Intelligent CIO North America Issue 29 - Page 71

INTELLIGENT BRANDS // Software for Business

AI software will grow 50 % faster in the next two years

Forrester forecasts that AI software will grow 50 % faster than the overall software market over the next two years , with an annual growth rate of 18 %.

The spend on AI software will double from US $ 33 billion in 2021 to US $ 64 billion in 2025 due to an accelerated adoption of AI during the pandemic and an increase in the number of companies that offer AI software .
According to Forrester ’ s Global AI Software Forecast , 2022 , cybersecurity is the fastestgrowing AI software category , with significant investments being made in real-time monitoring and response in order to mitigate growing cybersecurity threats . Within the AI software market , AI-infused software will see a 22 % CAGR by 2025 ; AI maker tools , which are used to develop AI applications , will see an 18 % CAGR ; and AI-centric software , which runs on AI components , will see a 14 % CAGR .
Across eight forecasted countries ( the US , China , Japan , France , Germany , Italy , Spain and the UK ), AI ’ s share of software spend will increase from 4.3 % in 2021 to 6 % in 2025 . The US and China will dominate this AI software spend , with 72 % of global AI spend . In addition , more than 80 % of annual investments in AI and Blockchain technologies will come from the two countries .
Key geographical highlights
Asia Pacific : China is a leading investor in AI software , with 24 % of AI spend – totalling US $ 9.6 billion – due to come from China in 2022 . China is also slated to outpace the rest of the world on AI software spend and to delegate US $ 16.6 billion , or 21 % of its software spend , on AI by 2025 . Japan is expected to spend US $ 4.1 billion on the AI software market in 2022 , largely due to the country ’ s heavy investment in collaborative robots .
Europe : Compared to the size of their economies , France , Germany , Italy , Spain and the UK lag behind the US and China when it comes to AI software spending , with US $ 7.3 billion expected to be invested in AI software in 2022 . Germany leads the European AI spend , with US $ 2.4 billion expected to be spent on AI software in 2022 . The UK and France are expected to spend US $ 2.3 billion and US $ 1.4 billion , respectively , on AI software in 2022 .
United States : The US leads AI enterprise adoption and is also the leading destination for private AI investment , with US $ 23.6 billion of funding in 2020 . In 2022 , 47 % of
AI spend will come from the US . American firms have the largest portfolio of AI patent applications and the highest number of patented AI techniques .
“ AI has great potential across categories including cybersecurity , process optimization and automation , health and human capital management ,” said Michael O ’ Grady , a Principal Forecast Analyst at Forrester . “ However , as AI adoption becomes mainstream , enterprises will need to manage its complexity , which includes adhering to responsible AI practices , nurturing the growing pool of AI talent and the continued evolution of business models .” p
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