cl-au logo
Story image

Digital transformation an almost $2 trillion industry by 2022

14 Nov 2018

Global spending on the technologies and services behind digital transformation (DX) is forecast to reach US$1.97 trillion (around €1.75 trillion) in 2022.

That’s according to the International Data Corporation’s (IDC’s) Worldwide Semi-annual Digital Transformation Spending Guide.

DX spending is expected to maintain steady growth from 2017 to 2022 with a five year compound annual growth rate (CAGR) of 16.7 percent.

"IDC predicts that, by 2020, 30 percent of G2000 companies will have allocated capital budget equal to at least 10 percent of revenue to fuel their digital strategies," says IDC Worldwide Digital Transformation Strategies research director Shawn Fitzgerald.

"This shift toward capital funding is an important one as business executives come to recognise digital transformation as a long-term investment. This commitment to funding DX will continue to drive spending well into the next decade."

According to IDC, four industries will be the major drivers of this growth and will account for almost half of the $1.25 trillion in worldwide DX spending in 2019. These are discrete manufacturing with $220 billion, process manufacturing with $135 billion, transportation with $116 billion, and retail $98 billion.

IDC expects the manufacturing industries to prioritise their DX spending on smart manufacturing, with more than $167 billion allocated to that segment next year, along with significant investments in digital innovation ($46 billion) and digital supply chain optimisation ($29 billion).

The leading strategic priority in the transportation industry is digital supply chain optimisation, with $65 billion in spending for freight management and intelligent scheduling forecast for next year.

And finally, in the retail industry it’s all about omni-channel commerce, which is expected to drive investments of more than $27 billion in omni-channel commerce platforms, augmented virtual experience, in-store contextualised marketing, and next-generation payments.

"Industry spending on DX technologies is being driven by core innovation accelerator technologies with IoT and cognitive computing leading the race in terms of overall spend," says IDC Customer Insights and Analysis Group program director Eileen Smith.

"The introduction of IoT sensors and communications capabilities is rapidly transforming manufacturing processes as well as asset and inventory management across a wide range of industries. Similarly, artificial intelligence and machine learning are dramatically changing the way businesses interact with data and enabling fundamental changes in business processes."

In terms of technology, hardware and services spending are expected to account for more than 75 percent of all DX spending in 2019.

With $152 billion, IT services will lead the services spending sector, followed by connectivity services on $147 billion – business services are set to undergo the fastest growth with a 29 percent CAGR.

Meanwhile, hardware spending will be more spread across a number of categories which include enterprise hardware, personal devices, and IaaS infrastructure. Software related to DX will still take up a considerable share of the market with $288 billion in 2019 and the fastest CAGR in the technology category with 18.8 percent.

And then when it comes to geography, the United States and China will be the two largest markets for DX spending with more than half of the worldwide total between them.

"The unprecedented speed at which technologies are coming to market supporting DX strategies can only be described as frantic," says IDC Customer Insights and Analysis Group research manager Craig Simpson.

"Areas regarded as pilot projects just a year ago have already become mature operations in some industries."

Story image
Apple unveils two new iPads, including new iPad Air
The products were revealed this morning at the company’s annual September event, along with several other new offerings like the Apple Watch Series 6 and the Apple One subscription service.More
Story image
Rhipe acquires Kiwi services provider Parallo
The purchase includes Parallo’s products, solutions, assets and IP, such as the Parallo Automation Library. Parallo’s 25 employees will also join Rhipe.More
Story image
Fortinet SOARs to new heights of protection on the wings of AI & automation
Jon McGettigan, Fortinet A/NZ Regional Director, talks about SOAR (security orchestration, automation and response) and explains that effective SOAR starts with your security policy.More
Story image
Microsoft launches program to help people with disabilities excel in tech
Microsoft wants to help people with disabilities excel in their technology careers, which is why it has launched a first-of-its-kind pilot program to achieve those goals.More
Story image
CrowdStrike integrates with ServiceNow program to bolster incident response
As part of the move, users can now integrate device data from the CrowdStrike Falcon platform into their incident response process, allowing for the improvement of both the security and IT operation outcomes.More
Story image
Ericsson bolsters 5G portfolio with $1.1b Cradlepoint buyout
Ericsson will acquire Cradlepoint to create greater market share in the enterprise 5G space, boosting Ericsson’s existing 5G portfolio that includes IoT and enterprise network solutions.More