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
Schneider Electric named HPE Momentum Edge Partner of the Year
The awards recognise partners from across the HPE ecosystem for their performance, customer commitment, growth and innovation, and professional achievements.More
Story image
Hands-on review: OPPO A72, the budget phone with killer cameras
I never expect budget phones to come with a fast charger, but this is another area where OPPO made sure to take care of the consumer. More
Story image
Device authentication services to reach $8.4 billion by 2026 in response to IoT cybersecurity
"There are several key technologies revolving around authentication security that currently transform the IoT device value chain."More
Story image
Commvault partners with Microsoft to deliver SaaS and cloud technology
“Today’s announcement combines two of the best enterprise cloud technologies to simplify and accelerate a customer’s journey to the cloud."More
Story image
Unisys recognised as powerful AWS partner thanks to digital transformation solutions
“Our team is dedicated to helping clients harness the power of hybrid cloud and achieve business outcomes by leveraging the agility, breadth of services and pace of innovation that AWS provides.”More
Link image
Five emerging cybersecurity trends MSP need to be aware of
MSPs need to be constantly updating their service portfolio and making the case to clients to up their cybersecurity budgets. Let’s examine five threats that have emerged in the first half of 2020 that MSPs should be monitoring as we enter the second half of the year.More