AI Software Market: A Quadrupling Growth to $251 Billion by 2027

AI software is poised for unprecedented growth, with generative AI applications taking the lead. These applications possess the ability to autonomously learn, discover, and provide recommendations or predictions based on user inputs. The market for AI-driven software, which automates tasks and generates content in response to user prompts, is projected to expand nearly fourfold by 2027.

What is AI software?

Knowing the answer to, “What is AI software?” can help you understand its role across different industries. AI software is a computer program capable of high-complexity tasks, like learning, decision-making, and solving problems. AI software uses machine learning to simulate human intelligence, which can allow the software to complete tasks of increasing nuance and sensitivity. Companies use AI software to help their businesses run more efficiently and to find new areas of improvement. This can result in the better allocation of human resources, allowing people to focus on more strategic and fulfilling tasks.

What are the benefits of AI software?

Engineers and developers build AI software to solve problems and create efficiencies. Businesses in many industries use AI software for a variety of tasks because of the concrete, measurable value that AI software can provide. Here are some of the many benefits of using AI software:

AI software can recognize patterns that humans can miss
AI can make raw data more valuable
AI software can automate some human roles
AI learnings can help drive better-informed business decisions

Rapid Growth of the AI Software Market

According to IDC’s latest report, the global AI software market is set to undergo an extraordinary transformation, catapulting from $64 billion in the previous year to a staggering $251 billion by 2027. This projection represents an impressive compound annual growth rate (CAGR) of 31.4%.

Leading the Way: Generative AI Applications

At the forefront of the AI software category are generative AI (genAI) applications, distinguished by their ability to autonomously learn, discover, and offer recommendations or predictions in response to user interactions.

The Two Forms of AI Applications

AI-centric Applications: In these applications, AI technologies serve as the indispensable core, driving the application’s functionality.
AI non-centric Applications: Here, AI is seamlessly integrated into ERP, CRM, SCM, and HCM features, playing an integral role in specific workflows, though the application could function without it.

Unwavering Momentum in AI Investments

Raghunandhan Kuppuswamy, a research manager at IDC, emphasizes the steadfast momentum in AI and automation investments, underscoring that businesses recognize the strategic necessity and pivotal role of cutting-edge technology in achieving long-term success.

Forecast Categories for AI-centric Software

IDC’s forecast encompasses the following categories of AI-centric software:

Artificial Intelligence Platforms: Expected to grow at a remarkable CAGR of 35.8%, these platforms facilitate the development of AI models and applications, including intelligent assistants that emulate human cognitive abilities.
AI System Infrastructure Software (SIS): Although smaller in scale, this category is projected to exhibit faster revenue growth than the overall market, with a five-year CAGR of 32.6%. AI SIS encompasses solutions providing foundational software layers for hosting higher-level application development.
AI Application Development and Deployment (AI AD&D) Software: Anticipated to grow at an impressive five-year CAGR of 38.7%, this category involves tools and platforms primarily employed by developers for building, testing, and deploying software.

Embracing Change:

The Convergence of Traditional AI with Generative AI

As noted by Ritu Jyoti, an IDC group vice president, the AI landscape is swiftly evolving. The convergence of traditional AI with Generative AI is set to usher in cutting-edge solutions that amalgamate decision-making efficacy with creative ingenuity.

Addressing Challenges and Prioritizing Ethics in AI Investments

Businesses venturing into AI investments should be poised to navigate the evolving landscape. Prioritizing ethical considerations alongside technological advancements will be paramount in maximizing the long-term return on investment.

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FAQ AI Software

What is AI software?

AI software is software that uses artificial intelligence (AI) to perform tasks that would normally require human intelligence. AI software is used in a wide variety of industries, including healthcare, finance, manufacturing, and retail.

What are the benefits of using?

There are many benefits to using AI software, including:

Increased efficiency: AI software can automate many tasks that are currently performed by humans, which can free up human workers to focus on more strategic tasks.
Improved accuracy: AI software can perform tasks with greater accuracy than humans, which can lead to better outcomes.
New insights: AI software can analyze large amounts of data to identify patterns and trends that would be difficult or impossible for humans to identify on their own.

What are the challenges of using it?

One of the biggest challenges of using AI software is the development cost. AI software can be expensive to develop, and it can also be expensive to maintain and update.

Another challenge is the potential for bias. AI software is trained on data, and if that data is biased, the AI software will be biased as well. It is important to carefully curate the data that is used to train AI software to avoid bias.

Finally, AI software can be complex and difficult to understand. This can make it difficult to troubleshoot problems and ensure that the AI software is performing as expected.

What are some examples?

Here are some examples of AI software:

AI-powered customer service chatbots: These chatbots can answer customer questions and resolve customer issues without the need for human intervention.
AI-powered medical diagnostic tools: These tools can help doctors to diagnose diseases more accurately and efficiently.
AI-powered fraud detection systems: These systems can help businesses to identify and prevent fraudulent transactions.
AI-powered product recommendation engines: These engines can recommend products to customers based on their past purchases and browsing behavior.

How is the AI software market expected to grow in the future?

The AI software market is expected to grow rapidly in the future. According to Statista, the global AI software market is expected to reach $2 trillion by 2030.

This growth is being driven by some factors, including the increasing availability of data, the decreasing cost of computing power, and the growing demand for AI software from businesses and governments around the world.

Conclusion

The AI software market’s trajectory is marked by unprecedented growth, fueled by generative AI applications. As businesses continue to invest in AI, they should do so with a forward-looking approach, recognizing the dynamic nature of this landscape and the imperative to uphold ethical standards. In doing so, they position themselves to harness the full potential of AI technologies for long-term success.