A new formula for growth in software
Software leaders are strategically reinvesting in growth, refining cost efficiencies, and engaging in mergers and acquisitions to remain at the forefront of the industry
The software industry is undergoing a significant transformation driven by the rapid advancement of Artificial Intelligence (AI). To stay ahead, software leaders must adapt their strategies to leverage AI for growth, cost optimization, and innovation. Our latest research, reveals key insights and recommendations for navigating this new landscape.
The majority of senior leaders at US software companies with annual revenues between $300 million and $10 billion are prioritizing revenue growth, with 91 percent of respondents focusing on this goal in the next 12 months.
Cost reduction is also a significant concern, with 69 percent planning to address it, reflecting the ongoing challenge of rising operational costs and the need to maintain healthy margins. The survey highlights a notable shift in the industry's approach to mergers and acquisitions (M&A), with the percentage of companies planning to pursue M&A increasing from 14 percent to 35 percent.
This rise underscores the strategic importance of acquiring the necessary building blocks to stay competitive in an AI-driven market.
Key findings
89% of software leaders prioritize revenue growth, focusing on expanding into new markets and deepening customer relationships.
Companies are exploring enterprise-wide cost reductions, with 66% planning cuts, and leveraging AI for process automation and efficiency.
The appetite for mergers and acquisitions has more than doubled, with 35% of respondents indicating increased M&A activity, driven by the need for strategic acceleration and capability building.
Over 75% of software companies are introducing new AI-driven features, and more than half are generating new revenue streams through AI-powered data services.
With M&A emerging as a strategic accelerator in this AI-driven landscape, and despite a sluggish dealmaking environment due to high interest rates and uncertain tariff policies, sentiment for M&A is on the rise. Companies recognize the need to acquire the technologies and talent that will fuel their future growth. To stay ahead, software companies can consider actively seeking out M&A opportunities that align with their AI ambitions and strategic goals. Other strategies could include:
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How KPMG can help
KPMG is well-positioned to support software companies in their strategic journey. With expertise in value creation, growth, cost optimization, and M&A for the technology sector, KPMG can help software leaders achieve sustainable success in the AI era.
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