Market research firm IDC said the spending growth represents a compounded annual growth rate(CAGR) of 24.4 percent from 2020 to 2025.

For 2022, 67% of Australian small businesses indicate higher IT spending. IDC anticipates spending in cloud, cybersecurity, and laptops and PCs to increase the most.

Leading industries in AI spending will be banking, federal and central government, professional services, and retail.

IDC Australia senior market analyst for data and analytics Anastasia Antonova said Australia continues to see a rapid adoption of artificial intelligence systems across various industries, indicating strong demands from Australian organisations in streamlining of core business processes and maximising the power of their organisational data.

AI spending in the banking industry is split across multiple functional areas, including customer service (program advisors and recommender systems), operations (fraud analysis and detection), and security (advanced threat intelligence and prevention systems).

In retail, the AI ​​use cases that receive the most investments are extended customer service agents, purchasing experts and product recommendations.

The two use cases accounted for nearly 40% of the industry’s AI spending. IDC says the shift to online shopping is contributing significantly to the adoption of AI in retail.

IDC Senior Research Manager, International, Customer Insights & Analysis said the greatest potential benefit for the use of AI remains its use in developing new business and building new business models.

“However, existing businesses are hesitant to embrace this potential, leaving the greatest opportunities to new market entrants with no fear of change and can adapt easily to new ways of conducting business.” he said

IDC predicts that 52.2% of AI spending will go into software for AI applications and platforms, AI system infrastructure software, and application development and deployment. Services will follow, with most investment going towards IT services and business services.