According to IDC, global spending on technologies and services to enable digital transformation (DX) of business practices, products and organisations is set to reach $1.97 trillion in 2022, with a CAGR of 16.7% over the 2017-2022 forecast period.
"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," the analyst says. "This shift toward capital funding is an important one as business executives come to recognize digital transformation as a long-term investment. This commitment to funding DX will continue to drive spending well into the next decade."
Four industries are responsible for nearly 50% of global 2017 DX spending worth $1.25tr-- discrete manufacturing ($220 billion), process manufacturing ($135bn), transportation ($116bn) and retail ($98bn). The top DX spending priority for the discrete and process manufacturing industries is smart manufacturing, with the two industries spending over $1.67bn on smart manufacturing in 2019. The industries will also make "significant" investments in digital innovation ($46bn) and digital supply chain optimisation ($29bn).
The leading strategic priority for the transportation industry is digital supply chain optimisation, leading to $65bn in spending on freight management and intelligent scheduling. Meanwhile the top priority for retail is omni-channel commerce, driving investments of over $27bn in omni-channel commerce platforms, augmented reality experiences, in-store contextualised marketing and next-generation payments.
The DX use cases seeing the largest investments across all industries in 2019 are freight management ($60bn), autonomic operations ($56bn), robotic manufacturing ($46bn) and intelligent and predictive grid management for electricity, gas and water ($46bn). Other use cases seeing investments worth over $20bn in 2019 include root cause, self-healing assets and automated maintenance, and quality and compliance.
In terms of technology, hardware and services account for over 75% of all 2019 DX spending. Leading services spending are IT services ($152bn) and connectivity services ($147bn), while business services will experience the fastest growth (29% CAGR) over the 5-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 totals $288bn in 2019, and is the fastest growing technology category with an 18.8% CAGR.
