Technology | Media | Telecommunications

Friday, January 29, 2016

Digital Transformation Tech Spending will Reach $2.1B

Across the globe, more CEOs and CIOs are attempting to capitalize on digital business transformation initiatives, to create a progressive environment that delivers a strategic competitive advantage. Likewise, vendors seek to offer the cloud, mobility and social commerce solutions that these companies require.

Worldwide spending on digital transformation (DX) technologies will grow to more than $2.1 billion in 2019 with a compound annual growth rate (CAGR) of 16.8 percent, according to the latest market study by International Data Corporation (IDC).

According to the IDC assessment, spending on DX technologies within the United States market will follow a similar trajectory, reaching nearly $732 million in 2019.

IDC defines digital transformation as the continuous process by which enterprises adapt to or drive disruptive changes in their customers and markets (external ecosystem), by leveraging digital competencies to innovate new business models, products and/or services.

Transforming Core Commercial Practices

Digital transformation involves enterprise-wide change requiring innovation in at least one of the following areas: Organization (workforce); Omni-Experience (customer); Operating Model (business model/process changes); Information; or Leadership -- as a part of a strategic business technology implementation.

IDC says that enterprises will invest the most -- nearly half the worldwide total in 2019 -- on DX technologies that support operating model innovations. These projects will typically focus on making business operations more responsive and effective by leveraging digitally-connected products/services, assets, people, and trading partners.

Technologies that support information innovations will be the fastest growing segment throughout the forecast period, approaching one-third of all DX spending by 2019. These investments will focus on technologies that help companies to better extract and develop the value and utility of business-related information.

"Digital transformation is not just a technology trend, it is at the center of business strategies across all industry segments and markets," said Robert Parker, group vice president at IDC. "Enterprise investments in digital transformation will constitute the majority of growth in technology markets over the next five years."

Industries Leading DX Strategy Adoption

The vertical industries with the largest DX spending worldwide in 2015 were discrete manufacturing at $224.7 million, followed by process manufacturing and transportation. These three industries were also the DX spending leaders in the United States market in 2015. However, DX spending by U.S. retail and healthcare providers is forecast to move these two industries into the number 3 and 4 positions by 2019.

The retail industry is forecast to have the fastest growing DX spending, both worldwide and in the U.S., with a five-year CAGR of more than 21 percent. Worldwide, healthcare providers and resource industries will follow closely, while telecommunications and healthcare providers will be the next fastest growing industries in the U.S. marketplace.

"Digital transformation has altered, and will continue to alter, the landscapes of business, education, and government, making this one of the fastest growing areas of technology spending," said Eileen Smith, program director at IDC. "Line of Business leaders must apply these technology-enabled changes to unleash productivity gains and significant competitive advantage across their organizations."