Sunday, July 13, 2025

AI Seems to be Displacing Some Amount of Other Enterprise IT Spending

Among the other effects artificial intelligence might be having on enterprise information technology spending, it appears there is a shift underway from application software to AI. 


The Boston Consulting Group finds enterprises are deliberately reallocating budgets from mature categories such as enterprise resource planning  and traditional application software to fund AI, cloud, and security initiatives. 


The Information Services Group predicts enterprise AI spending will grow nearly six percent in 2025, while overall IT budgets are expected to increase by less than two percent.


Researchers at A16Z argue that enterprise AI spending is now competing directly with traditional enterprise software purchases.


IDC meanwhile argues that 66 percent of all software spending will go toward AI-enabled applications and platforms through 2028. Other studies confirm the general trend. 


Study/Article

Evidence of Shift from Application Software to AI

BCG IT Spending Pulse (2025) 1

Budgets squeezed in mature software to fund AI

ISG Study (2025) 2 3 4

AI spending outpaces overall IT budget growth

A16Z CIO Survey (2025) 5 6

AI now part of core IT budgets, not just innovation

IDC AI Spending Guide (2024-2028) 7

Majority of software spend shifting to AI-enabled apps

S&P Global SME IT Spending (2025) 8

AI spending intent higher than for other software categories

TechTarget, SiliconANGLE (2025) 9 10

AI is a top IT buyer priority, surpassing traditional software

Tangoe State of the Cloud (2024) 11

AI drives cloud and IT budget increases


No comments:

Why Agentic AI "Saves" Google Search

One reason Alphabet’s equity valuation has been muted recently, compared to some other “Magnificent 7” firms, is the overhang from potential...