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Posts from the ‘ERP & Manufacturing’ Category

Oct 15

Gartner’s $953B IoT forecast puts 81% of spending in endpoints and the fastest growth in software

Gartner IoT market opportunity forecast 2024 to 2030 rising from $620.9 billion to $953.3 billion, stacked by endpoint electronics, communication services, services, infrastructure software, application software and security, with six KPI tiles for 2026 and 2030 totals, new spending, application software growth, 5G growth and the 2028 revision
IoT market opportunity reaches $953.3B by 2030, with endpoint electronics carrying 81% of it. Click any chart to open it full size. Source: Gartner (G00858825, Sept. 25, 2026), analysis by softwarestrategiesblog.com.

The new Gartner IoT forecast puts four out of every five dollars in devices, and the fastest growth in the software that runs them.

Published September 25, the forecast sizes the worldwide IoT market opportunity at $736.6 billion in 2026, up 9.6%, and $953.3 billion by 2030. That is a 7.2% compound annual growth rate from 2025 through 2030, landing just under $1 trillion.

Endpoint electronics account for $769.2 billion of the 2030 total, or 80.7%. Application software grows at 20.4% a year and infrastructure software at 14.8%. Together, the two software segments compound at 16.3%, 2.3 times the market.

The trillion-dollar mark also moved. Gartner’s previous edition, published in June 2024, put the 2028 market at $990.5 billion. The new edition puts 2028 at $850.3 billion, a $140.2 billion reduction, and does not cross $1 trillion before 2030.

I built this analysis from Gartner’s forecast report (G00858825) and the full detailed dataset behind it: 73,493 rows covering 6 technology segments, 28 subsegments, 12 sectors, 47 use cases, 9 regions and 7 years.

Each bar in the hero chart stacks Gartner’s six technology segments in current U.S. dollars. Navy is endpoint electronics, mid-blue is communication services, sky blue is services, teal is infrastructure software, purple is application software and red is security. Italic figures above each bar give year-over-year growth.

Six tiles underneath carry the 2026 and 2030 totals, the $281.0 billion in new spending between 2025 and 2030, the application software growth rate, the 5G growth rate and the 2028 revision against the 2024 edition.

Gartner IoT forecast puts 2026 at $736.6B and 2030 at $953.3B

Gartner sizes the market across six technology segments. Here is how each one moves from 2025 to 2030.

Segment 2025 2026 2030 2025-2030 CAGR 2030 share
Endpoint electronics $545.8B $600.7B $769.2B 7.1% 80.7%
Communication services $56.7B $58.8B $66.3B 3.2% 7.0%
Services $41.0B $43.9B $57.7B 7.1% 6.1%
Infrastructure software $19.9B $23.0B $39.7B 14.8% 4.2%
Application software $6.9B $8.3B $17.5B 20.4% 1.8%
Security $1.9B $2.1B $2.9B 8.6% 0.3%
Total $672.3B $736.6B $953.3B 7.2% 100%

Current U.S. dollars. CAGR and shares calculated by softwarestrategiesblog.com from Gartner’s dataset.

Growth peaks early. Gartner forecasts 9.6% in 2026 and 8.5% in 2027, then 6.4% in 2028, 6.1% in 2029 and 5.7% in 2030. Endpoint electronics drive the near-term numbers, growing 10.0% in 2026 and 8.7% in 2027 before slowing to 5.1% by 2030.

Software moves the other way. Application software growth rises from 20.2% in 2026 to 21.8% in 2030, and security growth climbs from 8.2% to 9.4%.

Endpoints add $223.4B, application software grows 2.8x faster

The market adds $281.0 billion between 2025 and 2030. Endpoint electronics capture $223.4 billion of it, or 79.5%.

The bubble chart below rebuilds Gartner’s own segment view from the dataset. The horizontal axis is growth rate, the vertical axis is dollars added, and bubble size is 2030 market opportunity.

Bubble chart of Gartner IoT technology segments comparing 2025 to 2030 CAGR with dollars added: endpoint electronics adds $223.4 billion at 7.1%, application software grows 20.4% and infrastructure software 14.8%
Segment CAGR versus dollars added, 2025 to 2030. Bubble size is 2030 market opportunity. Rebuilt from Gartner’s segment data. Source: Gartner (G00858825, Sept. 25, 2026), analysis by softwarestrategiesblog.com.

Application software grows 2.8 times faster than the market but adds only $10.6 billion. Infrastructure software adds $19.8 billion at 14.8%. Software’s share of IoT spending rises from 4.0% in 2025 to 6.0% in 2030.

Gartner ties the software growth to connecting devices with enterprise systems, predictive maintenance, operational optimization and digital twin projects that run on IoT platforms. Software, services and security together climb from 10.4% of spending in 2025 to 12.4% in 2030.

That is the strategic split in this forecast. Hardware sets the size of the market. Software, services and security decide who captures recurring value once the devices are installed.

Gartner cut $140.2B from its 2028 forecast

Gartner’s Table 2 compares this edition with the June 2024 edition, which ran through 2028. The new forecast is $113.8 billion lower for 2025 and $140.2 billion lower for 2028.

Gartner 2028 IoT forecast by segment, June 2024 edition versus September 2026 edition, showing the total cut from $990.5 billion to $850.3 billion, led by endpoint electronics and services
2028 IoT market opportunity, June 2024 edition versus September 2026 edition. Prior-edition values derived from Gartner’s Table 2. Source: Gartner (G00858825, Sept. 25, 2026), analysis by softwarestrategiesblog.com.

Endpoint electronics took the largest dollar cut, $102.6 billion in 2028. Its growth rates went up anyway: 8.9% to 10.0% in 2026, 7.0% to 8.7% in 2027 and 4.8% to 6.1% in 2028. A lower starting base, growing faster.

Services took the deepest percentage cut. The 2028 services forecast fell 37.6%, from $80.5 billion to $50.2 billion, with growth rates lowered 11 to 16 points in every year from 2025 through 2028.

Application software, infrastructure software and services all lost growth in the revision. Gartner says enterprise spending on software, security and services “is expected to develop more cautiously as organizations become more selective in scaling and expanding IoT environments.”

Security is the exception on dollars. Its 2028 forecast rose $665 million, or 37.3%, and Gartner lifted its 2028 growth rate from 6.7% to 8.6%.

Total 2028 growth moved up slightly, from 6.2% to 6.4%. The level is lower; the slope is about the same.

Automotive and manufacturing hold 55% of 2030 spending

Automotive is the largest IoT sector at $322.1 billion in 2030. Manufacturing and natural resources follows at $198.9 billion. Together they account for 54.6% of the 2030 market.

Gartner 2030 IoT market opportunity by sector, led by automotive at $322.1 billion and manufacturing and natural resources at $198.9 billion, with 2025 to 2030 CAGR for each sector
2030 IoT market opportunity by sector, with 2025 to 2030 CAGR and dollars added. Source: Gartner (G00858825, Sept. 25, 2026), analysis by softwarestrategiesblog.com.

Manufacturing is the growth story among the large sectors. It grows from $119.6 billion in 2025 to $198.9 billion in 2030, a 10.7% CAGR, adding $79.3 billion. Gartner expects it to grow 13.4% in 2026 and 15.0% in 2027.

Transportation reaches $109.8 billion at a 10.0% CAGR, with 16.0% growth in 2026 and 14.0% in 2027. Smart buildings, the fourth-largest sector at $107.2 billion, grows just 2.8% a year.

Inside manufacturing, software and services matter more than in the market overall. Application and infrastructure software reach $33.4 billion in the sector by 2030, 16.8% of its spending, compared with 6.0% for IoT overall. Services add another $32.3 billion.

Connected cars and factories add the most, EV charging grows fastest

Consumer connected cars remain the single largest use case, reaching $219.8 billion in 2030 and adding $58.3 billion. Manufacturing process automation adds $34.9 billion and air transport adds $28.8 billion.

Top 10 IoT use cases by dollars added from 2025 to 2030, led by consumer connected cars at $58.3 billion, and top 10 use cases by 2028 to 2030 CAGR, led by EV charging at 18.6%
Left: use cases adding the most dollars, 2025 to 2030. Right: fastest-growing use cases, 2028 to 2030 CAGR. Source: Gartner (G00858825, Sept. 25, 2026), analysis by softwarestrategiesblog.com.

Gartner names EV charging, manufacturing execution and management and connected products as the fastest-growing use cases from 2028 to 2030, at 18.6%, 12.0% and 11.3% CAGRs. The dataset also shows retail customer communication growing 12.9% over the same window, on a much larger $20.4 billion base.

Manufacturing execution and management is the standout among large use cases. It more than doubles, from $15.7 billion in 2025 to $32.8 billion in 2030, a 15.8% CAGR. Gartner attributes the growth to real-time control and optimization requirements on the factory floor.

Four use cases shrink. Connected lighting falls from $15.6 billion in 2025 to $7.5 billion in 2030. Automotive insurance declines from $6.4 billion to $4.3 billion, outdoor surveillance from $7.4 billion to $6.9 billion, and commercial automotive aftermarket from $2.1 billion to $1.5 billion.

5G grows 4.7x while 4G and below shrink

Communication services is the slowest-growing segment at 3.2% a year, but the mix inside it changes fast.

IoT communication services by connectivity type 2024 to 2030: 5G rises from $1.3 billion to $10.1 billion, satellite from $6.9 billion to $13.2 billion, while 4G and below falls to $38.5 billion
IoT communication services by connectivity type, 2024 to 2030. Source: Gartner (G00858825, Sept. 25, 2026), analysis by softwarestrategiesblog.com.

IoT 5G connectivity grows from $2.2 billion in 2025 to $10.1 billion in 2030, a 36.2% CAGR. Satellite grows from $7.8 billion to $13.2 billion at 11.0%. Cellular 4G and below, still the largest connectivity line, falls from $43.0 billion to $38.5 billion.

Gartner links connectivity to digital thread solutions that connect IT, OT and product life cycle data across the industrial value chain, the data foundation digital twins need.

Security is 0.3% of IoT spending

Gartner’s IoT security segment grows from $1.9 billion in 2025 to $2.9 billion in 2030. That is 0.3% of the 2030 market, against $769.2 billion in endpoints.

IoT software subsegments ranked by 2025 to 2030 CAGR, led by analytic platforms at 24.5% and security software at 21.2%, with Gartner's IoT security segment at 0.3% of 2030 spending
IoT software subsegments by 2025 to 2030 CAGR. Security software sits inside Gartner’s infrastructure software segment. Source: Gartner (G00858825, Sept. 25, 2026), analysis by softwarestrategiesblog.com.

Security software, which Gartner counts inside infrastructure software, is the second-fastest-growing software subsegment at 21.2% a year, reaching $7.4 billion. Add it to the security segment and IoT security reaches $10.3 billion by 2030, still 1.1% of the market.

Analytic platforms lead software growth at 24.5%, reaching $9.6 billion. Database management systems grow 19.2% to $10.0 billion. IoT platforms, the middleware layer Gartner credits with connecting devices to enterprise systems, grow 12.5% to $14.0 billion.

For security leaders, the gap is the point. Every connected robot, vehicle, meter and controller extends the OT attack surface, and spending to secure those endpoints grows at about a penny per dollar of IoT spend, even counted broadly. For the broader security market context, see Gartner’s $247.5B security forecast makes post-quantum firewall refreshes the only upgrade through 2030.

North America, China and Europe hold 75% of 2030 spending

North America is the largest region at $260.5 billion in 2030, followed by China at $229.9 billion and Europe at $224.2 billion. Together they hold 74.9% of the market.

Gartner 2030 IoT market opportunity by region: North America $260.5 billion, China $229.9 billion and Europe $224.2 billion, with Emerging Asia Pacific growing fastest at 14.7% CAGR
2030 IoT market opportunity by region, with 2025 to 2030 CAGR and share. Source: Gartner (G00858825, Sept. 25, 2026), analysis by softwarestrategiesblog.com.

North America grows slowest of the three, at 5.8% a year. Emerging Asia Pacific grows fastest, at 14.7%, reaching $53.0 billion. Sub-Saharan Africa grows 12.9% and Latin America 11.9%, both from small bases.

Gartner’s report also flags the war in the Middle East. It expects disruptions to the Strait of Hormuz to continue into 2027, with energy prices more than 50% above pre-war levels. Gartner expects the main near-term impact on IT spending to be a rebalancing of sourcing, vendor relationships and regional exposure rather than a material spending reduction.

A reading note on Gartner’s Table 2

The growth-rate columns in Gartner’s Table 2 are labeled 2025 GR, 2027 GR, 2028 GR and 2029 & 2030 GR. The values line up with 2025, 2026, 2027 and 2028.

The endpoint electronics changes of 1.1, 1.7 and 1.3 points match the revisions Gartner describes in its text for 2026, 2027 and 2028. I read the table that way throughout this analysis.

Gartner’s text also says the highest growth by 2030 comes from communications, media and services and transportation. In the dataset, communications, media and services is a $1.8 billion sector growing 11.0% a year, and transportation’s 10.0% CAGR trails manufacturing’s 10.7%.

What technology leaders should do with this forecast

  • Plan for AI-ready endpoints. Gartner credits endpoint growth to connected products, connected vehicles and AI-ready, edge-intelligent devices, including robots and industrial equipment. Device refresh plans should assume edge inference.
  • Budget for the software layer, not just devices. Software grows 16.3% a year against 7.1% for endpoints. Integration, analytics and IoT platforms are where projects stall or pay off.
  • Close the security gap early. IoT security, even counted broadly, is 1.1% of 2030 spending. Asset discovery, identity, segmentation and secure updates belong in the IoT business case.
  • Retire 4G-dependent fleets on a schedule. 4G and below shrinks every year from 2026 while 5G grows 36.2% a year.
  • Treat manufacturing execution as the growth zone. At 15.8% a year, it is the fastest-growing large use case in the forecast.

Frequently asked questions

How big is the IoT market according to Gartner? Gartner forecasts worldwide IoT market opportunity of $736.6 billion in 2026 and $953.3 billion in 2030, a 7.2% CAGR from 2025.

Which IoT segment is largest? Endpoint electronics, at $769.2 billion in 2030, or 80.7% of the market.

Which IoT segment grows fastest? Application software, at a 20.4% CAGR from 2025 to 2030, reaching $17.5 billion.

Did Gartner lower its IoT forecast? Yes. The 2028 forecast fell from $990.5 billion in the June 2024 edition to $850.3 billion, a $140.2 billion reduction, while 2028 growth edged up from 6.2% to 6.4%.

How fast is IoT 5G growing? IoT 5G connectivity grows at a 36.2% CAGR, from $2.2 billion in 2025 to $10.1 billion in 2030.

How I built this analysis

All market sizes are Gartner IoT market opportunity in current U.S. dollars from the detailed dataset behind G00858825, which reconciles to Gartner’s Table 1 totals. Growth rates for years and segments match Gartner’s published figures.

CAGRs for sectors, regions, subsegments and use cases, dollar additions, shares and the combined IoT security figure are my calculations. June 2024 edition values are derived by subtracting Gartner’s Table 2 dollar changes from the new forecast.

Earlier analysis in this series:

This post is my personal analysis of Gartner’s IoT research and does not represent my employer.

Sources

Oct 8

Gartner’s $812.6B app software forecast sends 38% of new spending to CRM as agentic AI targets $116B of legacy apps

Gartner enterprise application software forecast 2024 to 2030 rising from $384.8 billion to $812.6 billion, stacked by CRM, ERP, other application software, email and authoring, analytic platforms, supply chain management, content services and project and portfolio management, with six KPI tiles
Gartner’s 3Q26 enterprise application software forecast by market, 2024-2030, with six tiles on the numbers that matter most. Click any chart to open it full size. Source: Gartner (G00862072, Sept. 22, 2026), analysis by softwarestrategiesblog.com.

Enterprise application software spending reaches $496.3 billion in 2026 and $812.6 billion by 2030, according to the latest Gartner application software forecast. That is a 12.8% compound annual growth rate in constant currency, revised up from 12.7% last quarter.

The headline growth rate hides a sharper story. CRM alone captures $119.2 billion, or 38%, of the $316.2 billion the market adds between 2026 and 2030. In the same report, Gartner says cross-functional agentic AI will cannibalize $116 billion from traditional application software spending by 2030.

Those two numbers are close in size, and they point to the same conclusion. Most of the new money in application software goes to the markets where agentic AI is proving value first. Legacy suites that do not embed agents compete for a shrinking slice.

I built this analysis from Gartner’s Forecast: Enterprise Application Software, Worldwide, 2024-2030, 3Q26 (G00862072), published September 22, 2026. All market, subsegment and regional figures come from the 7,567-row dataset Gartner publishes with the report. The shares, dollars added and comparisons are my calculations.

Agentic AI is the growth engine and the threat

Gartner says cumulative spending between 2026 and 2030 will exceed $3.2 trillion, “fueled by the transition from Generative AI to Agentic AI.” The dataset totals $3,227 billion over those five years.

Gartner expects business leaders to favor applications with embedded agentic capabilities, and vendors to compete on how much functionality they deliver through agents. It warns that “legacy offerings risk rapid obsolescence.”

Early value is already showing up in three segments, according to Gartner: CRM, analytics and human capital management (HCM). Adoption starts inside functional silos such as marketing, sales and customer service, where use cases are maturing. Cross-functional integration follows once use cases prove out, the technology matures and enterprises build trust.

That second phase is where the $116 billion comes from. Gartner covers it in a separate report, Spending on Cross-Functional Agentic AI Will Cannibalize $116 Billion of Spending From Application Software Markets by 2030.

CRM takes the largest share of new spending

Bubble chart of eight enterprise application software markets comparing 2025 to 2030 CAGR with dollars added from 2026 to 2030, led by CRM adding $119.2 billion and analytic platforms growing 14.5%
Each market’s 2025-2030 CAGR against dollars added from 2026 to 2030. Bubble size shows 2030 spending. Source: Gartner (G00862072), analysis by softwarestrategiesblog.com.

CRM grows from $170.5 billion in 2026 to $289.8 billion in 2030 at a 13.8% CAGR. Its share of the total market rises from 34.4% to 35.7%.

Analytic platforms post the fastest market-level growth at 14.5%, reaching $73.8 billion. Email and authoring grows 13.6% to $77.2 billion, and supply chain management grows 13.2% to $71.5 billion. All three beat the market average.

ERP, other application software, content services and project and portfolio management all grow below 12%. Together they still add $106.5 billion, but each loses share.

Market 2025 2026 2030 CAGR 2025-2030 Added 2026-2030 Share of new spending
CRM $149.1B $170.5B $289.8B 13.8% +$119.2B 37.7%
ERP $73.5B $83.0B $130.9B 11.6% +$47.9B 15.1%
Other application software $74.6B $83.5B $128.6B 10.9% +$45.1B 14.3%
Analytic platforms $36.7B $42.3B $73.8B 14.5% +$31.5B 9.9%
Email and authoring $40.1B $47.0B $77.2B 13.6% +$30.3B 9.6%
Supply chain management $37.6B $42.8B $71.5B 13.2% +$28.7B 9.1%
Content services $18.9B $21.3B $31.9B 10.5% +$10.6B 3.4%
Project and portfolio management $5.3B $5.9B $8.8B 10.2% +$2.9B 0.9%
Total $435.8B $496.3B $812.6B 12.8% +$316.2B 100%

Spending in current U.S. dollars. CAGRs in constant currency. Dollars added and shares calculated by Software Strategies Blog from Gartner’s 3Q26 dataset (G00862072).

Cross-CRM and decision intelligence lead 23 subsegments

All 23 enterprise application software subsegments ranked by 2025 to 2030 CAGR, led by decision intelligence platforms at 20.8% and cross-CRM at 18.9%, with core manufacturing and operations management slowest at 6.7%
All 23 subsegments ranked by 2025-2030 CAGR in constant currency, with 2030 spending. Colors mark the parent market. Source: Gartner (G00862072), analysis by softwarestrategiesblog.com.

Decision intelligence platforms grow fastest, at 20.8%, and more than double from $2.7 billion in 2026 to $5.7 billion in 2030. The subsegment is small, but it sits closest to the agentic pattern Gartner describes: software that recommends or takes decisions rather than reporting on them.

Cross-CRM is the more important signal. It grows 18.9% a year and doubles from $27.5 billion to $55.7 billion. That is $28.1 billion of new spending, or 24% of CRM’s total gain. Cross-CRM is the closest thing in this dataset to the cross-functional integration Gartner expects agentic AI to drive.

Customer service and support remains the largest CRM subsegment, reaching $89.7 billion at 13.1%. Marketing reaches $68.1 billion at 12.8%. Sales grows slowest inside CRM, at 11.8%, to $50.2 billion.

Analytics and BI platforms grow 15.0% to $49.4 billion. Within supply chain management, orchestration platforms (14.3%) and procurement (14.2%) lead.

HCM carries ERP

ERP is the market where the subsegment split matters most. HCM grows 13.5% and reaches $78.5 billion by 2030, 60% of all ERP spending. It accounts for $31.7 billion, or 66%, of ERP’s $47.9 billion gain.

The rest of ERP grows slowly. Financial management systems components grow 9.7% to $41.8 billion. Enterprise asset management grows 8.0% to $4.6 billion. Core manufacturing and operations management grows 6.7% to $6.0 billion, the slowest of all 23 subsegments.

That fits Gartner’s list of where early agentic value is showing up. HCM made the list. Finance, asset management and manufacturing operations did not.

North America takes 57% of new spending

2030 enterprise application software spending by region, led by North America at $461.9 billion and 56.8% share, with Emerging Asia Pacific growing fastest at 19.2% CAGR
2030 spending by region with 2025-2030 CAGR and share of the global market. Source: Gartner (G00862072), analysis by softwarestrategiesblog.com.

North America reaches $461.9 billion in 2030, 56.8% of worldwide spending, and grows 13.1% a year. It captures $180.9 billion, or 57.2%, of the market’s new spending.

Europe grows 10.2%, the slowest of any region, and its share drops from 23.3% in 2026 to 22.0% in 2030.

The fastest growth is in Asia. Emerging Asia/Pacific grows 19.2% to $25.9 billion, and China grows 17.1% to $37.3 billion. Together they add $30.7 billion and lift their combined share from 6.6% to 7.8%.

What changed in the Gartner application software forecast

Change in 2030 enterprise application software spending in Gartner's 3Q26 forecast versus 2Q26 by market, led by content services up $1.734 billion and email and authoring up $1.719 billion
Change in 2030 spending by market vs. Gartner’s 2Q26 forecast. Dollar changes include exchange-rate effects. Source: Gartner (G00862072, Table 2), analysis by softwarestrategiesblog.com.

Gartner revised growth for only two markets. Email and authoring rose 0.5 to 0.6 percentage points a year. Content services rose 0.2 to 2.0 points a year, including 1.4 points in 2026. Gartner says growth trajectories for every other market are unchanged.

In U.S. dollars, the total forecast is $657 million lower for 2026 and $2.5 billion lower for 2027 than in 2Q26, then $3.3 billion higher by 2030. The 2030 gains are concentrated in content services (+$1.73 billion) and email and authoring (+$1.72 billion). Exchange rates explain the remaining dollar movement in markets where growth rates did not change.

Gartner also repeats a note on the war in the Middle East. It expects disruption to the Strait of Hormuz to continue into 2027 and energy prices to stay more than 50% above pre-war levels. Gartner expects the main near-term IT spending impact to be a rebalancing of sourcing strategies, vendor relationships and regional exposure, not a material reduction in spending.

A reading note

Gartner reports growth in constant currency, using 2024 exchange rates as the base. Market sizes are in current U.S. dollars, so 2026 spending rises 13.9% in dollars but 12.7% in constant currency. I use constant-currency CAGRs throughout and dollar values for sizes, dollars added and shares.

The $116 billion cannibalization figure comes from a separate Gartner report cited in this forecast. I compare it with CRM’s dollar gain to show scale, not to suggest that one offsets the other.

What software leaders should do

  • Follow the dollars, not the CAGR. CRM, ERP and other application software account for 67% of new spending. Analytics grows faster but adds less than a third as much as CRM.
  • Treat cross-CRM as the agentic beachhead. It doubles to $55.7 billion and sits where Gartner expects cross-functional agents to spread first.
  • Separate HCM from the rest of ERP. HCM delivers two-thirds of ERP’s growth. Finance, asset management and manufacturing operations vendors need an agentic story to avoid sliding below 10% growth.
  • Plan for cannibalization inside your own portfolio. Gartner’s $116 billion estimate means agentic AI will replace spending as well as add to it.
  • Weight go-to-market toward North America and fast-growing Asia. North America takes 57% of the gain. Emerging Asia/Pacific and China grow fastest. Europe grows slowest.

Frequently asked questions

How large is the enterprise application software market in 2026? Gartner forecasts $496.3 billion in end-user spending in 2026, up 12.7% in constant currency.

How large will it be in 2030? Gartner forecasts $812.6 billion in 2030, a 12.8% CAGR in constant currency from 2025 to 2030.

Which market is largest? CRM, at $289.8 billion in 2030, or 35.7% of the total.

Which segment grows fastest? Decision intelligence platforms, at a 20.8% CAGR. Among the eight markets, analytic platforms grow fastest at 14.5%.

How will agentic AI affect application software spending? Gartner says agentic AI drives growth, with early value in CRM, analytics and HCM. It also says cross-functional agentic AI will cannibalize $116 billion from traditional application software spending by 2030.

How I built this analysis

Market totals, growth revisions and quotes come from Gartner’s 3Q26 enterprise application software forecast (G00862072). Subsegment and regional figures come from the dataset Gartner publishes with the report, which covers eight markets, 23 subsegments, nine regions and 2024 to 2030. I calculated constant-currency CAGRs from 2025 to 2030, dollars added from 2026 to 2030, and market and regional shares. Charts are my own work from that data.

Earlier analysis in this series:

This post is my personal analysis of Gartner’s research and does not represent my employer.

Sources

Feb 17

IT And Marketing Show Strongest Interest In Adopting Gen AI First

IT, Marketing Show Strongest Interest In Adopting Gen AI First

  • Currently, 16% of organizations have implemented generative AI in production, while 44% are piloting it for potential applications.
  • Interest in deploying generative AI for production applications saw a fivefold increase from the first to the fourth quarter of 2023.
  • Healthcare, manufacturing, and education are the three industries most actively pursuing generative AI adoption.
  • A majority of organizations, 63%, deem CRM data critical to their generative AI initiatives.

These and many other insights are from Dresner Advisory Services‘ recent Generative AI Report. The advisory firm surveyed its research community of over 8,000 organizations and vendors’ customer communities. The study is global in scope, with 50% of respondents from North America, 26% from EMEA, 19% from Asia/Pacific and 6% from Latin America. Dresner’s report stands out for its in-depth and nuanced analysis of gen AI adoption across global organizations.

News about generative AI has captivated technology leaders. Demand for gen AI-related news and insights dominates many organization leaders’ time. 29% are following gen AI news updates constantly, and 30% say they often check in and see what’s new in gen AI, 24% regularly check the news. Overall, 72% of analytics and business intelligence (BI) professionals have made gen AI news a priority. North American respondents are the most diligent with constantly checking gen AI news, reflecting the region having the highest production use of gen AI.

Key takeaways from the report include the following:

Professionals in IT and marketing report plans to be the first adopters of generative AI, with 44% of IT and 36% of marketing professionals saying adopting gen AI is a primary focus. Operations/ production, sales, and C-level executives also show significant interest in adopting gen AI early. Dresner’s report states that “finance and human resources least often indicate overall interest, exceeding a majority only when aggregating their primary, secondary, and tertiary responses.”

gen ai

63% of organizations consider CRM data as critical or very important to generative AI. Finance and accounting data is considered the next most important, followed by call center and supply chain data. Dresner’s analysis found that respondents least often expect generative AI to leverage workforce (HR) data. Organizations are wary of using HR data due to privacy concerns combined with the stringent standards and safeguards on data security and its use across regulated industries today.

gen ai

Gen AI adoption across organizations accelerated rapidly in 2023. From 1Q23 to 4Q23, production use increased nearly fivefold, experimenting increased by 70%, and planned use in 12 months increased by 157%. Dresner’s research results reflect a major shift in generative AI prioritization last year. The report’s authors contend that implementation activity and funding were primarily from autonomous, decentralized sources, not from C-level mandates or sponsors, as it occurred late in fiscal years and into annual budget cycles.

gen ai

Consumer services lead gen AI production levels at 43%. Technology, business services, and healthcare have the next three highest levels of gen AI production in use today. The education industry reports the highest experimentation rate at 67%, closely followed by healthcare at 62%, while government trails at 50%. The report notes that the government also reports the highest levels for planned use beyond 12 months and no planned use.

gen ai

40% of organizations consider it critical to achieve productivity and efficiency gains from gen AI. One in three (30%) say improving customer experience and personalization is the next most critical priority, followed by improved search quality and decision-making (26%).

gen ai

Data privacy concerns are considered critical to 46% of organizations pursuing gen AI initiatives today. Legal and regulatory compliance, the potential for unintended consequences, and ethics and bias concerns are also significant. Less than half of respondents—46% and 43%, respectively—consider costs and organizational policy important to generative AI adoption.

gen ai

 

May 3

FinancialForce’s Spring 2022 Release Defines the Future of FP&A In Services

Economic uncertainty sends shock waves throughout businesses, with service organizations seeing its brunt. The recent drastic drop-off in Netflix subscribers is a case in point. Services CFOs say there is an urgent need to track how well their overarching planning strategies linking finance and operations perform. However, getting the data to analyze has been challenging for even the largest services businesses.

As a result, CFOs need Financial Planning & Analysis (FP&A) integrated with operational planning applications to make it easier to track plan performance across all P&Ls and financials. FinancialForce’s decision to launch a fully-featured FP&A on their ERP Cloud platform shows they read the services market clearly and listen to their customers’ CFOs on what matters most.

CFOs Want To Know The Financial Impact Of Every Planning Decision

Even during economic stability, finance teams struggle to get operations planning teams the data they need to predict the financial outcomes of decisions. Line-of-business leaders look to finance to provide accurate, detailed information on the financial implications of every planning decision. By having FP&A use the same data accounting, reporting and planning have, CFOs, COOs, and their teams get greater visibility and control over every aspect of budgeting and forecasting.

One of FP&A’s greatest shortcomings in the past was relying only on siloed financial data alone with little visibility into operational planning. Financial teams need access to all available data across finance and operations to do their jobs well and create accurate forecasts. Getting FP&A right with any ERP platform needs to start with the goal of delivering integrated business planning. Sales management and their teams also need visibility into FP&A reporting and analysis to manage revenue. FinancialForce’s decades of experience on the Salesforce platform combined with the integration expertise Salesforces’ MuleSoft acquisition brought to the company four years ago will increase the probability of their FP&A solution gaining adoption.

Services companies’ CFOs are grappling with new economic uncertainties every week. As a result, they’re most interested in getting greater visibility and control over the planning process, including version control, more automated multi-planning options, and more real-time enterprise-wide collaboration, all on a single platform. FinancialForce’s DevOps and product management teams deserve credit for identifying these challenges and including them in their FP&A application delivered in the Spring 2022 release.

FinancialForce

FinancialForce’s long-awaited FP&A solution enables analysts to create multiple what-if scenarios using calculation rules and mass functions, create dynamic plans and stress-test assumptions, and better anticipate their return by area and investment.

The future of FP&A Is An Integrated Cloud

Service organizations are quicker to migrate to the cloud versus their product-based counterparts. That’s because procurement, order-to-cash, and supply chain management workflows tend to be less complex than product-based businesses. Services organizations also need financial management, procure-to-pay, and Professional Services Automation (PSA), all on the same platform to support operational planning with FP&A.

FinancialForce’s Multi-X functionality is expanded in the Spring 2022 release to simplify the consolidation of financial statements and meet the needs of multi-entity organizations. In the latest release, it’s possible to record taxes due from intercompany tax transactions, accelerating the intercompany process for taxation and reporting. The Spring 2022 release also streamlines the creation of multi-company sales invoices and simplifies consolidated financial statement preparation with consolidation group structure capabilities.

FinancialForce

Multi-X enables the recording and sharing across a multi-tier or multi-entity business.

New localization features that are essential to running a global business were added, including support for Switzerland, Denmark, Finland, and Austria, as well as enhanced business operations in Germany and Australia. In addition, multi-X supports multi-company invoicing support and advanced invoice consolidations for multi-revenue billing. Calculating and recording tax on intercompany transactions and enabling cash matching process across companies are also supported.

FP&A’s future is an integrated cloud, further validated by FinancialForce’s’ launch of ERP Cloud, Professional Services Cloud, and enhancements to its Customer Success solutions. “In today’s business environment, organizations must be able to respond to disruptions quickly while continuing to innovate and deliver tangible outcomes to their customers,” said Dan Brown, Chief Product and Strategy Officer at FinancialForce. “Our Spring 2022 release gives our customers a richer toolset to help pursue their primary goal, delivering exceptional customer outcomes while improving the customer experience across the opportunity-to-renewal journey.”

New Professional Services (PS) Cloud additions in the Spring 2022 release include customer-requested improvements to skills and resource management, services estimating, and project management capabilities. FinancialForce’s customers have also requested improved resource management to scale their efforts to train and retain their workforce. As a result, the Spring 2022 Release adds intelligent automation to the staffing process by enabling auto-assignment of resource requests that meet specific criteria and an expanded capability to model ideal staffing scenarios across a project, opportunity, or region. These enhancements improve PS Cloud’s resource optimization capabilities and enable resource managers to deploy ever larger and more complex teams efficiently and cost-effectively.

Conclusion

Services organizations are looking for cloud-based professional services ERP systems that deliver greater forecast accuracy, faster forecasting and budgeting, and improved accountability, visibility, and control. Integrated clouds are the future of FP&A for all these factors and the need all services organizations have to improve revenue and operations performance. In addition, given the growing economic uncertainty today, CFOs also want to increase better predictability and better risk management strategies while also supporting more collaboration. All these factors combined are defining the future of FP&A in an integrated cloud, which is what FinancialForce has been doing for decades on the Salesforce platform.

May 10

Gartner Predicts Public Cloud Services Market Will Reach $397.4B by 2022

Gartner Predicts Public Cloud Services Market Will Reach $397.4B by 2022
  • Worldwide end-user spending on public cloud services is forecast to grow 23.1% in 2021 to total $332.3 billion, up from $270 billion in 2020.
  • Garter predicts worldwide end-user spending on public cloud services will jump from $242.6B in 2019 to $692.1B in 2025, attaining a 16.1% Compound Annual Growth Rate (CAGR).
  • Spending on SaaS cloud services is predicted to reach $122.6B this year, growing to $145.3B next year, attaining 19.3% growth between 2021 and 2022.  

These and many other insights are from Gartner Forecasts Worldwide Public Cloud End-User Spending to Grow 23% in 2021.  The pandemic created the immediate need for virtual workforces and cloud resources to support them at scale, accelerating public cloud adoption in 2020 with momentum continuing this year. Containerization, virtualization, and edge computing have quickly become more mainstream and are driving additional cloud spending. Gartner notes that CIOs face continued pressures to scale infrastructure that supports moving complex workloads to the cloud and the demands of a hybrid workforce.

Key insights from Gartner’s latest forecast of public cloud end-user spending include the following:

  • 36% of all public cloud services revenue is from SaaS applications and services this year, projected to reach $122.6B with CRM being the dominant application category. Customer Experience and Relationship Management (CRM) is the largest SaaS segment, growing from $44.7B in 2019 to $99.7B in 2025, attaining a 12.14% CAGR. SaaS-based Enterprise Resource Planning (ERP) systems are the second most popular type of SaaS application, generating $15.7B in revenue in 2019. Gartner predicts SaaS-based ERP sales will reach $35.8B in 2025, attaining a CAGR of 12.42%.
  • Desktop as a Service (DaaS) is predicted to grow 67% in 2021, followed by Infrastructure-as-a-Service (IaaS) with a 38.5% jump in revenue. Platform-as-a-Service (PaaS) is the third-fastest growing area of public cloud services, projected to see a 28.3% jump in revenue this year. SaaS, the largest segment of public cloud spending at 36.9% this year, is forecast to grow 19.3% this year. The following graphic compares the growth rates of public cloud services between 2020 and 2021.  
  • In 2021, SaaS end-user spending will grow by $19.8B, creating a $122.6B market this year. IaaS end-user spending will increase by $22.7B, the largest revenue gain by a cloud service in 2021. PaaS will follow, with end-user spending increasing $13.1B this year. CIOs and the IT teams they lead are investing in public cloud infrastructure to better scale operations and support virtual teams. CIOs from financial services and manufacturing firms I’ve recently spoken with are accelerating cloud spending for three reasons. First, create a more virtual organization that can scale; second, extend the legacy systems’ data value by integrating their databases with new SaaS apps; and third, an urgent need to improve cloud cybersecurity.

Conclusion

CIOs and the organizations they serve are prioritizing cloud infrastructure investment to better support virtual workforces, supply chains, partners, and service partners. The CIOs I’ve spoken with also focus on getting the most value out of legacy systems by integrating them with cloud infrastructure and apps. As a result, cloud infrastructure investment starting with IaaS is projected to see end-user spending increase from $82B this year to $223B in 2025, growing 38.5% this year alone. End-user spending on Database Management Systems is projected to lead all categories of PaaS through 2025, increasing from $31.2B this year to $84.8B in 2025. The following graphic compares cloud services forecasts and growth rates:

May 3

Which ERP Systems Are Most Popular With Their Users In 2021?

Which ERP Systems Are Most Popular With Their Users In 2021?
  • Sage Intacct, Oracle ERP Cloud, and Microsoft Dynamics 365 ERP are the three highest-rated ERP systems by their users.
  • 86% of Unit4 ERP users say their CRM system is the best of all vendors in the study. The survey-wide satisfaction rating for CRM is 73%, accentuating Unit4 ERP’s leadership in this area.
  • 85% of Ramco ERP Suite users say their ERP systems’ analytics and reporting is the best of all 22 vendors evaluated.

These and many other insights are from SoftwareReview’s latest customer rankings published recently in their Enterprise Data Quadrant Report, Enterprise Resource Planning, April 2021. The report is based entirely on attitudinal data captured from verified owners of each ERP system reviewed. 1,179 customer reviews were completed, evaluating 22 vendors. SoftwareReviews is a division of the world-class IT research and consulting firm Info-Tech Research Group. Their business model is based on providing research to enterprise buyers on subscription, alleviating the need to be dependent on vendor revenue, which helps them stay impartial in their many customer satisfaction studies. Key insights from the study include the following:

  • Sage Intacct, Oracle ERP Cloud, Microsoft Dynamics 365 ERP, Acumatica Cloud ERP, Unit4 ERP and FinancialForce ERP are most popular with their users.  SoftwareReview found that these six ERP systems have the highest Net Emotional Footprint scores across all ERP vendors included in the study. The Net Emotional Footprint measures high-level user sentiment. It aggregates emotional response ratings across 25 questions, creating an indicator of overall user feeling toward the vendor and product. The following quadrant charts the results of the survey:
  • 80% of Acumatica Cloud ERP users say their system helps create more business value, leading all vendors on this attribute. How effective an ERP system is at adapting to support new business and revenue models while providing greater cost visibility is the essence of how they deliver business value. The category average for this attribute is 75%. Of the 22 vendors profiled, 12 have scores at the average level or above, indicating many ERP vendors are focusing on these areas to improve the business case of adopting their systems.
Which ERP Systems Are Most Popular With Their Users In 2021?
  • 86% of Sage Intacct ERP users say their system excels at ease of implementation, leading all vendors in the comparison by a wide margin. Implementing a new ERP system can be a costly and time-consuming process as it involves extensive training, change management, and integration. Ease of Implementation received a category score of 75% across the 22 vendors, indicating ERP vendors are doubling down investments to improve this area. Just 11 of the 22 ERP vendors scored above the category average.
Which ERP Systems Are Most Popular With Their Users In 2021?

Apr 28

LinkedIn Best Companies To Work For In 2021 Dominated By Tech

  • Four of LinkedIn’s top ten companies to grow your career in 2021 are tech leaders.
  • Amazon is the highest rated company, followed by Alphabet (2nd), IBM (6th), and Apple (8th).
  • 15 of the 50 top companies in the U.S. are in the tech industry, including Oracle, Salesforce, and SAP.

These and many other insights are from the LinkedIn Top Companies 2021: The 50 best workplaces to grow your career in the U.S. published today. All 50 companies are currently hiring and have over 300,000 jobs available right now. LinkedIn’s analysis of the best companies to grow your career spans 20 countries, including Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Malaysia, Mexico, the Netherlands, the Philippines, Saudi Arabia, Singapore, Spain, Qatar, the UAE, and the U.K. 

LinkedIn is relying on a new methodology for the 2021 Top Companies Report. They’re basing the methodology has seven key pillars, each revealing an important element of career progression: the ability to advance, skills growth, company stability, external opportunity, company affinity, gender diversity, and educational background. LinkedIn provides an in-depth description of how they built their methodology here.

The 10 Best Companies To Grow Your Career In 2021

  1. Amazon – According to LinkedIn, Amazon has built an innovative remote-onboarding system, and it has more than 30,000 openings now. The fastest-growing skills in demand at Amazon include User Experience Design (UED), Digital Illustration, and Interaction Design. LinkedIn’s analysis shows the most in-demand jobs are Health And Safety Specialist, Station Operations Manager, Learning Manager.
  1. Alphabet, Inc – Planning to add at least 10,000 jobs in the U.S. alone and investing $7B in data centers and offices across 19 states, Alphabet grew revenue 47% last year, reaching $13B.  According to LinkedIn, the most in-demand jobs are Digital Specialist, Field Sales Specialist, and Business Systems Analyst.
  1. JPMorgan Chase & Co. – JPMorgan now offers 300 accredited skills and education programs to its workers, and the bank has been boosting wages for thousands of customer-facing roles to $16-$20 an hour. The most in-demand jobs include Market Specialist, Software Engineering Specialist, and Mortgage Underwriter.
  1. AT&T – 2020 was a tough year for AT&T, increasing the urgency the company has to grow its wireless and WarnerMedia businesses. Due to the pandemic, the company had to close hundreds of stores. Fortunately, AT&T was able to help the employees affected by the closures to find new jobs. The most in-demand jobs are Service Analyst, Trading Analyst, and Investment Specialist.
  1. Bank of America – Bank of America rose to the challenges of 2020, quickly redeploying almost 30,000 employees to assist in its role facilitating the government-backed Paycheck Protection Program. The most in-demand jobs are Trading Analyst, Investment Specialist, and Financial Management Analyst.
  1. IBM – More than one-third of IBMs revenue now comes from work related to cloud computing. The company’s Red Hat unit is a leading contributor to that growth, prizing skills such as Linux, Java, Python, and agile methodologies. IBM also is a leader in hiring autistic people through its Neurodiversity program. Most in-demand jobs include Back End Developer, Enterprise Account Executive, and Technical Writer.
  1. Deloitte –  Deloitte’s key activities span audit, assurance, tax, risk, and financial advisory work, as well as management consulting. It’s aiming to hire 19,000 people in the year ending May 29. Top recruiting priorities currently include cybersecurity, cloud computing, and analytics specialists.
  1. Apple – LinkedIn finds that Apple is committed to building an inclusive culture. Over half of its new hires in the U.S. represent historically underrepresented groups in tech — and the company claims to have achieved pay equity in every country where it operates—looking for an in? Apple has nearly 3,000 open jobs in the U.S. right now, ranging from its “genius” role at its retail stores to executive assistants and software engineers. 
  1. Walmart –  In February, the retail giant promised further raises to over 400,000 of its people and months later announced it would increase the share of its hourly store employees who work full-time to over 66% (up from 53% five years ago). Meanwhile, Walmart continues to think beyond the store as it ventures deeper into the e-commerce realm. Most in-demand jobs include Operational Specialist, Fulfillment Associate, and Replenishment Manager.
  1. EY – The accounting firm spent $450 million on employee training in 2020. And it is planning to hire over 15,000 people in the next year. With that much talent coming in, EY is focused on bringing in workers with diverse backgrounds, focusing on gender identity, race, and ethnicity, disability, LGBT+, and veterans. The most in-demand jobs include Strategy Director, Business Transformation Consultant, and Information Technology Consulting Manager.

Apr 24

FinancialForce’s Spring 2021 Release Shows Why Being Customer-Centric Pays

FinancialForce's Spring 2021 Release Shows Why Being Customer-Centric Pays

Bottom Line: Customer revenue lifecycles are the lifeblood of any services business, making FinancialForce’s Spring 2021 release timely given the services-first revenue renaissance happening today.

The essence of an excellent services business is that it can consistently create expectations clients trust and the business regularly exceeds. Orchestrating the best people for a given project at the right time, tracking costs, revenue, and margin across all services revenue, including those associated with a client’s assets, is very challenging. Customer revenue lifecycles are in the data, yet no one can get to them because they’re hidden across multiple systems that aren’t integrated. Knowing how efficient a services business is at turning customer engagement into cash is what everyone needs to know, but no one can find. The challenge is equally as daunting for long-established services providers and those rushing into new services businesses to redefine themselves in the hope of profits that are more consistent and fewer price wars.

How Much Is Customer Engagement Is Worth?

Services businesses face the paradox of exceeding client expectations with every engagement but not knowing if extra time, resources, and staff invested are paying off with more revenue and profit. FinancialForce’s Spring 2021 release looks to solve this problem. What galvanizes the ERP, PSA, and platform announcements is a fresh intensity on customer centricity, both for the services business adopting the Spring 2021 release and the customers it’s intended to serve.

Knowing if and by how much a given customer engagement and its revenue lifecycle generate cash, and its potential is one of the core focus areas of the Spring 2021 release. It’s badly needed as many services are flying blind today, overcommitting resources for little return and too often losing control of client engagement and paying the price in lost margin and profits. FinancialForce sees that pain and wants to alleviate it with better financial visibility on all aspects of customer services revenue. FinancialForce aims to provide customer-centric financial reporting down to the revenue stream and costing measure level.  

FinancialForce's Spring 2021 Release Shows Why Being Customer-Centric Pays
Knowing every customer’s impact on revenue and profitability from all revenue streams will make managing services engagements much more accurate, easier to manage, and more profitable. 

Key Takeaways From The Spring 2021 Release

Customer centricity seen through a financial lens is the cornerstone of FinancialForce’s latest release. One of the primary goals of this release is to update more applications to Salesforce Lightning to provide FinancialForce users with a more consistent user experience across all applications.  Salesforce has been doubling down for years on Lightning and its user experience technologies, with FinancialForce reaping the benefits for over a decade. FinancialForce is transitioning their core Professional Services Automation (PSA), Billing, Accounting & Finance and Procurement, Order and Inventory Management to Lightning in this release in response to their customers wanting a consistent user experience across the entire FinancialForce suite of applications.  The Spring 2021 release reflects how FinancialForce strives to provide a real-time understanding of customer lifetime value for their ERP and PSA customers.  

Additional key takeaways include the following:

  • FinancialForce sees reducing days to close as one of the highest priorities they need to address today. The majority of new feature announcements center on how the days to close cycles can be streamlined, especially across multi-company and multisite locations across geographic and currency-specific regions of the world. Multi-company currency revaluation will help FinancialForce customers who operate across multiple geographies that operate in different currencies and will be especially useful for those clients creating new global channels and considering foreign acquisitions. Further showing the high priority they are putting on reducing days to close, the Spring 2021 release also includes automated eliminations, multi-company period close for software closes, which are designed to temporarily close out a financial report and revenue schedules that can provide a future view in revenues – a key factor in knowing customer revenue lifecycles.
  • New features and a new Lightning interface for Accounting, Billing Central, and Inventory Management simplifies complex transactions for users. FinancialForce has one of the most customer-driven product management teams in enterprise software. The depth of features they have added to inventory management, transactional and reconciliation processes for accounting, drop-ship use cases, and enhancements for adding products to billing contracts show how much FinancialForce is listening to customers.
  • AI-enhanced financial reporting that works with any Einstein data set. FinancialForce leads the Salesforce partner ecosystem when it comes to integrating Tableau CRM (formerly known as Einstein Analytics) into its platform. Now thirteen releases in, FinancialForce’s Spring 2021 release reflects the intuitive, adaptive intelligence that the product management team aims to achieve by integrating Einstein into their financial reporting workflows. 
  • Professional Services Automation (PSA) Applications Including Resource Management, Project Management, and Time & Expense upgraded to Lightning.  Transitioning three of the core PSA applications to Lightning will help broaden adoption and make them easier to upsell and cross-sell across the FinancialForce customer base. It will also help existing customers using these applications get new employees up to speed faster on them, given how much more streamlined Lightning is as an interface compared to previous versions.
  • Intelligent Staffing solves the complex challenges resource managers face when assigning the best possible associates to a given project. Designed to filter and intelligently rank potential resources based on region, practice, group skill sets, and availability, Intelligent Staffing is designed to get resource managers as close to an ideal match as possible for a given project’s requirements. This is a much-welcomed new feature by FinancialForce customers who are large-scale services providers as they’re facing the challenges of assigning the right person to the right project at the right time to ensure project success.    
  • Integration of Salesforce AI’s Next Best Action (NBA) will raise the level of project expertise at scale across customers.  Part of the customer centricity focus in Spring 2021 is focused on providing customers with new technologies and applications to share expertise and knowledge at scale. Next Best Action provides prescriptive guidance for the project manager and will see heavy use in new associate onboarding across services businesses and achieve greater corporate-wide learning at scale. This is consistent with the focus in the Spring 2021 release on bringing greater space and speed to mid-size and larger services customers.

Conclusion

FinancialForce defines customer engagement and centricity from a financial standpoint in the Spring 2021 release. Too often, services businesses commit to large-scale projects without a clear idea of the customer revenue lifecycle. With FinancialForce, they can stop and ask if the level of customer engagement they’re committing to is worth it or not – and if it isn’t, what needs to be done. FinancialForce is doubling down on user experience and accelerating time-to-close, two areas their customers want innovation to and look to them to deliver. Look for FinancialForce to scale out with more MuleSoft and Tableau integration scenarios, all aimed at capitalizing on their expertise developing on the Salesforce platform. There’s a bigger challenge to customer engagement on the horizon, and that’s providing a real-time view of financials across all customers with all available data across a business, making MuleSoft integration key to FinancialForce’s future growth.

Mar 8

How FinancialForce Is Using AI To Fight Revenue Leakage

How FinancialForce Is Using AI To Fight Revenue Leakage

Bottom Line: Using AI to measure and predict revenue, costs, and margin across all Professional Services (PS) channels leads to greater accuracy in predicting payment risks, project overruns, and service forecasts, reducing revenue leakage in the process.

Professional Services’ Revenue Challenges Are Complex

Turning time into revenue and profits is one of the greatest challenges of running a Professional Services (PS) business. What makes it such a challenge is incomplete time tracking data and how quickly revenue leaks spring up, drain margins, and continue unnoticed for months. Examples of revenue leaks across a customers’ life cycles include the following:

  • Billing errors are caused by the booking and contract process not being in sync with each other leading to valuable time being wasted.
  • When products are bundled with services, there’s often confusion over recognizing each revenue source, when, and by which PS metric.
  • Inconsistent, inaccurate project cost estimates and actual activity lead to inaccurate forecasting, delaying the project close and the potential for bad debt write-offs and high Days Sales Outstanding (DSO).
  • Revenue leakage gains momentum and drains margins when the following happens:
    • Un-forecasted delays and timescale creep
    • Reduced utilization rates across each key resource required for the project to be completed
    • Invoice and billing errors that result in invoice disputes that turn into high DSOs & write-offs
    • Incorrect pricing versus the costs of sales & service often leads to customer churn.
    • Revenue leakage gains momentum as each of these factors further drains margin

Adding up all these examples and many more can easily add up to 20-30% of actual lost solution and services margin. In many ways, it’s like death by a thousand small cuts. The following graphic provides examples across the customer lifecycle:

How FinancialForce Is Using AI To Fight Revenue Leakage

Why Professional Services Are Especially Vulnerable To Revenue Leakage 

Selling projects and the promise of their outcomes in the future create a unique series of challenges for PS organizations when it comes to controlling revenue leakage. It often starts with inaccurately scoping a project too aggressively to win the deal, only to determine the complexity of tasks originally budgeted for will take 10 – 30% longer or more. Disconnects on project scope are unfortunately too common, turning small revenue leaks into major ones and the potential of long Days Sales Outstanding (DSO) on invoices. When revenue leaks get ingrained in a project’s structure, they continue to cascade into each subsequent phase, growing and costing more than expected.

The SPI 2021 Professional Services Maturity™ Benchmark Service published by Services Performance Insight, LLC in February of this year provides insights into the hidden costs and prevalence of revenue leakage. The following table illustrates how organizations with high levels of revenue leakage also perform badly against other key metrics, including client referencability. The more revenue leakage an organization experiences, the more billable utilization drops, on-time project deliveries become worse, and executive real-time visibility becomes poorer.

How FinancialForce Is Using AI To Fight Revenue Leakage

How FinancialForce Is Using AI To Fight Revenue Leakage

It’s noteworthy that FinancialForce is now on its 12th consecutive product release that includes Salesforce Einstein, and many customers, including Five9, are using AI to manage revenue leakage across their PS business. Throughout the pandemic, the FinancialForce DevOps, product management, and software quality teams have been a machine, creating rich new releases on schedule and with improved AI functionality based on Einstein. The 12th release includes prebuilt data models, lenses, dashboards, and reports.

Andy Campbell, Solution Evangelist at FinancialForce, says that “FinancialForce customers have access to best practices to minimize revenue leakage by scoping and selling the right product and services mix to allocating the optimal range and amount of services personnel and finally billing, collecting and recognizing the right amount of revenue for services provided.” Andy continued, saying that recent dashboards have been built for resource managers to automate demand and capacity planning and service revenue forecasting and assist financial analysts in managing deferred revenue and revenue leakage.

By successfully integrating Einstein into their ERP system for PS organizations, FinancialForce helps clients find new ways to reduce revenue leakage and preserve margin. Relying on AI-based insights for each phase of a PS engagement delivered a 20% increase in Customer Lifetime Value according to a FinancialForce customer. And by combining FinancialForce and Salesforce, customers see an increased bid:win ratio of 10% or more. The following graphic illustrates how combining the capabilities of Einstein’s AI platform with FinancialForce delivers results.

How FinancialForce Is Using AI To Fight Revenue Leakage

Conclusion

FinancialForce’s model building in Einstein is based on ten years of structured and unstructured data, aggregated and anonymized, then used for in-tuning AI models. FinancialForce says these models are used as starting points or templates for AI-based products and workflows, including predict to pay.  Salesforce has also done the same for its Sales Cloud Analytics and Service Cloud Analytics. In both cases, Salesforce and FinancialForce customers benefit from best practices and recommendations based on decades of data, which should be particularly interesting considering the “black swan” nature of 2020 data for most of their customers.

Jan 12

10 Ways AI Is Improving Cannabis Yields And Security

  • According to BDS Analytics, the Covid-19 pandemic drove retail sales up 35% above industry forecasts, accelerated by cannabis businesses being declared “essential” for medical purposes in virtually every U.S. legal market.
  • Fueled by strong consumer demand, annual legal (medical and adult-use) sales are projected to grow at a compound annual growth rate (CAGR) of 21%, to reach more than $41 billion by 2025 (from $13.2 billion in 2019), according to New Frontier Data.
  • BDS Analytics predicts that the U.S. Cannabis Industry will generate $20.8 billion in direct spending in 2021 and $39.6 billion in total economic contribution after factoring its indirect economic effects.

Bottom Line:  With an average yield per acre of $1.1 million, legal cannabis agriculture dwarfs all other crops in revenue potential while also providing the resources needed to fund AI-based monitoring to improve yields and security. 

Cannabis’ value per acre dwarfs all other crops being produced in North America today, prompting every commercial grower to consider how they can improve yields further while securing their crops on a 24/7, virtual basis. Recent studies by the USDA, The Rand Corporation, and the Marijuana Cultivators of Oregon find that at an average price of $1,948 per pound at Colorado prices, an acre of marijuana can yield more than $1.1 million per acre. The studies compared the most widely grown crops in the U.S., including corn, soybeans, oats, and wheat, which all yield less than $1,000 per harvested acre. The following graphic from New Frontier Data illustrates how profitable an acre of marijuana is to cultivate than other crops. 

10 Ways AI Is Improving Cannabis Yields And Security

Using AI to Protect & Grow a Cash Crop

AI and machine learning-based techniques based on real-time monitoring data are an integral part of today’s innovation in cannabis farm management.  Supervised machine learning algorithms capable of identifying patterns and sequences in imagery from thermal, infrared, and night vision cameras in real-time can help identify diseases affecting plants early. Identifying and alerting farm staff of a breach or break-in by an animal or person is possible using AI-based smart monitoring systems.

The more advanced a smart monitoring system is in its use of machine learning and real-time monitoring integration, the more effective it is in spotting anomalous activity.  Over time, the best AI-based remote monitoring and surveillance systems “learn” or begin to identify recurring patterns in data. Cannabis farms rely on AI and machine learning to identify which techniques for improving yield rates by specific fertilizer treatment produce the most flowers and overall yield per acre.

The following are ten ways AI is being used for improving cannabis yields and security:

  1. Monitoring real-time video feeds of remote cannabis fields using machine learning-based surveillance systems can identify a breach by an animal or human then send an alert immediately.  Given how valuable a single acre of cannabis is to a farm, knowing in real-time if there’s been an attempted breach or break-in can save thousands of dollars in potential crop damage and theft. Federated cannabis farms with multiple remote locations are starting to use AI and machine learning-based remote monitoring to secure their operations. Machine-learning based video surveillance systems can be programmed or trained over time to identify employees versus unknown people and easily spot animals attempting to break into a field.  The following image from Twenty20 Solutions illustrates how machine learning is used for identifying activity at a remote location:
  • Reducing the dependence on onsite security guards alone and gaining a 24/7, 365-day monitoring view of each grow and farm site. Instead of relying only on onsite security teams to monitor video feeds in real-time, cannabis growers turn to AI and machine learning-based surveillance to isolate the most anomalous or unexpected events given the pattern of previous activity on a site. Reducing the cost and insurance liability of having security teams on site is one of the most significant benefits of relying on a cloud-based remote monitoring system that can interpret and provide alerts based on real-time data.
  • AI-based surveillance monitoring systems can prepare activity reports in minutes for state and federal auditors, saving farmers and administrative staff thousands of hours a year getting the data together for audit teams.  Using machine learning and advanced video analytics, growers and their staff can prepare for state and federal audit reports in minutes instead of the many hours needed in the past.   
  • Helping to keep licensed cannabis growers in compliance by providing a 24/7, 90 day or longer video history of all activities at their farms keeps them in compliance with state regulatory requirements. Included in several states’ requirements are the specific requirements for video footage access, video archiving, access requirements, how cameras are placed, and how quickly video footage can be accessed. State regulatory agencies are initiating audits of licensed cannabis growing facilities in 2021. All states require video footage to be archived, yet 72% of cannabis operators fail to comply with security and surveillance requirements, according to a recent study by the Brightfield Group:
    • California regulations require that all video recordings from surveillance be saved 90 days or longer.
    • Washington requires all video recordings to be archived for a minimum of 45 days.
    • Oregon requires licensed cannabis growers to retain 24/7 video for 90 days with a minimum of 1.3mp per camera at 10fps. The exterior is 5fps.
  • Cannabis farms often experiment with new fertilizers and plant treatments on a pilot acre to see if they achieve the expected results, and machine learning-based analysis of video stream data helps track results.  Agricultural improvements in cannabis farming continue to accelerate as medical and leisure demand continues to grow exponentially. For example, a cannabis grower will often begin planting in the May/June timeframe to achieve a density of up to 4,000 plants per acre. Taking the real-time data stream infrared and thermal cameras of the acre will quickly tell growers how effective their new fertilizer and plan treatments are. Using the data from their monitoring system, the growers will expand the treatment to their entire farm, often over 40 to 50 acres in size.
  • Monitoring every access point to a facility with video surveillance 24/7 combined with sound recording can prove invaluable in stopping a break-in before it happens. Every entrance to a cannabis farm needs to be considered a primary threat vector if the farm will stay safe. Advanced remote monitoring and surveillance systems can provide video analytics that correlates sound, video, and status of infrared and thermal cameras, which together can help identify potential break-ins. And with real-time alerts, farm staff can take action immediately even if they aren’t onsite.
  • A few of the largest cannabis growing companies are experimenting with advanced video analytics combining infrared and thermal camera technologies to monitor insects and rodents’ impact on yield rates.  Real-time video feeds are being digitally analyzed using advanced video analytics techniques by the largest cannabis farms today to find out how effective pesticides, insect, and rodent deterrents are at protecting their cannabis crops.    
  • When a surveillance system is cloud-based, it is possible to access any farm or cannabis sites’ real-time video feeds, history of alerts, and advanced video analytics from any browser-based device at any time. Remote monitoring systems that are cloud-based often provide much greater flexibility in viewing, analyzing, and sharing monitoring data than their on-premise system counterparts. Any device with a browser can access the platform’s reporting features and know what is going on at a remote farm or cannabis production facility. 
  • AI-based remote monitoring systems can also identify potential safety hazards to workers and reduce workplace injuries and potential liability litigation. Using advanced pattern matching supported by supervised machine learning algorithms, cannabis growers can identify when workers in high-risk roles are at risk of getting hurt while on the job. All cannabis facilities in the U.S. continue to have the requirement of everyone wearing a face shield and masks for the site to stay in compliance with CDC guidelines. Remote monitoring systems can tell immediately which work teams need coaching to remain in compliance. 
  1. Define access privileges across a farm facility by the level of access every employee needs to do their job, which is especially useful for new hires. New hires often start in the field and don’t need access to the front offices or the accounting department, for example. One of the most challenging aspects of running a cannabis business is cash management. Using an AI-based surveillance and monitoring system integrated into the local security system and intelligent locks, employees are provided the level of access they need on the first day to be productive.
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