Strategic Intelligence: Application Software Sector Scorecard Q3 2025 Update

Application software companies face challenges integrating artificial intelligence (AI) into legacy systems due to outdated architectures, fragmented data, and performance bottlenecks. These issues slow deployment and undermine reliability across workflows. For example, Microsoft has enjoyed a surge in Copilot adoption, but clients struggle to embed it into legacy workflows. This is because legacy systems were not built to support AI, cloud processing, or modern application processing interfaces (APIs). AI models require clean, structured data to function. Companies must invest in extract, transfer, load (ETL) pipelines and data lakes to make legacy data usable.

Key Highlights

• AI is being used to counter advancing cyber threats. Key strategies include threat detection, automated incident response, behavioral analytics, and security operations center optimization. However, AI also introduces new risks. Attackers use generative models to craft deepfake phishing campaigns and manipulate results. While companies use zero-trust, red-teaming, and governance to secure AI, keeping humans in the loop is vital to avoid false positives.
• The shortage of skilled AI and cybersecurity talent delays client deployments, adds margin pressure, and hinders product rollouts. Microsoft has reported that its enterprise clients struggle to fully deploy GitHub Copilot and Azure AI due to a shortage of qualified engineers, forcing additional, expensive training investments. Without the right talent, companies cannot fully capitalize on AI and become vulnerable to disruption and cyberattacks. Those who invest in upskilling, automation, and partnerships will gain a competitive edge.

Scope

• This sector scorecard provides a top-down, comprehensive outlook for the key players in the application software sector over the next two years, based on the key themes set to transform their industry landscape.

Reasons to Buy

• Companies that invest in the right themes become success stories. Those that miss the important themes in their industry end up as failures.
• The analyst's thematic research ecosystem is a single, integrated global research platform that provides an easy-to-use framework for tracking all themes across all companies in all sectors. It has a proven track record of identifying the important themes early, enabling companies to make the right investments ahead of the competition and secure that all-important competitive advantage.
• The analyst has developed a unique thematic methodology for ranking all major companies in all major sectors based on their relative strength in the big themes that are impacting their industries.
• First, we identify the top 10 themes transforming a sector across four categories (tech, macro, industry, and ESG). We also rank themes in order of priority by examining activity levels across 200 million alternative data signals, including patents, jobs, deals, filings, social media, and news.
• Second, we research each theme in detail, examining the value chain, key players, and trends. Additionally, we examine the impact of each theme across the 20 industries we cover. Our 200 million signals help identify the leading adopters of a theme in each sector.
• Finally, using our sector scorecards, we rank the companies most likely to succeed in a sector over the next five years.