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AI Applications Professional Services Upside

Business technology innovation offers solutions to many of today’s challenges. It’s a catalyst for fast-tracking digital transformation, enabling cost savings during a period of high inflation, and enabling workflow automation during IT talent shortages.

Worldwide revenues for the artificial intelligence (AI) market — including software, hardware, and services — totaled $383.3 billion in 2021, that’s an increase of 20.7 percent over the prior year, according to the latest market study by International Data Corporation (IDC).

IDC now forecasts that the AI market value will reach nearly $450 billion in 2022, and maintain a year-over-year growth rate in the high teens throughout their five-year forecast period.

Artificial Intelligence Market Development

“Across all industries and functions, end-user organizations are discovering the benefits of AI technologies, as increasingly powerful AI solutions are enabling better decision-making and higher productivity,” said Rasmus Andsbjerg, associate vice president at IDC.

Software accounted for the largest share of the overall AI market in 2021. Combined, the four AI Software categories — AI Applications Delivery & Deployment, AI Applications, AI System Infrastructure Software, and Artificial Intelligence Platforms — delivered $340 billion in 2021 with AI Applications representing nearly half the total.

Artificial Intelligence Platforms delivered year-over-year growth at 36.6 percent. Within the AI Applications category, AI Customer Relationship Management (CRM) Applications and AI Enterprise Resource Management (ERM) Applications each delivered about 16 percent of the category total.

The remainder was delivered by the myriad of other AI Applications available in the global market. With nearly 300 companies vying for opportunities to gain share, the AI Applications market remains highly competitive.

AI-centric applications, in which AI technologies are central and critical to the function of the application, continued to slowly grow their share of the AI Software market. In 2021, AI-centric applications captured 12.9 percent of the market — that’s up 29.3 percent year-over-year.

The remainder of the market was held by AI non-centric applications, where AI technologies are integral to certain workflows of the application, but if those technologies were removed, the application would still be able to function.

Similarly, the deployment of AI Software in cloud services continues to grow. In 2021, 47.3 percent of AI Software purchases were deployed to the public cloud — that’s an increase of 4 percent over 2020 and 8.4 percent over 2019.

Furthermore, IDC expects cloud services deployment of newly purchased AI Software apps to surpass traditional on-premises data center solution deployments in 2022.

AI Hardware was both the smallest ($18.8 billion) and fastest growing (38.9 percent year-over-year growth) segment of the AI market. The hardware growth was driven by efforts to build dedicated AI systems capable of meeting the increased compute and storage demands of AI models and data sets.

While both AI Servers and AI Storage delivered strong growth in 2021–39.1 and 32.9 percent respectively — server purchases were notably larger at $15.6 billion.

Outlook for New AI Applications Growth

The AI Services market saw its total value increase 22.4 percent year-over-year to $24 billion in 2021. Client demand for expertise in developing production-grade AI solutions helped the AI IT Services category grow 21.9 percent year-over-year to $18.8 billion.

The AI Business Services category grew 24.2 percent year-over-year as organizations sought assistance on AI governance, business process, and talent strategies.

That said, I believe the professional services category will grow rapidly as demand for AI application development skills outstrips the talent supply across the globe. Meanwhile, low-cost and no-code solutions will gain momentum with more business technologists creating apps.

Many CIOs and CTOs will continue to seek the help and guidance of IT vendors and systems integrators that are qualified to support AI-enabled digital business transformation initiatives. Knowledge transfer will be a key component of these new client engagements.

Originally published at https://blog.geoactivegroup.com on October 3, 2022.

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