Spending on cognitive and artificial intelligence (AI) systems is forecast to grow at a “rapid pace” during the next four years, as customers turn preliminary strategies into full-scale deployments.
That’s according to IDC findings, which reports that worldwide spending on cognitive and AI systems will reach US$77.6 billion in 2022, more than three times the US$24 billion forecast for 2018.
Such figures suggests a compound annual growth rate (CAGR) of 37.3 per cent, offering encouragement for channel partners already building out capabilities across smart technologies.
"The market for AI continues to grow at a rapid pace," said David Schubmehl, research director at IDC. “Vendors looking to take advantage of AI, deep learning and machine learning need to move quickly to gain a foothold in this emergent market.
“IDC is already seeing that organisations using these technologies to drive innovation are benefitting in terms of revenue, profit, and overall leadership in their respective industries and segments.”
Specific to technology, Schubmehl said software will be both the “largest and fastest growing” technology category throughout the 2017-2022 forecast period, representing around 40 per cent of all cognitive/AI spending with a five-year CAGR of 43.1 per cent.
Areas of focus for these investments are conversational AI applications (e.g., personal assistants and chatbots) and deep learning and machine learning applications (employed in a wide range of use cases).
Delving deeper, hardware (servers and storage) will be the second largest area of spending until late in the forecast, when it will be overtaken by spending on related IT and business services.
According to Schubmehl, both categories will experience “strong growth” over the forecast (30.6 per cent and 36.4 per cent, respectively) despite growing slower than the overall market.
From a customer standpoint - and of note to the channel - the cognitive/AI use cases that will see the largest spending totals in 2018 are automated customer service agents (US$2.9 billion), automated threat intelligence and prevention systems (US$1.9 billion), sales process recommendation and automation (US$1.7 billion) and automated preventive maintenance (US$1.7 billion).
Furthermore, the use cases that will see the fastest investment growth are pharmaceutical research and discovery (46.8 per cent), expert shopping advisors and product recommendations (46.5 per cent), digital assistants for enterprise knowledge workers (45.1 per cent) and intelligent processing automation (43.6 per cent).
“Worldwide cognitive / AI systems spend has moved beyond the early adopters to mainstream industry-wide use case implementation," added Marianne Daquila, research manager at IDC.
“Early adopters in banking, retail and manufacturing have successfully leveraged cognitive/AI systems as part of their digital transformation strategies.
“These strategies have helped companies personalise their relationship with customers, thwart fraudulent losses, and keep factories running. Increasingly, we are seeing more local governments keeping people safe with cognitive/AI systems.
“There is no doubt that the predicted double-digit year-over-year growth will be driven by even more decision makers, across all industries, who do not want to be left behind.”
In assessing sector spending trends, banking and retail will be the two industries making the largest investments in cognitive/AI systems in 2018 with each industry expected to spend more than US$4 billion this year.
“Banking will devote more than half of its spending to automated threat intelligence and prevention systems and fraud analysis and investigation while retail will focus on automated customer service agents and expert shopping advisors & product recommendations,” Daquila explained.
Beyond banking and retail, Daquila said discrete manufacturing, healthcare providers, and process manufacturing will also make “considerable investments” in cognitive/AI systems this year.
In addition, the industries that are expected to experience the fastest growth on cognitive/AI spending are personal and consumer services (44.5 per cent) and federal/central government (43.5 per cent), while retail will move into the top position by the end of the forecast with a five-year CAGR of 40.7 per cent.
Regionally speaking, the strongest spending growth over the five-year forecast will be in Japan (62.4 per cent) and Asia Pacific (excluding Japan and China) at 52.3 per cent.