Skip to main content

AI Developers Drive New Demand for IT Vendor Services

Preparing for the adoption of new technologies is challenging for many large enterprise organizations. That's why savvy CIOs and CTOs seek information and guidance from vendors that can assist them on the journey to achieve digital business transformation. Meanwhile, investment in artificial intelligence (AI) systems and services will continue on a high-growth trajectory.

According to the latest worldwide market study by International Data Corporation (IDC), spending on AI systems will reach $97.9 billion in 2023 -- that's more than two and a half times the $37.5 billion that will be spent in 2019. The compound annual growth rate (CAGR) for AI in the 2018-2023 forecast period will be 28.4 percent.

Artificial Intelligence Market Development

"The AI market continues to grow at a steady rate in 2019 and we expect this momentum to carry forward," said David Schubmehl, research director at IDC. "The use of artificial intelligence and machine learning (ML) is occurring in a wide range of solutions and applications from ERP and manufacturing software to content management, collaboration, and user productivity."

Artificial intelligence and machine learning are top of mind for most organizations today, and IDC expects that AI will be the disrupting influence changing entire industries over the next decade.

Spending on AI systems will be led by the retail and banking industries, each of which will invest more than $5 billion in 2019. Nearly half of the retail spending will go toward automated customer service agents and expert shopping advisors & product recommendation systems. The banking industry will focus its investments on automated threat intelligence and prevention systems and fraud analysis and investigation.

Other industries that will make significant investments in AI systems throughout the forecast include discrete manufacturing, process manufacturing, healthcare, and professional services. The fastest spending growth will come from the media industry and federal or central governments with five-year CAGRs of 33.7 percent and 33.6 percent respectively.


Investments in AI systems continue to be driven by a wide range of use cases. The three largest use cases -- automated customer service agents, automated threat intelligence and prevention systems, and sales process recommendation and automation -- will deliver 25 percent of all spending in 2019. The next six use cases will provide an additional 35 percent of overall spending this year.

The use cases that will see the fastest spending growth over the 2018-2023 forecast period are automated human resources (43.3 percent CAGR) and pharmaceutical research and development (36.7 percent CAGR). However, eight other use cases will have spending growth with five-year CAGRs greater than 30 percent.

Decision-makers across all industries are now grappling with the question of how to effectively proceed with their AI journey.  That's why the largest share of technology spending in 2019 will go toward services, primarily IT services, as firms seek outside expertise to design and implement their AI projects.

Hardware spending will be somewhat larger than software spending in 2019 as firms build out their AI infrastructure, but purchases of AI software and AI software platforms will overtake hardware by the end of the forecast period with software spending seeing a 36.7 percent CAGR.

Outlook for AI Applications Development Growth

On a geographic basis, the United States will deliver more than 50 percent of all AI applications development spending throughout the forecast period, led by the retail and banking industries. Western Europe will be the second-largest geographic region, led by banking and discrete manufacturing.

China will be the third-largest region for AI spending with retail, state or local government, and professional services vying for the top position. The strongest spending growth over the five-year forecast period will be in Japan (45.3 percent CAGR) and China (44.9 percent CAGR).

Popular posts from this blog

Digital Transformation Spending Reaches $1.8 Trillion

Ongoing investment in business technology will remain on track, despite concerns about the global economic outlook which continues to evolve in 2022. Enterprise CIOs and CTOs are focused on operational profitability and digital business growth goals that are enabled by strategic IT initiatives. Global spending on the Digital Transformation (DX) of business practices, products, and organizations is forecast to reach $1.8 trillion in 2022 -- that's an increase of 17.6 percent over 2021, according to the latest market study by International Data Corporation (IDC). Many anticipated DX investments will sustain this pace of growth throughout the 2021-2025 forecast period, with a five-year compound annual growth rate (CAGR) of 16.6 percent. Digital Transformation Global Market Development "IDC expects to see aggressive DX technology investment growth in 2022 following a minor slowdown during the pandemic period," said Craig Simpson, senior research manager at IDC . "As orga

Flexible Working: Why Company Culture Matters

The main reasons for the Great Resignation are obsolete leadership, fearful middle managers, and a toxic culture that hinders employee engagement. Perhaps that's why some organizations are still struggling with the consideration and development of a flexible working model.  They're incapable of evolving to a more enlightened approach to work where employees are treated with respect. They're stuck in a bygone era of the 20th-century industrial revolution where 'shareholder value' tops all other values, and where spreadsheets and financial data analysis drives all key decision making. We should not be surprised that 76 percent of human resource (HR) leaders now feel that hybrid work challenges an employee's connection to organizational culture, according to a recent survey by Gartner. A 2022 poll of HR leaders reveals the most challenging aspect of setting their hybrid strategy is adjusting the current organizational culture to support a hybrid workforce. In fact,

Energy Sector IoT Cybersecurity Gains Momentum

The electric distribution industry continues to invest in digital transformation projects. Advanced Metering Infrastructure (AMI) technology is becoming a driver for connected electricity meters, which will reach an installed base of 1.3 billion by 2027. AMI growth is prompting utilities and energy suppliers to revisit their IT infrastructure security and device management operations, according to the latest worldwide market study by ABI Research. Energy Infrastructure Security Market Development Digitization of traditional electricity grids and the modernization of the aging energy infrastructure is among the top concerns for utility operators and governments worldwide. Security for last-mile energy consumption applications was frequently overlooked. "However, the introduction of AMI, smart metering, and grid digitization is steadily increasing spending for secure management services, assisting implementers to transition to IT (information technologies) and OT (operational techno