AI and the Evolution of Enterprise Applications
Significant Growth in 2023
In 2023, the enterprise applications market saw remarkable revenue growth, driven by AI, especially Generative AI (GenAI). According to IDC, revenues hit $356 billion, a 12% increase year-over-year.
AI Transforming Business Software
AI and GenAI integration has revolutionized enterprise applications by providing greater intelligence, faster insights, and enhanced decision-making capabilities. Employees increasingly depend on these tools for collaboration.
Cloud Technology as the Backbone
Cloud technology underpins this transformation, facilitating rapid innovation. It enhances experiences for employees, customers, and partners, leading to quicker value realization and competitive differentiation.
SaaS and Cloud-Enabled Applications
Mickey North Rizza of IDC states that SaaS and cloud applications are at the forefront. Generative AI introduces numerous use cases, reshaping businesses with intelligent technology.
Experience-Orchestrated Businesses
Experience-orchestrated (X-O) businesses leverage modern and innovative enterprise applications. They enhance decision velocity and differentiation globally, according to IDC.
Top Vendors in the Market
The leading vendors in 2023 included SAP, Salesforce, Oracle, Microsoft, and Intuit, capturing 21.2% of worldwide revenues. SAP and Salesforce are statistically tied for first place.
Future Projections by IDC
IDC forecasts that by 2028, enterprise application revenues will exceed $600 billion. The integration of AI, machine learning, and GenAI is expected to drive this growth, yielding faster and smarter insights.
Public Cloud Adoption
Public cloud will become the dominant deployment model, accounting for over 70% of new spending. A 16.5% CAGR is expected for public cloud-based applications, outpacing the overall market.
Secondary Markets Composition
Secondary markets include ERM, CRM, SCM, and more. IDC’s forecasts distinguish commercial software revenue, which encompasses usage licenses and support fees.
Commercial Software Revenue Breakdown
Commercial software revenue excludes service revenue from training and consulting. It includes fees for continued use licenses, product support, and other services, potentially including upgrades.
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