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AI, Cognitive Spending Soaring to $12.5B in 2017

Enterprise are looking to increase their spending on artificial intelligence and cognitive computing systems by nearly 60% in 2017, as companies see these technologies as the next great wave in innovation, according to new numbers from IDC.

By the end of 2017, businesses will have spent $12.5 billion on AI and cognitive systems, according to a recent report from IDC. This is a significant 59.3% increase from 2016 to 2017. During the next three years, as interest in these technologies grows, the market could see a compound annual growth (CAGR) rate of 54.4%, with revenues reaching about $46 billion by 2020.

The IDC report notes that AI and cognitive software are becoming key parts of enterprise infrastructures and businesses should start understanding, as well as begin investing, in these technologies. (See AI Jitters Kick Off 2017.)

The growing importance of AI and cognitive computing are also changing the types of cloud technologies companies are offering to customers. For example, Salesforce has started to blend its cloud and software-as-a-service (SaaS) with its Einstein AI in different offerings, including a recent update to its Financial Services Cloud. Additionally, Alibaba Cloud, the cloud arm of online retailer Alibaba, has announced it will add more AI and machine learning technology into its offerings.

The result is that cloud, AI and cognitive are laying the ground work for companies to fulfill their goal of a digital transformation.(See Digital Transformation: Why IT Culture Matters.)

"Intelligent applications based on cognitive computing, artificial intelligence, and deep learning are the next wave of technology transforming how consumers and enterprises work, learn, and play," David Schubmehl, IDC's research director for Cognitive Systems and Content Analytics, wrote in the report.

Most of the money this year will be spent on cognitive applications, which also include cognitive-enabled process and industry apps that can automatically learn, discover and make predictions. During the next several years, this one part of the market is expected to have a CAGR of nearly 70%.

Here's how IDC sees the revenue breakdown in the market:

  • Cognitive applications: $4.5 billion
  • Cognitive-related IT and businesses services: $3.5 billion
  • Cognitive and AI software platforms: $2.5 billion
  • Server and storage for cognitive and AI: $1.9 billion

The IDC report found that different businesses within the financial services market are leading the way with cognitive and AI adoption, mainly to develop new fraud and risk detection technologies.

(Source: IDC)
(Source: IDC)

Manufacturing, retail and healthcare are also adopting AI and cognitive systems.

The US will remain the largest market for AI and cognitive in 2017, with revenues totaling $9.7 billion. That is followed by Europe, the Middle East and Africa, and then Asia-Pacific.

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— Scott Ferguson, Editor, Enterprise Cloud News. Follow him on Twitter @sferguson_LR.

kq4ym 4/11/2017 | 9:59:59 AM
Re: AI Yes, it does seem like an extraordinary increase for one year as noted they will "increase their spending on artificial intelligence and cognitive computing systems by nearly 60% in 2017." That would seem to be a lot of R&D for sure. And just how that will translate to ROI in the coming years will be interesting to watch as some success and failures become measurable in the journey forward.
Ariella 4/6/2017 | 9:49:36 AM
Re: AI @danielcawrey Oh, I'm sure some will be wasted just because there are always inefficienies in such planning, likely with some changes in direction that inevitably crop up after things are begun.  But that's all part of the price of progress. 
danielcawrey 4/5/2017 | 10:55:41 PM
Re: AI This increase in spending is justified. However, one has to wonder if some of this money will end up wasted. AI is nowhere near primetime yet. Therefore, it's hard to say what organizations are actually spending.

Unless it is R&D, it's hard to say whether putting money into AI is worth it. Yet.
Ariella 4/5/2017 | 8:57:07 AM
Re: AI @Joe was it sold as a safety enhancement? Or was there some other justification offered?
Joe Stanganelli 4/5/2017 | 8:44:51 AM
Re: AI @Ariella: Reminds me of an article I read yesterday about employees in Sweden *voluntarily* (although being loudly celebrated when they do...persuasion by social proof and other tactics) allowing themselves to be microchipped by their employer -- meaning that they can be tracked anywhere.

This is how it starts.

Or, rather, it already started and we missed it while we were arguing over what "cloud computing" really means.
Ariella 4/4/2017 | 4:54:29 PM
Re: AI LOL @Scott. I often see AI articles accompanied by pictures of robots with human facial features. One the Avengers series movies also fell into that, embodying an AI system  so people could relate to it as a character. The reality is much more abstract than that. But we humans really like to put a face and personality to thing.
Scott_Ferguson 4/4/2017 | 3:55:31 PM
Re: AI @Ariella: That is true. Now that makes me regret putting the picture of HAL up on the homepage with the article. 
Ariella 4/4/2017 | 1:18:51 PM
Re: AI @Scott Yes, definitely. As people learn what it really is and stop picturing scary robots that try to take over the world, it will become something that people expect to fit into business strategies.
Scott_Ferguson 4/4/2017 | 12:45:51 PM
Re: AI @Ariella: My only surprise was that I thought it would be more. I think the important part of the whole report is the growth potential over the next three years or so. It's a market that's growing at 50% or more per year. By 2020, it's going to start to get really big. 
Ariella 4/4/2017 | 12:27:28 PM
AI I'm not surprised. I keep reading about industries applying AI for everything from marketing to discovering materials to engineer more efficient cars. Toyota, for example, has set up reserach partnerships with universities and other research organizations over the next four years to find a way to make battery cells that are better for the environment. At the same time, the Japanese division is partnering with NTT to optimize big data coming through the connected car with the help of AI.
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