Regtech solutions will also become important within commercial areas other than financial services, as more regulated vertical industries seek to ease their government oversight compliance burdens.

Meanwhile, digital onboarding and how to 'onboard remotely' in a safe, user-friendly way that respects Know Your Customer (KYC) regulations has become of critical importance during the global pandemic.

Global Regtech Market Development

According to the latest worldwide market study by Juniper Research, spending on Regtech systems that enable banks and other heavily regulated sectors to meet their ongoing compliance requirements will exceed $130 billion in 2025 -- that's up from $33 billion in 2020.

Juniper analysts found that this 290 percent market growth is being fueled by greater use of artificial intelligence (AI) to automate manual tasks and the transition to digital onboarding, which have emerged as critical capabilities in the wake of the global COVID-19 pandemic.

The Juniper research findings recommend that Regtech vendors make AI a core part of their overall solutions, while still leveraging traditional human intelligence to keep their decisions fully explainable.

Furthermore, the application of AI capabilities in automating manual tasks will allow more businesses to begin to improve their levels of spending on regulatory compliance technologies.

According to the Juniper market assessment, nearly 330 million new bank accounts will be opened via digital onboarding solutions in 2025 -- up from 184 million accounts in 2020.

Ultimately, consumers across the globe will continue to use digital onboarding in ever-greater numbers, and Regtech vendors must design long-term strategies that support this ongoing effort.

"Digital onboarding has been accelerated by lockdown measures, but ultimately, it is an acceleration of existing trends towards greater digital engagement. Businesses should rebuild their KYC and onboarding processes from the ground up to take advantage of these new capabilities, or they will lose ground to digitally native competitors," said Nick Maynard, lead analyst at Juniper Research.

The comprehensive research also found that almost 18 percent of global financial service provider's digital onboarding in 2025 will use AI systems, compared to just under 4 percent in 2020.

Outlook for Regtech Applications Growth

The global market study identified that the introduction of AI in areas such as identity document verification means that businesses can finally move from their still largely manual processes to a fully digital model of KYC. 

This transition will provide significant cost savings of over $460 million in banking onboarding alone, and will also provide a significantly improved financial service customer user experience.

I believe that AI technology will be increasingly central to the digital onboarding process -- whether this is in automatically verifying identities using 'selfie onboarding' or building and checking digital identities against KYC data.

How Cloud Innovation Enables Digital Business Growth

Like so many other innovators across the globe, forward-thinking organizations in the Asia-Pacific region are reinventing themselves with a goal to fuel renewed digital business growth. As economic activities return to pre-COVID pandemic levels, these savvy leaders are building technology-enabled business models.

Cloud computing has emerged as the core foundation of this renewed business technology focus, leading to Asia-Pacific public cloud services spending growth of over 38 percent to $36.4 billion in 2020, according to the latest market study by International Data Corporation (IDC).

"Cloud services have addressed more than cost management challenges during the COVID-19 pandemic. Cloud services and technologies have been the basis for the rapid introduction of new digital services to support remote workers and online customers, and it’s been the speed of implementation and low up-front costs that have enabled that," said Chris Morris, vice president at IDC.

Cloud Computing Market Development

Cloud Infrastructure as a service (IaaS) has been the top contributor to the overall public cloud spend during 2020, making up around 48 percent of the overall cloud investment -- and it is expected to remain the highest throughout the forecast period of 2021-2024.

IaaS spending across compute, storage, and networking will remain steady throughout the forecast with compute taking the major share of spending followed by storage. Software as a Service (SaaS) is positioned as the second largest in terms of spending on cloud computing with a share of around 40 percent, followed by Platform as a service (PaaS) with an 11 percent share in 2020.

The majority share of SaaS spending is coming from enterprises spending on cloud-hosted applications. Software Applications and System Infrastructure Software (SIS) is also contributing to SaaS spending. 

This is expected to further grow as enterprises leverage SaaS solutions that cover collaboration, productivity, and IT security to support 'remote working' and the 'hybrid workforce' phenomena. PaaS spending will be led by Data Management Software, which will record a five-year CAGR of 41.2 percent during 2019-2024.

IDC expects this trend to continue due to the focus on business scalability, increased performance, improved security, and optimizing IT operations to create business resiliency and cap on-premises infrastructure costs. Moreover, cloud-based security benefits are driving enterprises in the region to migrate to public cloud service offerings with new enthusiasm. 

Regarding industry growth projections, Professional Services (15 percent share), Banking and Discrete Manufacturing (around 10 percent share) are the top three industries accounting for one-third of the overall public cloud services spending throughout the forecast period of 2021-24.

However, Construction and Professional Services -- due to increased focus on external-facing interactions and customer experience -- will see the fastest growth in public cloud spending with a five-year CAGR of 39 percent and 35 percent respectively.

Regarding commercial segment growth, very large businesses will account for 37.1 percent, medium-sized businesses will deliver around 30.2 percent, and large businesses with 20.8 percent are the three segments that accounted for the Asia-Pacific total 2020 public cloud spending.

Both small and medium-size businesses show the fastest growth during the forecast period of around 34 percent in cloud investment. These segments were the hardest hit organizations during the global pandemic, and have an immediate need for business continuity, resiliency, and eventually new digital growth.

Outlook for Public Cloud Services Adoption

From a geographical perspective, China was the largest market for public cloud services in 2020 with its $19.4 billion investment that accounted for about 53.4 percent of the Asia-Pacific total. The openness of enterprises to adopt cloud technology, supplemented by government initiatives and the presence of home-grown cloud service providers, is boosting the continued adoption and growth.

Australia ($5.2 billion) and India ($3.5 billion) will be in second and third place respectively in terms of cloud infrastructure and service spending in the region, driven by fast adoption across enterprises and the presence of global hyperscale public cloud providers.

That said, I anticipate that cloud computing trends in this region will be reflected in other regions as a post-pandemic economic recovery emerges, and the thriving organizations accelerate their digital transformation agenda. Therefore, forward-thinking CIOs and CTOs will have a unique opportunity to further influence digital business growth strategies.

Asia-Pacific Region Drives Demand for Private Networks

Both telecom service providers and large enterprises from different vertical industries are driving significant growth of private mobile network deployments within Australia, China, Japan, New Zealand, South Korea, and Singapore, according to the latest market study by ABI Research.

Together they will create a $7 billion market opportunity by 2025 within the Asia-Pacific region -- accounting for more than 65 percent of global private network revenues. By 2030, developed markets in North America and Europe will account for more than $16 billion -- representing 25 percent of global private network revenues.

"These findings show the great regional variability that we see for private network deployments," said Leo Gergs, research analyst at ABI Research.

Private Mobile Networks Market Development

Two primary factors are creating the drive for private networks. One, a rising number of national spectrum liberalization initiatives are allowing enterprises access to licensed mobile network spectrum without having to involve a communication service provider for their spectrum assets.

Initiatives like CBRS in the United States, spectrum sharing in the UK, and the site-aside of licensed spectrum in a growing number of European countries give enterprises the opportunity to deploy a deterministic network that minimizes the risk of unauthorized access.

As these arrangements guarantee enterprises the opportunity to customize the network performance to fit their needs exactly, it is no surprise to see that the auction of CBRS Priority Access Licensees (PAL) has raised more than $4.5 billion in bids.

The second factor is that the demand for enterprise digitization is increasing sharply, driving new attention to the market.

There is a range of new players attacking the traditional telco industry when it comes to private networks. Hyperscaler cloud providers such as Amazon Web Services, Microsoft, and Google are rapidly advancing their telco ambitions in the private network domain.

At the same time, vertical-specific players are working to integrate private cellular networks into their existing enterprise offerings. In addition to System Integrators, industrial automation vendors are deeply rooted in the industrial manufacturing domain and growing their product portfolios to include private cellular networks.

"One should not underestimate their capabilities," Gergs emphasizes. "Recent announcements of Siemens setting up a private 5G network to cover 1.4 million m2 at Germany’s largest exhibition ground in Hannover gives a hint to just of how capable these industrial automation vendors are to serve their specific verticals."

According to the ABI assessment, these developments show that the traditional telco industry is under immense pressure to gain a foothold in private mobile networks for the enterprise domain.

"While new players have the power to disrupt the private network's market with new innovative service-based business models that resonate well with enterprise requirements, traditional CSPs keep trying to force enterprises into the last decade’s CAPEX-intensive business models," says Gergs.

Outlook for Private Network Infrastructure Growth

The telco industry needs to radically rethink its approach to successfully target the immense enterprise private network opportunity. They need to embrace spectrum liberalization initiatives and consider flexible business models that can be adjusted to address heterogeneous enterprise requirements.

"As a first step, and as much as possible, telcos should move away from a focus on short-term profitability and embrace a long-term monetizing strategy that does minimize the amount of necessary upfront investment," Gergs concludes.

That said, I believe we could see mobile network operators offer their expertise to help large enterprise CIOs and CTOs deploy their 5G infrastructure. Very few enterprise IT organizations have the skills and experience to build wireless cellular networks. Therefore, it's more likely for IT teams to focus on their related cloud edge computing applications.

Flexible Working Options for Contact Center Employees

The 'future of work' for call center or contact center employees will include more 'flexible working' location options. Seventy percent of customer service and support employees want to continue to work from home (WFH) at least once a week after the pandemic ends, according to the latest market study by Gartner.

In September 2020, Gartner surveyed 5,000 employees, including 550 customer service professionals, and found that service employees who traditionally did not have many opportunities to WFH are now used to it and like it, and they wish to continue in some capacity once the pandemic is over.

This is in line with most service leaders who believe WFH is here to stay post-pandemic. Eighty-one percent of service leaders believe between 30 percent to 80 percent of their workforce will primarily be working from home two years from now.

Future Hybrid Workforce Market Development

"As service leaders weigh the future of their work from home programs, they’ll have to balance their own visions for the future with employee wishes," said Lauren Villeneuve, advisory director at Gartner. "A key factor should be the impact it has had and will continue to have on the employee experience. Leaders will want to understand which focus areas should be prioritized and which should not as they decide where to invest in and optimize their work from home programs."

According to the Gartner assessment, customer service and support leaders working on long-term post-COVID-19 WFH strategies should consider the following:

Culture: Since the mass shift to working from home, many service leaders report growing concerns for the future of their company culture. However, Gartner data indicates WFH has posed less of a challenge to organizational culture than anticipated.

In fact, most customer service employees who work remotely say the organizational culture has remained the same – and most of those who do think it’s changed actually say it’s improved since the shift to WFH.

Service leaders should continue to monitor culture within their own organizations but may want to consider investing time and resources elsewhere.

Collaboration: While employees affirm WFH hasn’t negatively impacted culture, it has impacted collaboration. Service employees say they are collaborating less frequently since transitioning to WFH. 

While service leaders have invested in collaboration technologies, they should make sure they also create opportunities for collaboration, model collaborative behavior and reward collaboration when it occurs to ensure the technology is used.

Career development: Pre-pandemic biases against remote employees now seem particularly unfounded given employee performance has largely remained consistent throughout the pandemic. While the vast majority of service employees continue to WFH, this presents less of an issue.

But if managers hold these beliefs once some employees return to the workplace, they could create a barrier to career progression for employees who choose to continue working from home.

Service leaders should work to uncover why these biases exist and closely monitor managers who manage remote employees or hybrid teams for signs of bias.

Outlook for Contact Center Applications Innovation

Furthermore, customer care managers, and the IT organizations that support them, will review the technology infrastructure that their remote employees utilize. Many will likely migrate from legacy virtual private network (VPN) apps and first-generation virtual desktop client software to more modern cloud-based offerings.

I believe that Unified Workspace and Unified Security solutions will automate business processes and transform the employee experience, plus further enhance user productivity by improving secure remote access performance.

Moreover, Unified Endpoint Management solutions will provide analytics-enabled insights that help to advance Desktop as a Service (DaaS) offerings, and thereby start to streamline service manager routine workflows and associated activities.

How Mobile Apps Drive Digital Payment Global Adoption

Leading the way forward, fintech vendors have offered a variety of digital payment solutions across regional financial service markets. Plus, due in part to the disruptive COVID-19 global pandemic, and the move away from cash-dependent payment methods, digital wallets are now gaining broad adoption.

According to the latest worldwide market study by Juniper Research, the number of unique digital wallet users will exceed 4.4 billion globally in 2025 -- rising from an estimated 2.6 billion in 2020.

Juniper analysts found that mobile phone wallets are driving this impressive 70 percent growth, as fintech mobile app payments rapidly scale across geographical and vertical industry markets.

Digital Payment Market Development

Furthermore, the increasing alignment between in-person and remote commerce channels is leading to greater use of smartphone app wallets, with web app wallet use confined to high-value purchases or complex bill payments.

Juniper Research recommends that retailers and other merchants should undertake complete reviews of their eCommerce processes to ensure that they're offering a highly capable mobile app solution.

This solution must be inclusive of a streamlined checkout process, the correct mobile wallet integrations, and bullet-proof security, or they will lose out to more mobile-savvy digital organizations.

The new research found that traditional developed markets -- such as the UK and U.S. regions-- are clearly lagging behind global leaders such as China and India, in terms of digital wallet adoption.

With China and India now forecast to account for 69 percent of digital wallet transactions in 2025, it's hard to imagine that the Western European and North American market growth trajectory can compare.

"In developed markets, mobile wallets facilitate card payments, but in emerging markets, wallets in places have bypassed cards entirely. Wallet providers in developed markets need to focus on building acceptance and analytics features, in order to boost their appeal in a card-centric environment," said Nick Maynard, lead analyst at Juniper Research.

Juniper analysts also found that QR code payments will account for 40 percent of all digital wallet transactions globally in 2025 -- that's an apparent fall from 47 percent of transactions in 2020.

Meanwhile, QR code payments are presently still playing a leading role, due to their ease-of-use and acceptance, which makes them a critically important area for continued digital wallet use.

Outlook for Digital Payment Applications Growth

However, according to the Juniper assessment, over the next five years, the evolution of features such as card acceptance via near field communications (NFC) enabled smartphones will begin to close the 'ease of acceptance' gap.

I believe that digital wallets benefit the providers' own storefronts and third-party storefronts, together with retail consumer loyalty programs, online bill payment options, and mobile banking services.

Furthermore, digital wallet payment technology has evolved to the point where they make use of a variety of different payment technologies. Therefore, the upside revenue growth opportunities are likely to blossom across the globe.

Artificial Intelligence Global Revenue will Reach $554.3B

The global market for intelligent business technology solutions continues to evolve, as more CIOs and CTOs seek ways to automate routine tasks and associated business processes. The solutions have gained momentum in the marketplace as offerings matured and became mainstream across many industries.

Worldwide revenues for the artificial intelligence (AI) market -- including software, hardware, and services -- are forecast to grow 16.4 percent year-over-year in 2021 to $327.5 billion, according to the latest worldwide market study by International Data Corporation (IDC).

Artificial Intelligence Solutions Market Development

By 2024, the market is expected to break the $500 billion mark with a five-year compound annual growth rate (CAGR) of 17.5 percent and total global revenues reaching $554.3 billion.

Among the three technology categories, software represented 88 percent of the total AI market revenues in 2020. However, it is the slowest growing category with a five-year CAGR of 17.3 percent.

Within the AI software category, AI Applications took the largest share of revenue at 50 percent in 2020. In terms of growth, the AI Software Platforms market is forecast to be the strongest with a five-year CAGR of 32.7 percent.

The slowest will be AI System Infrastructure Software with a five-year CAGR of 13.7 percent while accounting for roughly 36 percent of AI software revenues. Within the AI Applications market, AI ERM is expected to grow slightly stronger than AI CRM over the next five years.

"The global pandemic has pushed AI to the top of the corporate agenda, empowering business resilience and relevance," said Ritu Jyoti, vice president at IDC. "AI is becoming ubiquitous across all the functional areas of a business. Advancements in Machine Learning, Conversational AI, and Computer Vision AI are at the forefront of AI software innovations, architecting converged business and IT process optimizations, predictions and recommendations, and enabling transformative customer and employee experiences."

The AI Services category grew slower than the overall AI market with 13 percent annual revenue growth in 2020. However, it is forecast to grow 17.4 percent year over year in 2021, outperforming the overall AI market by approximately 1 percent.

Its five-year CAGR is expected to be 18.4 percent with revenues reaching $37.9 billion by 2024. This technology category breaks down into two market segments: IT Services and Business Services. IT Services is the larger of the two, accounting for nearly 80 percent of all AI Services revenues.

From a growth perspective, IT Services for AI tends to grow faster than Business Services for AI except for 2024, where Business Services for AI is forecast to perform slightly higher than both IT Services for AI and the overall AI Services market.

Though the pandemic interrupted the momentum of worldwide AI services market growth, enterprise demand for AI capabilities to support business resiliency and augment human productivity sustained double-digit expansion in 2020, even as other discretionary projects experienced delays.

According to the IDC assessment, client demand for technical expertise to develop, implement, and manage AI applications drives IT services expansion, while increasing adoption of AI-enabled automation within business processes boosts spending on business services.

Overall, the competitive landscape in both IT services markets for AI is a highly fragmented one where players from across the services value chain continue to invest in technology assets, innovation resources, and expertise in applying AI to solve industry- and domain-specific problems for clients.

Artificial Intelligence Infrastructure Market Growth

The AI hardware market is the smallest category with approximately a 5 percent share of overall AI revenues in 2020. The share is forecast to increase slightly in 2021 at the expense of AI software.

The AI server market grew faster than the AI storage market in 2020, but these results are expected to reverse in 2021 when AI storage is forecast to grow 31.8 percent year-over-year compared to 26.4 percent for the AI server market.

By 2024, AI hardware is forecast to be a $30.5 billion market with AI Servers representing an 82 percent revenue share. The AI server and storage markets continue to see rapid growth, providing an increasingly specialized and innovative infrastructure foundation under the entire AI landscape.

While the number of vendor companies tracked in each market is the same, the competitive landscape of the AI server market is more fragmented than the AI storage market, where the top 3 companies accounted for 49 percent market share in 1H 2020.

Remote Working Demand Disrupts IT Security Norms

Enterprise IT Security investment in critical infrastructure has been consistent over the last 12 months, regardless of huge disruptions from the global Covid-19 pandemic. The resulting effect has been mostly in increased demand for secure 'remote working' connectivity.

Cybersecurity spending announced by governments has not really changed significantly, with most maintaining similar funding planned in previous years, and an average year-on-year growth rate between 5 percent and 10 percent.

According to the latest worldwide market study by ABI Research, cybersecurity spending for critical infrastructure (CI) will increase by $9 billion over the next year to reach $105.99 billion in 2021.

IT Critical Infrastructure Market Development

The primary challenge of the Covid-19 pandemic has been for CI operators to ensure that systems and services keep running smoothly, despite an increasingly distributed and remote enterprise workforce.

As such, greater emphasis has been placed on ensuring that IT infrastructure operations can be securely monitored and managed remotely by authorized personnel.

"There is no denying that secure connectivity has become a key focus, not least with the revelations late last year of the SolarWinds Orion hack, which has brought into sharp focus the need for better vetting of services offered by third party contractors and remote update processes," said Michela Menting, research director at ABI Research.

The scale of the cyber intrusion clearly illustrates how vulnerable systems can be when they have weak links, and how easily threat actors can infiltrate and escalate privileges once access has been gained.

The implications for national security are significant, and critical infrastructure operators and governments worldwide are now re-evaluating and re-assessing the risks as they relate to remote work management.

According to the ABI analyst assessment, the brunt of security spending is still first and foremost focused on IT networks, systems, and data security from a defensive perspective. This is where the primary threats are focused, and operators are keenly aware of the potential ramifications of a breach there.

"However, increasing efforts are being placed on offensive security investments to better prepare response mechanisms, as well as securing operational technologies as operators in many sectors go through digital transformation and start evolving toward smart and connected IoT infrastructures," Menting explains.

Progress is nonetheless slow, as many sectors are bound by regulations which can make it difficult to change quickly. In addition, new security processes require time for testing and validation before being greenlit for use, ensuring they don’t compromise the integrity or proper functioning of existing processes.

While security spending is significant in defense, financial services, and Information & Communication Technologies (ICTs), it still lags in the more industrial sectors such as energy, water, and waste management, as the risks related to physical threats are significant.

Some initial traction is nonetheless driving transport, public security, and healthcare -- all in line with digital transformation efforts in those industries, and notably from smart city developments.

Outlook for New IT Security Applications Growth

"By and large, security spending in critical infrastructures is wide and varied, and diverges significantly among regions due to policy and regulation but is overall embracing cybersecurity much more holistically as connectivity and digitization continue to play increasing roles in everyday operations," Menting concludes.

That said, I believe that more CIOs and CTOs are seeking comprehensive solutions that improve operational resilience, while also removing some of the complexity from managing a legacy multi-vendor IT security environment.

As working from home gained momentum, IT organizations -- and the employees that they support -- experienced some of the inherent limitations of traditional VPN services. That's why chief information security officers (CISOs) have been tasked with the goal to attain a solution that adapts to the evolving demands for secure 'anywhere' access to on-premises and cloud-based SaaS applications.