Boom times for software in A/NZ

Published on the 01/12/2021 | Written by Heather Wright

Water cooler boosts moral

What’s leading the charge, and what’s with that AI?…

Surprise! Collaboration applications have topped the list of software Australian and New Zealand organisations have been buying up this year – something that won’t be a surprise to anyone. Perhaps more interesting, however, is the second-place getter, artificial intelligence platforms, which have seen a 35 percent increase in spend this year reaching US$111.5 million across Australia and New Zealand, in a half-year when software boomed.

That’s IDC’s figures. Gartner – which notes growing interest from Australian and New Zealand governments and an explosion of AI startups across the region – is painting a similarly rosy picture for AI platforms. Its forecast – albeit for the global market (country level data isn’t available) – puts growth at 21.3 percent for next year, hitting US$62 billion worldwide.

For its part, IDC says the rapid local growth seen in the first half of 2021 indicates strong demands from A/NZ organisations in modernisation and streamlining of core business processes.

“Implementation of AI software services and intelligent knowledge discovery tools is on the rise to support decision-making, forecasting and to improve business outcomes, IDC says.

Anastasia Antonova, IDC Australia/New Zealand senior market analyst, says the abundance of customer and business data is feeling wider adoption of the platforms.

In a boom market for software, just what are businesses purchasing?

“To stay on top of the game and meet individual customer needs, organisations across A/NZ invest in intelligent process automation tools and leverage AI capabilities to revamp operational processes, improve customer and business data analysis, support decision making and forecasting and, as a result, ensuring flourishing customer experience,” Antonova says.

Gartner’s 2022 CIO and Technology Executive Survey shows 35 percent of A/NZ CIOs say they have already deployed or plan to deploy AI and machine learning technologies within the next 12 months. That’s below the worldwide average of 48 percent.

But that more circumspect approach might not be all bad.

At Forrester’s recent Data Strategy and Insights conference attendees were cautioned that to ensure AI is evaluated just like any other software platforms.

“Just because it’s AI it doesn’t necessarily mean that it has business value,” Mike Gualtieri, Forrester VP and principal analyst, warned, adding that companies need to proceed with caution when purchasing AI offerings, as vendors and ‘solutions’ proliferate.

Even Gartner is sounding a note of caution, with Alys Woodward, Gartner senior research director, saying successful AI business outcomes will depend on the careful selection of use cases.

“Use cases that deliver significant business value, yet can be scaled to reduce risk, are critical to demonstrate the impact of AI investment to business stakeholders,” Woodward says.

And while 48 percent of CIOs globally might be professing AI ambitions, the reality of AI deployment is much more limited, with Gartner noting that organisations commonly experiment with AI, but struggle to make the technology a part of their standard operations. In fact, the research house is forecasting that it won’t be until 2025 that half of organisation’s worldwide reach what it calls the ‘stabilisation stage’ of AI maturity or beyond.

Knowledge management is the big growth market for 2022 according to Gartner, clocking 31.5 percent growth to hit US$7.2 billion. Virtual assistants – currently the largest market at $6.2 billion in 2021 – is expected to log 14.7 percent growth in 2022, while autonomous vehicles, the digital workplace and crowdsourced data are also on track for growth of around 19-20 percent.

But it’s not just collaboration and AI that A/NZ businesses are buying up on.

Software sales rebounded strongly this year according to IDC figures. The H1 2021 tracker shows the total A/NZ software market reached US$7.5 billion, with double-digit growth in both countries at 20.6 percent in Australia, and 20.4 percent in New Zealand.

Cloud revenues now represent 45 percent of the total A/NZ software market, with strong growth of 31 percent in H1.

Taking bronze position, right behind collaboration (with 49 percent growth) and AI platforms (35 percent), is the integration and orchestration middleware software market, driven upwards as companies accelerate their digital and innovation initiatives with legacy modernisation, hybrid integration, workflow/process automation and API-led innovation initiatives.

“As business requirements are rapidly changing, demanding more interconnectivity and innovation and less maintenance, IDC expects demands for integration and API management software to continue their strong growth trajectory in the second half of 201 and further,” IDC says.

Post a comment or question...

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.


Thank you! Your subscription has been confirmed. You'll hear from us soon.
Follow iStart to keep up to date with the latest news and views...