As the global economy braces for slower trade growth and geopolitical tensions, the software industry is defying economic headwinds with robust expansion. According to Forrester’s Global Commercial Software Forecast, 2025 To 2029, software infrastructure growth is set to achieve a strong compound annual growth rate (CAGR) of 13.3% while application software growth will see a more subdued 9.5% CAGR.
Key drivers, trends, and opportunities within the commercial software market include:
- Security software is seeing the fastest growth. Forrester’s research highlights investments in cloud security, identity and access management, and security operations. The market capitalization of Palo Alto Networks and Fortinet across 2023 and 2024 greatly exceeded their average revenues. As cyberthreats grow more complex, security spending remains a cornerstone of infrastructure investment.
- There’s strong database demand driven by AI, data storage, and governance. Spending for off-the-shelf AI software will be four times greater in 2030 than in 2024 largely due to increasing demands around data governance. MongoDB’s revenues from its Atlas database more than doubled during the past two years, and there is strong growth for Snowflake due to its consumption-based pricing model. Databricks’ Lakehouse architecture and AI governance capabilities are transforming how businesses handle structured and unstructured data.
- Tech operations management is seeing the fastest growth in application software. ServiceNow, Atlassian, and Datadog are redefining tech operations management with AI-powered tools. ServiceNow’s AI Agent Orchestrator harmonizes teams of AI agents, while Atlassian Intelligence helps users navigate organizational data more efficiently. In 2024, Datadog more than doubled the number of customers who spent more than $1 million in annual recurring revenues.
- There are new AI-driven opportunities. OpenAI expects its revenues to triple in 2025 and to see an astounding 33% CAGR through 2029 to reach $125 billion in revenues, and Microsoft’s AI business reached a $13 billion annual run rate in 2024. This past January, ServiceNow launched an AI-enabled CRM offering that includes CRM agents, data, and workflows. HubSpot differentiated its CRM through the 2024 launch of Breeze Copilot and Breeze customer and content agents along with AI features that provide campaign summaries, call sentiment analysis, engagement scoring, and analysis of buyer intent. Zendesk plans to automate 50% of customer engagements by 2027 through the use of autonomous agents.
Despite strong commercial software spending growth, the economic slowdown requires enterprises to tighten software spend controls through regular audits of software use, more consolidation of software functionality to reduce redundancy, more use of open source, and more negotiations with software vendors to reduce price hikes — notably to take advantage of the decline in value of the US dollar. Forrester’s forecast shows commercial software spend will reach $1.7 trillion by 2029 and maintain double-digit growth.
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Forrester clients can schedule a Forrester guidance session for more insights and to explore the narratives within this forecast.
