06 Apr 2017
Spending on Cognitive and Artificial Intelligence Systems in Western Europe is Forecast to Reach $1.5 Billion This Year, According to New IDC Spending Guide
London, April 6, 2017 – An update to the Worldwide Semiannual Cognitive/Artificial Intelligence Systems Spending Guide from International Data Corporation (IDC) forecasts Western European revenues for cognitive and artificial intelligence (AI) systems will reach $1.5 billion in 2017, an increase of 40.0% over 2016. Western European spending on cognitive and AI solutions will continue to see significant corporate investment over the next several years, achieving a compound annual growth rate (CAGR) of 42.5% through 2020, when revenues will be more than $4.3 billion.
"IDC is seeing huge interest in cognitive applications and AI across Europe right now, from different industry sectors, healthcare, and government," said Philip Carnelley, research director for Enterprise Software at IDC Europe and leader of IDC's European AI Practice. "Although only a minority of European organizations have deployed AI solutions today, a large majority are either planning to deploy or evaluating its potential. They are looking at use cases with clear ROI, such as predictive maintenance, fraud prevention, customer service, and sales recommendation."
The three largest Western European industries to invest in cognitive and artificial intelligence systems are banking, retail, and discrete manufacturing, although cross-industry applications have the largest share across all industries. By 2020 these industries – including cross-industry applications – account for almost half of all IT spending on cognitive and artificial intelligence systems. The total finance sector (banking, insurance, and securities) will account for 22% of cognitive spending in 2020. However, the fastest growing sectors to 2020 are distribution and services (professional services, retail, transportation) with a CAGR of 60.8% to 2020, the public sector (education, government, healthcare provider) with a CAGR of 60.8%, and infrastructure (telecommunications, utilities) with a CAGR of 60.1%
Western Europe represents 12.1% of spending on cognitive and artificial intelligence systems in 2017, but its overall growth in spending at a CAGR of 42.5% lags the worldwide market, which shows a CAGR of 54.4% from 2015 to 2020. Western Europe's share of spending will fall to 9.5% of the world by 2020 and the region loses its second place to the Asia/Pacific region (including Japan).
From a technology perspective, the largest area of spending in Western Europe in 2017 will be cognitive applications ($516 million), which includes cognitively-enabled process and industry applications that automatically learn, discover, and make recommendations or predictions. Cognitive/AI software platforms, which provide the tools and technologies to analyze, organize, access, and provide advisory services based on a range of structured and unstructured information, will see investments reach $350 million this year, as will IT services associated with cognitive and artificial intelligence systems; but cognitive/AI software platforms show much higher growth, and will nudge past $1.0 billion by 2020. Dedicated server and storage purchase will total just under $250 million in 2017, but will reach nearly $850 million by 2020.
The cognitive/AI use cases that will see the greatest levels of investment in Western Europe this year are: sales process recommendation and automation systems, fraud analysis and investigation systems, quality management investigation and recommendation systems, automated threat intelligence and prevention systems, and IT automation systems. Combined, these five use cases will consume over half of all cognitive/AI systems spending in 2017. However, by the end of the forecast, slower spending on sales process recommendation and automation systems will drop it to the number 4 position, with fraud analysis and investigation systems taking over the lead position among use cases. Those use cases that will experience the fastest spending growth over the 2015-2020 forecast period are smart networking (137% CAGR) and diagnosis and treatment systems (87.4% CAGR), although smart networking will still only represent less than 1% of spending by 2020.
"Cognitive Computing is coming, and we expect it to embed itself across all industries. However, early adopters are those tightly regulated industries that need robust decision support: Finance, specifically banking and securities investment services, is one of these early adopters" said Mike Glennon, Associate Vice President, Customer Insights and Analysis.
"However, the cost savings to be found in automating decision support in a structured environment, together with the enhanced ability to identify previously hidden aspects of behavior, ensure the distribution and services and public sectors embrace cognitive computing and artificial intelligence systems – where it can offer the dual benefits of lowering cost, and growing new business. We also expect strong growth in adoption in manufacturing in Western Europe, at the core of industry across the region."
The Worldwide Semiannual Cognitive Artificial Intelligence Systems Spending Guide sizes the market for technologies that analyze, organize, access, and provide advisory services based on a range of unstructured information. The spending guide quantifies the cognitive computing opportunity by providing data for more than 20 use cases across 16 industries in eight regions. Data is also available for the related hardware, software, and services categories. Unlike any other research in the industry, the detailed segmentation and timely, global data is designed to help suppliers targeting the market to identify market opportunities and execute an effective strategy.
About IDC Spending Guides
IDC's Spending Guides provide a granular view of key technology markets from a regional, vertical industry, use case, buyer, and technology perspective. The spending guides are delivered via pivot table format or custom query tool, allowing the user to easily extract meaningful information about each market by viewing data trends and relationships.
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly-owned subsidiary of International Data Group (IDG), the world's leading media, data, and marketing services company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC.
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