Spending on Digital Transformation Will Soar Past $1 Trillion in 2018

Worldwide spending on the technologies and services that enable the digital transformation (DX) of business practices, products, and organizations is forecast to be more than $1.1 trillion in 2018, an increase of 16.8% over the $958 billion spent in 2017, according to IDC.

DX spending will be led by the discrete and process manufacturing industries, which will not only spend the most on DX solutions but also set the agenda for many DX priorities, programs, and use cases. IDC examined current and future spending levels for more than 130 DX use cases across 19 industries in eight geographic regions. The results provide new insights into where DX funding is being spent as well as what DX priorities are being pursued.

Discrete manufacturing and process manufacturing are expected to spend more than $333 billion combined on DX solutions in 2018. This represents nearly 30% of all DX spending worldwide this year. From a technology perspective, the largest categories of spending will be applications, connectivity services, and IT services as manufacturers build out their digital platforms to compete in the digital economy.

The main objective and top spending priority of DX in both industries is smart manufacturing, which includes programs that focus on material optimization, smart asset management, and autonomic operations. IDC expects the two industries to invest more than $115 billion in smart manufacturing initiatives this year. Both industries will also invest heavily in innovation acceleration ($33 billion) and digital supply chain optimization ($28 billion).

Driven in part by investments from the manufacturing industries, smart manufacturing ($161 billion) and digital supply chain optimization ($101 billion) are the DX strategic priorities that will see the most spending in 2018. Other strategic priorities that will receive significant funding this year include digital grid, omni-experience engagement, omnichannel commerce, and innovation acceleration.

To achieve its DX strategic priorities, every business will develop programs that represent a long-term plan of action toward these goals. The DX programs that will receive the most funding in 2018 are digital supply chain and logistics automation ($93 billion) and smart asset management ($91 billion), followed by predictive grid and manufacturing operations (each more than $40 billion).

Each strategic priority includes a number of programs which are then comprised of use cases. These use cases are discretely funded efforts that support a program objective, and the overall strategic goals of an organization. The use cases that will receive the most funding this year include freight management ($56 billion), robotic manufacturing ($43 billion), asset instrumentation ($43 billion), and autonomic operations ($35 billion).