Businesses will spend nearly $1.2 trillion (€1.06 trillion) on digital transformation this year as they seek an edge in the digital economy, according to a new IDC spending guide.
According to International Data Corporation (IDC), businesses around the world are making significant investments in the technologies and services that enable the digital transformation (DX) of their business models, products and services, and organisations.
In the latest update to its Worldwide semi-annual Digital Transformation Spending Guide, IDC forecasts global DX spending to reach $1.18 trillion (€1.04 trillion) in 2019, an increase of 17.9 percent over 2018.
“Worldwide DX technology investments are expected to total more than $6 trillion (€5.3 trillion) over the next four years,” said Eileen Smith, program vice president with IDC’s Customer Insights & Analysis group. “Strong DX technology investment growth is forecast across all sectors, ranging between 15 percent and 20 percent, with the financial sector forecast to be the fastest with a compound annual growth rate (CAGR) of 20.4 percent between 2017 and 2022.”
The two industries that will invest the most in digital transformation in 2019 are discrete manufacturing and process manufacturing. For both industries, the top DX spending priority is smart manufacturing, supported by significant investments in autonomic operations, manufacturing operations, and quality.
Retail will be the next largest industry in 2019, followed closely by transportation and professional services. Each of these industries will be pursuing a different mix of strategic priorities, from omni-channel commerce for the retail industry to digital supply chain optimisation in the transportation industry and facility management – transforming workspace in professional services. A CAGR of 21.4 percent will enable the professional services industry to move ahead of transportation in terms of overall DX spending in 2020.
According to IDC’s guide, from a technology perspective, hardware and services investments will account for more than 75 percent of all DX spending in 2019. Services spending will be led by IT services and connectivity services. Hardware spending will be spread across several categories, including enterprise hardware, personal devices, and IaaS infrastructure.
“Digital transformation is quickly becoming the largest driver of new technology investments and projects among businesses,” said Craig Simpson, research manager with IDC’s Customer Insights & Analysis group. “It is already clear from our research that the businesses which have invested heavily in DX over the last 2-3 years are already reaping the rewards in terms of faster revenue growth and stronger net profits compared to businesses lagging in DX initiatives and investments.”
The United States and China will be the two largest geographic markets for DX spending, delivering more than half the worldwide total in 2019, explains IDC.
