Over $1 Trillion spent on Digital Transformation This Year

In BICSI Bytes, News by info@bicsi.com.au

According to IDC, enterprises 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. IDC’s latest Worldwide Digital Transformation Spending Guide forecasts global DX spending to reach US$1.18 trillion in 2019 – a 17.9% increase over 2018.

“Worldwide DX technology investments are expected to total more than $6 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% and 20%, with the financial sector forecast to be the fastest with a compound annual growth rate (CAGR) of 20.4% between 2017 and 2022.”

The two industries that will invest the most in digital transformation in 2019 are discrete manufacturing ($221.6 billion) and process manufacturing ($124.5 billion). 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 21.4% CAGR will enable the professional services industry to move ahead of transportation in overall DX spending in 2020.

The DX use-cases – discretely funded efforts that support a program objective – that will see the largest investment across all industries in 2019 will be autonomic operations ($52 billion), robotic manufacturing ($45 billion), freight management ($41 billion), and root cause ($35 billion). Other use-cases that will see investments in excess of $20 billion in 2019 include self-healing assets and augmented maintenance, intelligent and predictive grid management for electricity, and quality and compliance. The use-cases that will experience the greatest spending growth over the 2018-2022 forecast period are virtualised labs (108.6% CAGR), digital visualisation (53.5% CAGR), and augmented design management (43.9% CAGR).

Hardware and services investments will account for over 75% of all DX spending in 2019. Services spending will be led by IT services ($154 billion) and connectivity services ($102 billion). Hardware spending will be spread across several categories, including enterprise hardware, personal devices, and IaaS infrastructure. DX-related software spending will total $253 billion in 2019. The fastest growing technology categories will be IaaS (35.9% CAGR), application development and deployment software (26.7% CAGR), and business services (26.5% CAGR).

“DX 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. “The businesses that 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.”