<img height="1" width="1" style="display:none;" alt="" src="https://dc.ads.linkedin.com/collect/?pid=420604&amp;fmt=gif">

Digital Transformation Spending to Approach $2 Trillion by 2022

Posted by Anna Mielczarek on 04-Dec-2018 07:30:00

According to the International Data Corporation’s (IDC’s) Worldwide Semi-annual Digital Transformation Spending Guide, global spending on the technologies and services behind Digital Transformation (DX) business practices, products, and organisations is forecast to reach US$1.97 trillion (around £1.54 trillion) in 2022!

Digital Transformation spending is expected to steadily expand throughout the 2017-2022 forecast period, achieving a five-year compound annual growth rate of 16.7%.

db123_2_cover_image_1
source: TheOpenUniversity 
 

Shawn Fitzgerald, research director, Worldwide Digital Transformation Strategies said that ‘IDC predicts that, by 2020, 30% of G2000 companies will have allocated capital budget equal to at least 10% of revenue to fuel their digital strategies’, while also emphasising that ‘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’s research four industries will be responsible for nearly half of the $1.25 trillion in worldwide DX spending in 2019:

  • discrete manufacturing ($220 billion)
  • process manufacturing ($135 billion)
  • transportation ($116 billion)
  • retail ($98 billion)

 

Top Industry Based on 2019 Market Share 

prUS44440318-F-1

source: IDC
 

IDC expects the manufacturing industries to prioritise their Digital Transformation 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).

As for the transportation industry, the leading strategic priority is digital supply chain optimisation, which translates to nearly $65 billion in spending for freight management and intelligent scheduling. Meanwhile, the retail industry will mainly focus on omni-channel commerce, which will 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,’ said Eileen Smith, program director with IDC's Customer Insights and Analysis Group. ‘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.’

 

‘The unprecedented speed at which technologies are coming to market supporting DX strategies can only be described as frantic. Areas regarded as pilot projects just a year ago have already become mature operations in some industries.’ 

(Craig Simpson, research manager with IDC's Customer Insights and Analysis Group)

 

It is worth mentioning that from a technology perspective, hardware and services spending will account for more than 75% of all DX spending in 2019. With $152 billion services spending will be led by IT services followed by connectivity services ($147 billion) while business services will experience the fastest growth (29.0% CAGR) over the five-year forecast period.

Hardware spending will be spread across a number of categories, including enterprise hardware, personal devices, and IaaS infrastructure. DX-related software spending will total $288 billion in 2019 and will be the fastest growing technology category with a CAGR of 18.8%.

 

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.

In the U.S., the leading industries will be discrete manufacturing ($63 billion), transportation ($40 billion), and professional services ($37 billion) with DX spending focused on IT services, applications, and connectivity services.

Similarly, in China, the industries spending the most on DX will be discrete manufacturing ($60 billion), followed by process manufacturing ($35 billion), and utilities ($27 billion). Connectivity services and enterprise hardware will be the largest technology categories in China.

source: IDC

 

 

 

About Us: 

B60 is a global leader in delivering Digital Transformation and Technology Development and works with ambitious firms in the U.K. Europe and USA across multiple sectors. Since 2012 B60 has been embracing digital change by utilising our unique operating models, frameworks and methodologies to truly drive innovation and change from within our clients businesses.

If you’d like to discuss with one of our experts on how you could successfully deploy Digital Transformation and Technology Development in your business drop us an email at hello@b60apps.co.uk or alternatively call us on 0121 405 0270.

 

Get in touch with B60

Topics: Digital Transformation, Finance, retail, transport, AI