• Global spending forecast to double over next four years, growing from $50.1b in 2020 to more than $110b in 2024.
• Software and services will each account for a little over one-third of all AI spending this year with hardware delivering the remainder.
• The US will deliver more than half of all AI spending, followed by Western Europe and China.

Dubai: Spending on artificial intelligence (AI) systems is set to accelerate over the next several years as organisations deploy artificial intelligence as part of their digital transformation efforts and to remain competitive in the digital economy.

According to research firm the International Data Corporation (IDC), the global spending is forecast to double over the next four years, growing from $50.1 billion in 2020 to more than $110 billion in 2024.

Ritu Jyoti, Program Vice-President for Artificial Intelligence at IDC, said that companies will adopt AI not just because they can, but because they must.

Two of the leading drivers for AI adoption are delivering a better customer experience and helping employees to get better at their jobs.

Automated customer service agents, sales process recommendation and automation, automated threat intelligence and prevention and IT automation 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.

Converting data into knowledge

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.

Jyoti 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 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),” she said.

As per IDC, retail and banking are the two industries that will spend the most on AI solutions throughout the forecast period.

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 five industries for AI spending in 2020. The industries that will see the fastest growth in AI spending over the forecast are media, federal/central government and professional services.

Enterprises saw a silver lining

Andrea Minonne, Senior Research Analyst for Customer Insights and Analysis at IDC, said that 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.

Transportation industry as well as the personal and consumer services industry will be cautious with their investments this year as their focus will be on cost containment and revenue generation rather than innovation or digital experiences, he said.

On the other hand, he said that AI has played a role in helping societies deal with large-scale disruptions caused by quarantines and lockdowns.

In the short term, Stacey Soohoo, Research Manager for Customer Insights and Analysis at IDC, said the pandemic caused supply chain disruptions and store closures with continued impact expected to linger into 2021 and the outyears.

However, she said that 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 said.

On a geographic basis, the US will deliver more than half of all AI spending throughout the forecast, followed by Western Europe and China.