A/NZ Software Spending Slowed in 2023, Artificial Intelligence Grew 62% YoY
Australia and New Zealand (A/NZ) Software Spending in 2023 Reaches $20.9 Billion.
SYDNEY, 10 June 2024 – According to the International Data Corporation (IDC) Worldwide Semiannual Software Tracker (2H23), annual software spending across A/NZ grew 17.3% year-over-year (YoY) in 2023, reaching US$20.9 billion in constant currency. The 2023 growth has softened compared to previous years amid continuous uncertainty within the A/NZ economy, leading the ANZ businesses to be very cautious in controlling and tightening costs. IDC forecasts A/NZ software market revenues to reach nearly US$39 billion by 2028, posting a 13.2% compound annual growth rate (CAGR) over the 2023-2028 period.
“Economic pressure has been felt across both countries. Despite all fluctuations, the Australian economy has been holding up strongly throughout the year, while economic conditions in New Zealand have been a bit more challenging with the economy entering a recession. Even though businesses across the A/NZ region faced very noticeable financial stress, they keep their focus on productivity and efficiency. Hence, investment in applications and software remains a priority,” says Anastasia Antonova, Research Manager, Data & Analytics, IDC A/NZ.
In contrast, the artificial intelligence (AI) platforms software market experienced a remarkable YoY growth of 62.3%. In turn, Generative AI (GenAI), in particular, has captured the highest growth among all submarkets under Artificial Intelligence Platforms market with such a diverse supplier landscape. From traditional AI/ML vendors and cloud service providers to a large variety of startups, IDC has seen an explosion of features and capabilities for various use cases. However, most A/NZ businesses are still in the early stages of experimentation with GenAI. Before going full speed with AI platform implementation, businesses will need to carefully evaluate data location, use cases, integration capabilities, skills requirements, time-to-value, costs, and address any security concerns.
Overall, artificial intelligence applications keep gaining wider adoption across A/NZ region, as businesses of all sizes in both public and private sectors continue exploring the potential of implementing AI technologies across the organisation.
IDC’s 2023 Asia/Pacific excluding Japan and China (APeJC) Software and Public Cloud survey, indicated that the Artificial Intelligence platforms market is on course to receive the highest budget increase within the Applications Development and Deployment markets. A/NZ organisations identified improved employee productivity as the most desired outcome and a key driver for continuous increase of investments in AI. The importance of productivity outcomes was also highlighted by the AI Forum in New Zealand, which launched a quarterly survey to quantify the real impact of AI on productivity gains in New Zealand. It will provide businesses with of the real impact of AI and potentially uncover new opportunities in the era of AI.
A/NZ Government agencies have been highly supportive of implementations and use of artificial intelligence, as it is considered a key innovation driver and a significant contributor to improved social, environmental and economic outcomes. The Australian Government established the National AI Center to develop Australia’s AI ecosystem further and created Australia’s AI ethics framework. In New Zealand, the Government and AI Forum collaborated on an AI Governance and AI strategy for New Zealand. In both countries, government agencies are collaborating with global counterparts to drive further technological development, ethical and responsible use of AI, and mitigation of any associated risks.
All this is contributing to an acceleration in AI investment. According to IDC Worldwide Semiannual Software Tracker (2023H2) the Artificial Intelligence Platforms software market is expected to continue its strong growth trajectory with CAGR of 44%, reaching over US$3.5 billion by 2028. “While investments in AI continue to grow and adoption rates, as well as the use of AI across all sectors, are on the rise, it is important for ANZ organisations to adhere to responsible AI principles and frameworks, stick to “human in the loop” at all phases of their AI journey and introduce metrics, helping to measure an impact of AI on productivity,” ends Antonova
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