A new report says global spending on artificial intelligence (AI) is forecast to double over the next four years, growing from over $50 billion in 2020 to more than $110 billion in 2024.
However, it said that banking and retail will be the driving force for the spending with governments also looking to utilise the benefits of AI. Insurance failed to make the top five of sectors which will drive global AI growth.
The International Data Corporation (IDC) has issued its Worldwide Artificial Intelligence Spending Guide, which predicts spending on AI systems will 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. It added the compound annual growth rate (CAGR) for the 2019-2024 period will be 20.1%.
“Companies will adopt AI — not just because they can, but because they must,” said Ritu Jyoti, program vice president, Artificial Intelligence at IDC. “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 (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).”
The guide said 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.
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, Senior Research analyst, Customer Insights & Analysis. “On the other hand, AI has played a role in helping societies deal with large-scale disruptions caused by quarantines and lockdowns. 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. Also, hospitals across Europe are using AI to speed up COVID-19 diagnosis and testing, to provide automated remote consultations, and to optimize capacity at hospitals.”
“This release of the Artificial Intelligence Spending Guide was adjusted for the impact of COVID-19,” said Stacey Soohoo, Research Manager, Customer Insights & Analysis. “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.”
On a geographic basis, the United States will deliver more than half of all AI spending throughout the forecast. Western Europe will be the second largest geographic region, China will be the third largest region for AI spending. The strongest spending growth over the five-year forecast will be in Japan (32.1% CAGR) and Latin America (25.1% CAGR).