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Collaboration apps lead A/NZ software investment charge

Collaboration apps lead A/NZ software investment charge

Cloud revenues now represent 45 per cent of the total A/NZ software market.

Credit: Unsplash

In what will come as absolutely no surprise to anyone in the local channel, the collaborative applications segment spearheaded investment growth in the software market in Australia and New Zealand (A/NZ) during the first half of the year.

The total A/NZ software market reached US$7.5 billion over the first six months of 2021, showing double-digit annual growth in both countries, according to the latest figures from industry analyst firm IDC.

In terms of vendor revenue, the market grew by 20.6 per cent, year-over-year, in Australia and 20.4 per cent, year-over-year, in New Zealand during the first half of 2021.

Given the mad rush to remote working that followed the onset of COVID-19, the collaboration applications segment has led the charge, claiming the greatest annual growth rate of the entire software market, at 49 per cent, reaching US$257.8 million across A/NZ.

And the surge is far from subsiding. According to IDC, businesses continue to invest heavily in conferencing and team collaborative applications to support productivity, effective communications with clients and partners, and to promote engagement among employees in a new hybrid environment.

At the same time, an increasing number of organisations are embarking on their digitisation journeys and leveraging digital technologies.  

As such, organisations on both sides of the Tasman continue to invest in cloud services to increase competitiveness, efficiency, business resiliency and support innovation.  

In the first half, cloud adoption showed a substantial annual increase of 31 per cent, with cloud revenues now representing 45 per cent of the total A/NZ software market.

Meanwhile, artificial intelligence (AI) platforms showed the second strongest year-over-year increase of any segment in the software market, after collaboration apps, growing by 35 per cent across A/NZ, reaching US$111.5 million.  

This rapid growth indicates strong demand from A/NZ organisations in modernisation and the streamlining of core business processes, according to the analyst firm.  

Moreover, the implementation of AI software services and intelligent knowledge discovery tools is on the rise, supporting decision-making and forecasting, and improving business outcomes.  

According to Anastasia Antonova, senior market analyst at IDC A/NZ, organisations across the Tasman are investing in intelligent process automation tools and leveraging AI capabilities to revamp operational processes and improve customer and business data analysis in their collective bid to meet individual customer needs. 

At the same time, the integration and orchestration middleware software segment recorded the third strongest annual growth during the period, enjoying a 31 per cent, year-over-year, surge across Australia and New Zealand, reaching US$164.6 million.

The rapid growth of integration software has been largely driven by legacy modernisation, hybrid integration, workflow and process automation and application programming interface (API)-led innovation initiatives, according to IDC.  

Looking forward, IDC expects demand for integration and API management software to continue its strong growth trajectory in the second half of 2021 and further as business requirements change, demanding more interconnectivity and innovation with less maintenance.

Further, IDC forecasts increased adoption of cloud and digital technologies beyond 2021 across A/NZ, as organisations continue to reinvent their business processes to enable future growth, increased resiliency, agility and competitiveness in the digital-first era.

Recent research by fellow market analyst Gartner suggested that global AI software spending will grow 21.3 per cent, to US$62 billion, next year.

Knowledge management, virtual assistants, autonomous vehicles, digital workplace and crowdsourced data will make up the top five use cases for AI software spending in 2022, the analyst firm indicated.

The forecast report focused on applications with AI embedded in them, such as computer vision software, as well as software that is used to build AI systems.

“Use cases that deliver significant business value, yet can be scaled to reduce risk, are critical to demonstrate the impact of AI investment to business stakeholders,” Gartner senior research director Alys Woodward said. 

Demand for AI technologies and associated market growth is closely tied to organisational AI maturity levels, the report noted.

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