Global spending on artificial intelligence (AI) is forecast to double over the next four years to reach over US$110 billion by 2024.
Estimating a five-year compound annual growth rate (CAGR) ending 2024 of 20.1 per cent, the uptake in spending will be due to AI integration becoming a part of digital transformation projects.
This is according to the August edition of IDC's Worldwide Artificial Intelligence Spending Guide, with Ritu Jyoti, program vice president of AI at IDC, claiming that "companies will adopt AI — not just because they can, but because they must".
"AI is the technology that will help businesses to be agile, innovate, and scale," she said. "The companies that become 'AI powered' will have the ability to synthesise information (using AI to convert data into information and then into knowledge), the capacity to learn (using AI to understand relationships between knowledge and apply the learning to business problems), and the capability to deliver insights at scale (using AI to support decisions and automation)."
Out of the industries expected to spend the most on AI solutions during 2020, retail is anticipated to come out on top with a need for chatbots and recommendation engines.
In second place is banking, which is predicted to utilise the technology for fraud analysis and investigation, program advisors and recommendation systems. Rounding out the rest of the top five are the discrete manufacturing, process manufacturing and healthcare industries.
Meanwhile, the industries forecast to see the fastest growth over the five-year period are media, federal/central government and professional services. However much like the technology industry at large, the COVID-19 pandemic has caused a slowdown in AI spending.
"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,” said Andrea Minonne, senior research analyst for IDC’s Customer Insights & Analysis team.
“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,” he said.
On the other hand, the impact of the pandemic has been mitigated by AI technology in certain areas.
"Some European governments have partnered with AI start-ups to deploy AI solutions to monitor the outcomes of their social distancing rules and assess if the public was complying with rules,” Minonne added. “Also, hospitals across Europe are using AI to speed up COVID-19 diagnosis and testing to provide automated remote consultations and to optimise capacity at hospitals."
Of the categorised use cases for the technology, IDC believes automated customer service agents will lead the charge for its 2020 forecast, with 11.3 per cent of market share value.
This is followed by sales process recommendation and automation use cases at 7.1 per cent, automated threat intelligence and prevention at 6.6 per cent, IT automation at 6.3 per cent and fraud analysis and investigation at 6.1 per cent. However, the vast majority of the spend is uncategorised, accounting for 62.6 per cent.
Software and services are both estimated to account for over a third each of all AI spending, with hardware making up the rest. Of these groups, software is expected to see the fastest growth in spending, with a five-year CAGR of 22.5 per cent.
Within software spending, the largest share is estimated to go towards AI applications at US$14.1 billion. For services, the biggest slice of the pie is forecast to be IT services at US$14.5 billion. Hardware’s top spender meanwhile is predicted to be servers at US$11.2 billion.
In terms of global regions, the US is forecast to make the lion’s share of AI spending with more than half, driven by retail and banking. Next is expected to be Western Europe with a focus on banking, retail and discrete manufacturing, and then China with its state and local government, banking and professional services as the primary AI spending industries.
When considering the fastest growing regions however, Japan is anticipated to come out on top with its five-year CAGR of 32.1 per cent, followed by Latin America with 25.1 per cent.