Spending on Digital Transformation Will Reach $1.3 Trillion in 2018

Spending on Digital Transformation Will Reach $1.3 Trillion in 2018
Fotolia

Worldwide spending on digital transformation (DX) technologies (hardware, software, and services) is expected to be nearly $1.3 trillion in 2018, an increase of 16.8% over the $1.1 trillion spent in 2017. IDC forecasts DX spending to maintain a strong pace of growth over the 2016-2021 forecast period with a compound annual growth rate (CAGR) of 17.9%. In 2021, DX spending will nearly double to more than $2.1 trillion.

The majority of DX spending in 2018 ($662 billion) will go toward technologies that support new or expanded operating models as organizations seek to make their operations more effective and responsive by leveraging digitally-connected products/services, assets, people, and trading partners. The second largest DX investment area in 2018 ($326 billion) will be technologies supporting omni-experience innovations that transform how customers, partners, employees, and things communicate with each other and the products and services created to meet unique and individualized demand. Information will also be an important DX investment area ($240 billion in 2018) as organizations strive to obtain and leverage information for competitive advantage through better decisions, optimized operations, and new products and services.

The industries that will invest the most in digital transformation in 2018 are discrete manufacturing ($214 billion), professional services ($133 billion), process manufacturing ($132 billion), and transportation ($127 billion). All four industries are expected to spend the most on operating model transformation, with information transformation as the second largest area of investment for both the discrete and process manufacturing industries and omni-experience transformation coming in second for the professional services and transformation industries. The industries that will see the fastest DX spending growth over the five-year forecast are construction (32.1% CAGR), retail (21.9% CAGR), and healthcare provider (21.7% CAGR).

The technology categories that will see the greatest amount of DX spending in 2018 are connectivity services, IT services, enterprise hardware, and applications. Investment in connectivity services will be central to those industries focusing on operating model transformation and omni-experience transformation. Industries focusing on information transformation are expected to invest more heavily in IT services and enterprise hardware. Investments in new applications will be important to virtually all industries as they pursue their DX strategies.