Ongoing concerns about economic volatility and access to skilled digital transformation talent are top-of-mind for many CEOs and CFOs. And, business technology investment is being re-prioritized as more executive leadership teams focus on strategic business outcomes.
Meanwhile, spending on artificial intelligence (AI) will reach nearly $118 billion in 2022 and surpass $300 billion in 2026, according to the latest worldwide market study by International Data Corporation (IDC).
The ongoing incorporation of AI into a wide range of products will drive a compound annual growth rate (CAGR) of 26.5 percent over the 2022-2026 forecast period. This is more than four times greater than the five-year CAGR of 6.3 percent for overall worldwide IT spending during the same period.
Artificial Intelligence Market Development
The past two years have accelerated the use of AI in IT systems, and organizations are now more willing to take advantage of the efficiency benefits and enhanced capabilities that AI systems offer.
AI systems can support people-oriented tasks and improve their capabilities through technologies such as Conversational AI and Image Processing, used to interact with clients and potential clients in a way that these people are prepared to accept.
"AI is not the future, it is now," said Mike Glennon, senior analyst at IDC. "Most IT vendors have adopted AI solutions to supplement their products and are enhancing their products to make AI crucial to their success."
Banking and Retail are the two industries that will deliver the largest AI investments over the forecast period. Together, the two industries will account for roughly one-quarter of all AI spending worldwide.
Professional services will be the next largest industry with more than 10 percent share of spending, followed by discrete and process manufacturing. Professional services will also be one of the industries with the fastest growth in AI spending (28.7 percent CAGR), trailing only the Media industry (29.8 percent CAGR).
Among the 30 AI use cases identified by IDC, Augmented Customer Service Agents will see the most spending throughout the forecast period, reaching $35.9 billion in 2026. While it is the largest use case in only two industries (Retail and Telecommunications), Augmented Customer Service Agents are an investment area for every industry.
Other leading AI use cases include Sales Process Recommendation and Augmentation, Fraud Analysis and Investigation, and Program Advisors and Recommendation Systems. By 2026, these four use cases will represent more than 38 percent of all AI spending worldwide.
"Three of the leading use cases are customer and sales focused, showing that adopters of AI are using it to grow their business significantly with a strong customer and sales focus at a time when the economy struggles," Glennon noted.
Outlook for AI Applications Investment Growth
According to the IDC assessment, the United States will be the largest geographic market for AI systems, accounting for more than 50 percent of all AI spending worldwide throughout the forecast period.
Retail and Banking will be the leading industries for AI investments in the U.S. market. Western Europe will account for more than 20 percent of worldwide IT spending and will deliver the fastest spending growth with a five-year CAGR of 30 percent. The People's Republic of China will be the third largest AI market with one of the slowest growth rates (21.1 percent CAGR).
That said, I believe more CIOs and CTOs will choose to direct their attention to employee workflow and related business process automation apps, with the intent to improve productivity. Enhancing frontline employee experience can positively impact customer experience. It's a key reason why AI will be applied to more use cases.