The IDC Worldwide Artificial Intelligence Spending Guide, spending on AI systems will accelerate over the next several years as organizations deploy artificial intelligence as part of their digital transformation efforts and to remain competitive in the digital economy. The compound annual growth rate (CAGR) for the 2019-2024 period will be 20.1%.
IDC said that AI is the technology that will help businesses to be agile, innovate, and scale. The companies that become 'AI-powered' will have the ability to synthesize information (converting data into information and then into knowledge), the capacity to learn (in understanding relationships between knowledge and applying the learning to business problems), and the capability to deliver insights at scale (using AI to support decisions and automation).
Drivers of AI adoption
Two of the leading drivers for AI adoption are delivering a better customer experience and helping employees to get better at their jobs.
This is reflected in the leading use cases for AI, which include automated customer service agents, sales process recommendation and automation, automated threat intelligence and prevention, and IT automation.
Combined, these four use cases will represent nearly a third of all AI spending this year. Some of the fastest growing use cases are automated human resources, IT automation, and pharmaceutical research and discovery.
AI big spenders by industry
The two industries that will spend the most on AI solutions throughout the forecast are Retail and Banking.
The Retail industry will largely focus its AI investments on improving the customer experience via chatbots and recommendation engines while Banking will include spending on fraud analysis and investigation and program advisors and recommendation systems.
Discrete Manufacturing, Process Manufacturing, and Healthcare will round out the top 5 industries for AI spending in 2020. The industries that will see the fastest growth in AI spending over the 2020-2024 forecast are Media, Federal/Central Government, and Professional Services.
"COVID-19 caused a slowdown in AI investments across the Transportation industry as well as the Personal and Consumer Services industry, which includes leisure and hospitality businesses. These industries will be cautious with their AI investments in 2020 as their focus will be on cost containment and revenue generation rather than innovation or digital experiences," said Andrea Minonne, IDC senior research analyst, Customer Insights & Analysis.
She added that AI has played a role in helping societies deal with large-scale disruptions caused by quarantines and lockdowns.
"This release of the Artificial Intelligence Spending Guide was adjusted for the impact of COVID-19," said Stacey Soohoo, research manager, Customer Insights & Analysis.
She noted that in the short term, the pandemic caused supply chain disruptions and store closures with continued impact expected to linger into 2021 and the outyears. For the most impacted industries, this has caused some delays in AI deployments.
“Elsewhere, enterprises have seen a silver lining in the current situation: an opportunity to become more resilient and agile in the long run. Artificial intelligence continues to be a key technology in the road to recovery for many enterprises and adopting artificial intelligence will help many to rebuild or enhance future revenue streams and operations," she added.
Share of spend by technology
Software and services will each account for a little more than one third of all AI spending this year with hardware delivering the remainder.
The largest share of software spending will go to AI applications ($14.1 billion) while the largest category of services spending will be IT services ($14.5 billion).
Servers ($11.2 billion) will dominate hardware spending. Software will see the fastest growth in spending over the forecast period with a five-year CAGR of 22.5%.