Booming growth forecasted for European AI platforms
European software market’s five-year compound annual growth rate (CAGR) for 2022–2027 is expected to be 12% but three main areas are predicted to grow substantially faster. Artificial intelligence platforms have an expected CAGR of 41% reflecting a 16x increase from 2018 to 2027. This is followed by integration and orchestration middleware with a CAGR of 24% and software quality and life cycle tools with a CAGR of 20%, market intelligence firm International Data Corporation (IDC) forecasts.
The European software market grew by 15% year on year in 2022 despite economic turbulence and global instability.
This was the highest growth in the last 20 years, demonstrating the resiliency of demand for software in the face of major macroeconomic factors, IDC says.
“The growth was primarily driven by increased price of software licenses (reflecting high inflation), customers locked in with existing partners, and contracts signed for longer time periods than in previous years.
In 2023, the European software market is predicted to grow at “just” 11.7%, owing to general caution across all sectors.
In addition to the top three segments, the overall application development & deployment market (platform as a service) is forecast to post a 18% CAGR, making it a key spending driver. Prior to the COVID era, applications were the leading software investment area for European companies.
IDC says security software was central to companies’ investment strategies during the pandemic period and in 2022, when the number of attacks reached a record high.
“Healthy growth in security spending is expected throughout the forecast period, alongside an increasing demand for tools used by developers and integration specialists.”
“Applications integration, business transactions, and automated decision making — including predictive and prescriptive analytics — are growth areas now, and we expect demand to be stable or increasing for the next five years, underpinned by massive AI enablement,” says Tomas Doktor, research manager with IDC European Software.
“New capabilities and services based on GenAI will open opportunities for competitive differentiation and revenue growth for vendors that can offer those solutions with the appropriate security and governance.”
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