Software spending across Australia, New Zealand grew to $18.7 bn in 2022

According to International Data Corporation (IDC)’s latest IDC Worldwide Semiannual Software Tracker (2022H2), annual software spending across Australia and New Zealand (A/NZ) grew 12% year-over-year (YoY) in 2022, reaching US$18.7 billion. The 12% YoY growth is in line with the longer-term market growth rate and was a moderation from the rapid 18% expansion in 2021, as the market turns more conscious of controlling costs amid uncertain economic conditions. The A/NZ software market revenues are expected to reach US$33 billion by 2027, posting a 12% compound annual growth rate (CAGR) over the 2022-2027 period.

“Despite continuous economic pressure across both countries, A/NZ software spending remains highly resilient, with software solutions continuing to provide A/NZ organizations with competitive differentiation, opportunities to innovate and improve business performance”, says Anastasia Antonova, Research Manager, Data & Analytics at IDC A/NZ.

Although, the overall A/NZ software market continued its strong growth trajectory throughout 2022, artificial intelligence (AI) platforms, collaborative applications, as well as integration and orchestration middleware software markets recorded the strongest YoY growth of 35%, 24%, and 23% respectively in 2022.

Undoubtedly, artificial intelligence has become a hot topic for discussions and disputes across the globe. Despite differences of opinions circulating around AI, it is evident that the application of AI is only starting to unfold and is already showing the potential to revolutionize conventional business operations. Remarkably, the Artificial Intelligence Platforms software market recorded the highest YoY growth of 35% in 2022 across Australia and New Zealand. The market is forecast to keep its strong growth trajectory, growing at 35% CAGR up to 2027.

“We have seen a growing number of AI use cases across various industries in the region. Many A/NZ organizations consider AI technologies as a strategic business imperative to drive innovation, improve decision making, automate repetitive tasks, and boost customer, employee and business experience”, Antonova adds. In addition, it is important to note that both Australian and New Zealand Government entities are increasing funding in embracing and supporting artificial intelligence as a strategic technology to drive economic growth.

Despite economic headwinds and uncertainty, the A/NZ collaborative applications market grew with 24% YoY growth, reaching US$545 million. The winds of change driven by the Covid-19 pandemic forced companies to recognize the crucial role of collaboration in the digital world. Collaborative applications are now a core of a successful digital enterprise, driving business opportunities, inclusiveness, and productivity. It enables talent, customers, and partners to connect from anywhere, creating a more productive and inclusive work culture.

The growth of the collaborative applications market has no signs of slowing down and it is forecast to reach US$1.3 billion in 2027 at a CAGR of 18%. Continuous building of a collaborative culture infrastructure, supporting real-life communications and live events, will aid A/NZ businesses in retaining and attracting talent, customers, and partners. In contrast, companies that have not digitally enhanced their culture of collaboration will find it a lot more difficult to compete, hire and retain talent.

In 2022, the A/NZ integration and orchestration middleware software market recorded the third strongest annual growth of 23%, reaching US$445 million in 2022. The growth is being fueled by event stream processing software, which enables automation and automated decision-making, as organizations push for business process automation and optimization in a bid to enhance efficiency and lower operating costs. A/NZ investments in the integration and orchestration software market are set to continue growing rapidly, doubling by 2027, as we will continue to see an increasing number of integration and automation use cases. IDC