Cloud-based artificial intelligence (AI) and customer relationship management (CRM) are predicted to contribute to a staggering $483 billion in revenue for enterprise applications by 2027, according to a report by market research firm International Data Corporation (IDC). The study suggests that ongoing investments in public cloud software, such as infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS), and software-as-a-service (SaaS), will represent over two-thirds of all enterprise applications revenue within the next few years. The rapid adoption of AI technologies, especially generative AI, is further fueling this growth.
IDC’s report highlights the increasing preference for cloud-based solutions and the desire to modernize existing systems as key drivers in the enterprise applications software market. Mickey North Rizza, the group vice president of Enterprise Software at IDC, notes that organizations are investing in tools and technologies like automation, cloud, AI, and advanced analytics to stay competitive in the digital era. Many companies are even willing to pay a premium for cloud-native architecture featuring microservices and containers, which offer greater agility and scalability.
A recent survey conducted by IDC, which involved nearly 3,000 CTO/CIOs worldwide, found that a significant number of organizations are either maintaining their existing applications or planning to replace their current systems within the next three years. This reflects the continuous competitiveness within the enterprise applications software market, as companies strive for growth and adaptability in the face of an increasingly challenging business environment.
Major players in this market include Microsoft, which recently launched its AI assistant, Dynamics 365 Copilot, capable of drafting contextual chat and email responses to customer queries, assisting marketers in targeting customer categories, and writing e-commerce product listings. Salesforce has also introduced AI Cloud, a suite of products designed to enhance customer relationship management in enterprises. Additionally, Oracle has incorporated new capabilities in its Fusion Cloud Applications Suite to optimize supply chain planning, operational efficiency, and financial accuracy.
While the top 10 players in the market currently account for only 30.8% of revenue share, indicating a fragmented market, the industry report released by market research firm Gartner predicts that enterprise applications and IT services will drive global IT spending to reach $4.5 trillion by 2023. Gartner also foresees increased spending in managed services, cloud, AI, and security applications.
Overall, the growing demand for cloud-based AI and CRM solutions, coupled with the desire to upgrade existing systems, is poised to drive significant revenue growth in the enterprise applications software market. As organizations strive to remain competitive and relevant in the digital era, investments in advanced technologies will continue to shape the industry landscape.
