Augmented Software

Key Takeaway:

The integration of artificial intelligence into software development tools, known as "Augmented Software," is transforming the technological strategies of companies. This trend is driven by the need to enhance efficiency, cut costs, and capitalize on the potential of open-source solutions. Tools like GitHub’s Copilot and Amazon's CodeWhisperer are pioneering this shift by enabling more accurate and holistic code generation from natural language, significantly boosting developer productivity and satisfaction. Despite these advances, adoption faces hurdles such as technical challenges and the need for retraining. However, promising early productivity gains suggest wider adoption soon. Financially, the impact is notable, with predictions of up to a $10 billion revenue increase by 2024 for enterprise software companies, indicating a robust market potential that could extend far beyond 2025.

Trend Type: Technology

Sub-trends: Enterprise-Grade Open-Source Software, DIY Software, GenAI & Enterprise software, AI Augmented development, Platform Engineering, SQL optimization becomes a priority.

May, 2024 • Less than 4 min read

While AI adoption globally today is more than double that in 2017, according to McKinsey, the proportion of organizations using AI has leveled off to around 50-60% in recent years.

However, Generative AI (GenAI) marks a tipping point for AI with its ability to generate new content (such as text, audio, video, images, code, or even protein sequences) from similar formats of unstructured data.
‘Developers are perhaps one of the most valuable assets for the modern digital enterprise, yet they spend well over 40 percent of their time on repetitive, low-value tasks that could be easily automated with a modern tool set.’ Santiago Comella-Dorda, McKinsey partner, Boston
Source: Deloitte Tech Trends 2024

 


Despite these advancements, the adoption of augmented software tools faces hurdles such as technical challenges, the necessity for extensive retraining, and other organizational barriers. However, the productivity gains demonstrated in early trials are promising, indicating that broader adoption could soon become a reality. By 2026, Gartner predicts that 80% of users of low- and no-code tools will be from non-traditional IT backgrounds, underscoring the democratizing effect of these technologies.

 

Also, the financial implications of integrating generative AI in software products is significant. Deloitte forecasts that by the end of 2024, almost every enterprise software company will have this integration potentially adding up to a $10 billion increase in annual revenue. This estimate points to a robust market potential that extends well beyond 2025, with revenue from enterprise software companies possibly reaching into the tens of billions.

 

However, this growth comes with its own set of challenges. The adoption rates and the realizable return on investment (ROI) from these AI-enhanced tools could dictate the pace at which this market expands. Early indications suggest a strong ROI, yet the actual deployment of these tools might initially encounter resistance due to pricing concerns, prompting some vendors to consider hybrid pricing models. Regulatory issues, privacy concerns, and intellectual property rights are additional barriers that could slow down the adoption of AI-driven solutions. Some EU regulations could be particularly restrictive, affecting the deployment of current-generation AI software tools in European markets. On top of that, a shortage of GenAI accelerator chips (refer to the AI Chip Demand trend) has also emerged as a bottleneck, potentially delaying the roll-out of AI features within enterprise software.

Use Cases

Netflix Test Studio

DIY Software: Netflix built Netflix Test Studio (NTS), which supports a seamless streaming experience on many types of devices. NTS is a cloud-based automation framework for developers to deploy and execute tests. NTS runs more than 40K long-running tests every day and allows remote tests of Netflix-ready devices.

Vistra Corp's AI powers up power plants

AI Augmented development: Vistra partnered with McKinsey to develop more than 400 AI models and used MLOps to standardize their deployment and maintenance. This enabled the company to optimize the thermal efficiency across 26 of its plants, generate more than $20 million in energy savings, and abate about 1.6 million tons of carbon per year.

Use Cases

Netflix Test Studio

DIY Software: Netflix built

Vistra Corp's AI powers up power plants

AI Augmented development:

Sub-Trend Sources
Enterprise-Grade Open-Source Software: BCG The Next Wave
DIY Software: CBInsights Emerging Tech Trends, Thoughtworks Tech Radar, McKinsey Tech Trends Outlook, Deloitte Tech Trends
GenAI & Enterprise software: Delloite TMT Predictions, Forrester Predictions, McKinsey Economic Potential of GenAI
AI Augmented development: Gartner Strategic Trends, McKinsey Tech Trends Outlook
Platform Engineering: Gartner Strategic Trends
SQL optimization becomes a priority: BMC Blogs IT TrendsBMC Blogs IT Trends

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