The report also found that AI is assisting SaaS growth rather than replacing it.
More than two-thirds of European businesses are expected to integrate artificial intelligence (AI) software by the end of next year, a new report published today (19 December) has revealed.
The State of European BusinessTech 2024 report published by Finch Capital, and based on its own research and analysis, also found that while AI is set to redefine many industries in the year ahead, not all sectors and markets will benefit equally.
According to Finch Capital, it focused its deep dive on AI as the company considers AI to be “redefining the trajectory of business technology software businesses”.
The report argues that despite fears that AI might disrupt the software-as-a-service (SaaS) model, it is in fact assisting SaaS growth rather than replacing it. “The theme of AI killing SaaS is overhyped. We believe AI will be a catalyst for SaaS.”
Aman Ghei, managing partner at Finch Capital, maintained that AI “is not a disruptor, but an enabler for European business-tech”.
However, he conceded that not all sectors or markets are equally positioned to enjoy the potential benefits offered by AI, and “that imbalance needs to be addressed”.
“Despite advancements, workforce disparities are becoming more pronounced,” Ghei said.
Spending surges
The report found that businesses are increasingly turning to SaaS solutions enhanced by AI, resulting in an increase in spending. In 2024 alone, investment in SaaS and supporting tech infrastructure grew by more than 20pc, while spending on GenAI infrastructure increased by 30pc.
The findings also show that workforce disparities are becoming more pronounced in Europe, with automation advancing in desk-based roles. Sectors such as tax, accounting and human resources are seeing AI adoption rates as high as 85pc.
Meanwhile, the legal and regulatory sectors have seen a huge jump in AI adoption from 17pc to 79pc in just two years.
The report further showed that 80pc of Europe’s workers in roles such as medical, industrial, hospitality and retail sectors are being largely left behind. These workers receive only 1pc of enterprise software funding, highlighting a critical gap in digital transformation efforts.
When it comes to funding, the report found that the UK accounted for more than 50pc of all business-tech capital raised in Europe, which was driven by record-breaking investment in AI for customer support, analytics and process automation.
Ireland also enjoyed success, with business-tech funding increasing by 123pc year-on-year to €49m. The largest deal in the sector came from AccountsIQ, which raised €60m in a Series C round.
Spain and France also saw huge boosts (227pc and 238pc respectively), while Germany experienced an 80pc decline.
“Looking ahead to 2025, the report shows strong momentum for business-tech, with several factors underpinning this growth,” Ghei said.
“A surge in AI-driven SaaS adoption, supported by demonstrable ROI metrics, is anticipated. Additionally, increased enterprise M&A activity will likely accelerate as firms seek unified, end-to-end solutions.
“Strategic investments in deskless worker solutions, compliance tooling and CFO-driven software are also expected to gain traction, further cementing AI’s role as an enabler of innovation.”
A recent report by professional services company Accenture found that GenAI could have huge benefits for Ireland in the near future. According to the report, GenAI has the potential to contribute up to €148bn to Ireland’s annual gross domestic product (GDP) by 2038, representing a 22pc increase over the baseline forecast.
Speaking to SiliconRepublic.com, Accenture’s Denis Hannigan said the recent focus for AI has been “to really drive out some value“.
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