Private equity firms are poised for a new wave of investment in software companies after a recent period of intense activity has turned into challenging times. According to senior partner Alfonso Pulido and colleagues, today’s more optimistic view comes as chief information officers are increasing spending, though not in every software category. Outlays for cybersecurity and data and analytics are likely to rise sharply as companies continue to develop their generative AI capabilities, while spending on human capital management and finance is expected to remain more stagnant.
Image description:
A bar graph shows the anticipated increase in software spending over the next 12 months across 16 areas of investment, as a percentage of the responses from 86 chief information officers surveyed. The top 2 responses are cybersecurity, at 80% of respondents, and data and analytics, at 69% of respondents.
Footnote: Question: How do you expect your spending on software to change in the next 12 months in each of the following categories?
Source: McKinsey CIO Survey 2023.
End of image description.
To read the article, see “Five considerations for software private equity in 2024,” March 1, 2024.