As the global economy braces for slower trade growth and geopolitical tensions, the software industry defies economic headwinds with robust expansion. Software infrastructure growth is set to achieve a strong compound annual growth rate (CAGR) of 13.4% from 2024 to 2029. Application software growth sees a more subdued 9.5% CAGR. Key drivers, trends, and opportunities within the commercial software market include:
Security Software sees the fastest growth. Forrester’s new soon to be published cybersecurity forecast highlights investments in cloud security, identity and access management, and security operations. The market capitalizations of Palo Alto Networks and Fortinet greatly exceeds their average revenues. As cyber threats grow more complex, security spending remains a cornerstone of infrastructure investment.
Strong Database demand driven by AI, data storage and governance. Data governance helps off-the-shelf AI software spending to be four times greater in 2030 than in 2024. MongoDB’s Atlas Database and Snowflake’s consumption-based pricing model fuel strong growth. Databricks, with its Lakehouse architecture and AI governance capabilities transforms how businesses handle structured and unstructured data.
Tech Operations Management sees the fastest growth in application software. ServiceNow, Atlassian, and Datadog redefine 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. Datadog more than doubled the number of customers who spent more than $1 million in annual recurring revenues.
New AI driven opportunities. Open AI expects its revenues to triple in 2025 and to see an astounding 33% CAGR through 2029, to reach $125 billion in revenues. Microsoft’s AI business reached a $13 billion annual run rate in 2024. ServiceNow launched an AI-enabled CRM offering in January 2025 that includes CRM agents, data, and workflows. HubSpot differentiated its CRM through the launch in 2024 of Breeze copilots and Breeze customer and content agents, as well as AI features that provide campaign summaries, call sentiment analysis, engagement scoring, and analysis of buyer intent. Zendesk’s plan 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 Global Commercial Software Forecast, 2025 To 2029 shows commercial software spend will reach $1.7 trillion by 2029 and maintain double digit growth.
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