IDP is a very crowded field

last updated:

IDP is a very crowded field

last updated:

Nearly 400 companies now offer intelligent document processing functionality. Why so many?

We are now tracking nearly 400 companies in our comprehensive IDP vendor database: an increase of 17% over last year. Unsurprisingly, the widespread availability of generative AI toolkits for developers has accounted for some of the new names on the list. Meanwhile several other new entrants have built their new IDP solutions using the machine learning and computer vision AI tools that have been around for nearly ten years.

This trend continues a dramatic and ongoing shift in market dynamics, one that can be difficult and confusing to navigate for buyers. Selecting the right vendor can be tricky and time-consuming without guidance. Adding to the market confusion, IDP functionality is now widely available outside of the traditional pure play, back-office products and the document management vendors. IDP is showing up in many other software categories.

Why so many?

I am asked this question more than any other one. Here are my thoughts on why we have so many companies doing it.

  1. IDP is a multi-billion-dollar market with a projected 16-17% CAGR. We estimate the market will double within four years in response to customer demand and market drivers. Everyone wants to get on it now.
  2. Recent advancements in AI computing – coupled with the lower cost of market entry – have made it much easier to build an IDP product or to add IDP functionality into a workflow or business application. Once there were specialist software companies doing this; now any development team can plug IDP into their platform.
  3. There is no One Ring to Rule Them All. Documents are vastly diverse and endlessly variable – and, despite vendor claims and dreams, no single platform or product can do it all. For example, take just one document type – invoices: there exist thousands of different invoice formats and layouts across hundreds of tax jurisdictions, in many different cultures, and in hundreds of different languages. IDP vendors have been at it since the 1990s and no one has yet come close to one solution that reads them all. What works well in, say, Germany or India, doesn’t work as well in Ukraine or Canada.
  4. It’s so easy to find a dissatisfied customer who tried another IDP product. This is the leading reason that founders give when I ask, why did you start an IDP company? I’ve heard the same story again and again: “we came across a business that was getting less than 50% accuracy from the installed solution and we got them to 95% with our AI! So we started a company.”
  5. With the rise of LLMs and RAG (retrieval augmented generation), businesses are finally realizing the urgency of extracting good information from their unstructured data. Several companies have emerged to focus on this new market demand.

What will happen to them?

Our research indicates that only 10% of these companies will grow past $10 million in annual sales and only 1% to 2% will eventually pass $100 million. The rest will remain small companies in niche markets; they can thrive by offering industry-focused offerings and more personalized services.

How to make sense of this crowded market

If you want accurate and expert analysis, Deep Analysis offers advisory services based on this research. 

  • For end-users: we can offer expert advice on vendor short-listing and competitive comparisons.
  • For vendors and their channels: we can help with competitive intelligence consulting and workshops, go-to-market strategy workshops, keynote speakers, and thought leadership content.  
  • For investors or companies looking to acquire: we offer the most comprehensive picture of the IDP landscape with unique insight into company comparables. 

Engagements can range from a short consultation to in-depth projects. We also sell market reports and offer an annual subscription to all our research. To engage Deep Analysis’ services, please contact us.

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