Investing.com -- The IT Operations (ITOps) market, once viewed as a cost center confined to back-office functions, is experiencing a profound transformation driven by artificial intelligence and automation, according to note by Raymond (NS:RYMD) James.
The firm estimates the sector will expand to $125 billion by 2028, growing at a compound annual rate of 13% from $80 billion in 2024.
Raymond James highlights the shift in ITOps' role from back-office support to a critical business driver, with platforms such as ServiceNow (NYSE:NOW) gaining prominence among C-suite executives for streamlining operations and enabling differentiation. The increased reliance on AI to automate redundant tasks and optimize workflows has positioned the sector for durable double-digit growth, attracting investor interest despite a challenging macroeconomic backdrop.
The report notes that valuation multiples for ITOps companies have declined, now trading in line with broader technology indices, such as the S&P 500 Technology Select Sector SPDR Fund (XLK). However, Raymond James sees this as an attractive entry point for investors, emphasizing the potential for significant shareholder value creation through a cycle of growth, profitability, and reinvestment.
The ITOps ecosystem encompasses several submarkets, including IT Service Management (ITSM), Health Performance and Analysis (HPA), and Artificial Intelligence for IT Operations (AIOps):
ITSM - Valued at over $7 billion, the ITSM market is expanding in the low- to mid-teens, driven by the consolidation of spending into core platforms and the integration of AI capabilities. ServiceNow, with nearly 50% market share, remains a leader, followed by competitors like Atlassian (NASDAQ:TEAM), leveraging its Jira ecosystem.
HPA - Estimated at $22 billion, this market supports the performance of IT infrastructure and applications, with submarkets such as Application Performance Monitoring (APM) and observability showing high growth. Organizations' shift to cloud-based systems and the criticality of real-time performance monitoring are key growth drivers.
AIOps - At $2 billion, the AIOps segment is growing in the mid- to high-teens. By leveraging AI to analyze vast amounts of IT data, this technology enhances decision-making and expedites problem resolution. Raymond James anticipates AIOps will increasingly integrate with ITSM platforms.