As the worldwide financial system braces for slower commerce development and geopolitical tensions, the software program business is defying financial headwinds with sturdy growth. In accordance with Forrester’s International Business Software program Forecast, 2025 To 2029, software program infrastructure development is about to attain a powerful compound annual development price (CAGR) of 13.3% whereas utility software program development will see a extra subdued 9.5% CAGR.
Key drivers, developments, and alternatives inside the industrial software program market embody:
Safety software program is seeing the quickest development. Forrester’s analysis highlights investments in cloud safety, id and entry administration, and safety operations. The market capitalization of Palo Alto Networks and Fortinet throughout 2023 and 2024 tremendously exceeded their common revenues. As cyberthreats develop extra complicated, safety spending stays a cornerstone of infrastructure funding.
There’s sturdy database demand pushed by AI, information storage, and governance. Spending for off-the-shelf AI software program will probably be 4 occasions better in 2030 than in 2024 largely because of growing calls for round information governance. MongoDB’s revenues from its Atlas database greater than doubled in the course of the previous two years, and there’s sturdy development for Snowflake because of its consumption-based pricing mannequin. Databricks’ Lakehouse structure and AI governance capabilities are remodeling how companies deal with structured and unstructured information.
Tech operations administration is seeing the quickest development in utility software program. ServiceNow, Atlassian, and Datadog are redefining tech operations administration with AI-powered instruments. ServiceNow’s AI Agent Orchestrator harmonizes groups of AI brokers, whereas Atlassian Intelligence helps customers navigate organizational information extra effectively. In 2024, Datadog greater than doubled the variety of clients who spent greater than $1 million in annual recurring revenues.
There are new AI-driven alternatives. OpenAI expects its revenues to triple in 2025 and to see an astounding 33% CAGR by way of 2029 to achieve $125 billion in revenues, and Microsoft’s AI enterprise reached a $13 billion annual run price in 2024. This previous January, ServiceNow launched an AI-enabled CRM providing that features CRM brokers, information, and workflows. HubSpot differentiated its CRM by way of the 2024 launch of Breeze Copilot and Breeze buyer and content material brokers together with AI options that present marketing campaign summaries, name sentiment evaluation, engagement scoring, and evaluation of purchaser intent. Zendesk plans to automate 50% of buyer engagements by 2027 by way of using autonomous brokers.
Regardless of sturdy industrial software program spending development, the financial slowdown requires enterprises to tighten software program spend controls by way of common audits of software program use, extra consolidation of software program performance to scale back redundancy, extra use of open supply, and extra negotiations with software program distributors to scale back value hikes — notably to reap the benefits of the decline in worth of the US greenback. Forrester’s forecast exhibits industrial software program spend will attain $1.7 trillion by 2029 and preserve double-digit development.
Have any ideas? Contact me, Michael O’Grady.
Forrester shoppers can schedule a Forrester steering session for extra insights and to discover the narratives inside this forecast.
