IDC Forecasts Huge Growth for AI, Cognitive Systems in the Next Four Years

By: Jeff Bertolucci| - Leave a comment

Artificial intelligence and cognitive systems have been going mainstream for some time now, as confirmed by an accelerating trend in a new IDC study, which forecasts that worldwide revenues for cognitive and similar AI technologies will surge from nearly $8 billion in 2016 to more than $47 billion in 2020.

As reported by InformationWeek, the IDC report shows efforts are underway by software developers and end-user organizations to embed and deploy AI/cognitive systems in a wide range of enterprise applications and processes.

“Recent announcements by several large technology vendors and the booming venture capital market for AI startups illustrate the need for organizations to be planning and undertaking strategies that incorporate these wide-ranging technologies,” David Schubmehl, IDC research director for cognitive systems and content analytics, said in a statement.

The “digital disruption” generated by these technologies will be dramatic, Schubmehl added. This poses a challenge for enterprises to identify, understand and implement the most promising growth opportunities and use cases for cognitive computing.

Built for Automation

By using algorithms and rules-based logic to analyze and act upon a variety of data flows, AI/cognitive systems are particularly useful for automating a broad spectrum of functions in many industries, IDC reports. In 2016, the use cases attracting the most investment included:

  • Automated customer and technical service agents.
  • Quality management investigation and recommendation systems.
  • Diagnosis and treatment systems.
  • Fraud analysis and investigation.

Technical support is one area where the benefits of cognitive/AI are readily apparent. Not only can automated customer agents rapidly ingest and analyze data, but they also can identify patterns and discover connections that human support agents often miss. Some of these can go as far as to enable companies to develop sophisticated support chatbots that simulate conversation with human users.

According to IDC, the cognitive/AI use cases to experience the fastest revenue growth over the next four years include:

  • Public safety and emergency response.
  • Pharmaceutical research and discovery.
  • Diagnosis and treatment systems.
  • Supply and logistics.
  • Quality management investigation and recommendation systems.
  • Fleet management.

Education and process manufacturing will also show significant growth over the 2016-2020 forecast period. Near-term opportunities include banking, securities and investments and manufacturing. “In these segments, we find a wealth of unstructured data, a desire to harness insights from this information, and an openness to innovative technologies,” said Jessica Goepfert, IDC program director for customer insights and analysis.

Cognitive Systems Are a Boon for Fraud Detection

The value proposition of cognitive systems “aligns well” with industry leaders’ main priorities. Goepfert notes that “cognitive technologies are being used in the banking industry to detect and combat fraud — consistently a top industry pain point.” And in manufacturing, cognitive systems recognize and respond to dynamic fluctuations in product specs, and can adjust production to stay within quality targets.

Four industries — banking, retail, healthcare and discrete manufacturing — will generate more than half of all global cognitive AI revenues this year, with banking and retail each delivering nearly $1.5 billion, IDC estimates.

Schubmehl stated, “Software developers and end user organizations have already begun the process of embedding and deploying cognitive AI into almost every kind of enterprise application or process.”

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About The Author

Jeff Bertolucci

News Writer

Jeff Bertolucci is a Los Angeles-based journalist specializing in technology, digital media, and education. His work has appeared in Kiplinger's Personal Finance, InformationWeek, PCWorld, Macworld, The Saturday Evening Post, The Los Angeles Times and many other publications.