Spending on Digital Transformation Will Be Nearly $2 Trillion in 2022
Worldwide spending on the technologies and services that enable the digital transformation (DX) of business practices, products, and organizations is forecast to reach $1.97 trillion in 2022, according to IDC. DX spending is expected to steadily expand throughout the 2017-2022 forecast period, achieving a five-year compound annual growth rate of 16.7%.
"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," said Shawn Fitzgerald, research director, Worldwide Digital Transformation Strategies. "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 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), and retail ($98 billion). For the discrete and process manufacturing industries, the top DX spending priority is smart manufacturing. In the transportation industry, the leading strategic priority is digital supply chain optimization, which translates to nearly $65 billion in spending. The top priority for the retail industry is omni-channel commerce, which will drive investments of more than $27 billion.
The DX use cases that will see the largest investment across all industries in 2019 will be freight management ($60 billion), autonomic operations ($54 billion), robotic manufacturing ($46 billion), and intelligent and predictive grid management for electricity, gas, and water ($45 billion). Other use cases that will see investments in excess of $20 billion in 2019 include root cause, self-healing assets and automated maintenance, and quality and compliance.
From a technology perspective, hardware and services spending will account for more than 75% of all DX spending in 2019. Services spending will be led by IT services ($152 billion) and 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%. The United States and China will be the two largest geographic markets for DX spending, delivering more than half the worldwide total in 2019.