Spending on digital transformation (DX) technologies will reach nearly $1.3 trillion in 2018 -- that's an increase of 16.8 percent over 2017. In 2021, DX spending will nearly double to more than $2.1 trillion, according to the latest worldwide market study by International Data Corporation (IDC).
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 or services, assets, people, and trading partners.
Digital Transformation Market Development
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 enterprise data and associated actionable insights for competitive advantage through better decisions, optimized operations, and new products and services.
"At this point in the digital transformation era, all industries are investing heavily in new technologies," said Eileen Smith, program director at IDC. "While some industries are more focused on cloud, big data, analytics, and mobility, many have shifted their investment focus toward the Internet of Things (IoT), artificial intelligence (AI), cognitive computing and robotics."
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).
The industries that will see the fastest DX spending growth over the five-year forecast are construction (32.1 percent CAGR), retail (21.9 percent CAGR), and healthcare provider (21.7 percent 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 and omni-experience transformation.
Outlook for Regional DX Application Growth
On a geographic basis, the United States will see DX spending of $437 billion in 2018 followed closely by the Asia-Pacific (excluding Japan) region at $412 billion. The U.S. will also maintain a five-year CAGR that outpaces the overall market, enabling it to remain the global leader throughout the forecast period.
DX spending in Europe, the Middle East, and Africa (EMEA) will total $280 billion in 2018. The geographic regions that will experience the fastest growth in DX spending are Canada (25.2 percent CAGR), Latin America (23.3 percent CAGR), Central and Eastern Europe (22.1 percent CAGR), and the Middle East and Africa (22.0 percent CAGR).
According to the IDC assessment, the competitive pressures from early adopters are starting to force others to begin transformational efforts. Even in regions with relatively slow uptake, enterprises and public sector organizations are rethinking their approaches and embracing digital change.