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Digital Growth Spending will Reach $2 Trillion in 2020

Worldwide spending on digital transformation (DX) technologies will reach more than $1.2 trillion in 2017 -- that's an increase of 17.8 percent over 2016, according to the latest market study by International Data Corporation (IDC).

IDC expects overall digital growth spending to maintain this pace with a CAGR of 17.9 percent over the 2015 to 2020 forecast period -- eventually reaching an impressive $2 trillion in 2020.

Digital Transformation Market Development

"Changing competitive landscapes are disrupting businesses and creating an imperative to invest in digital technologies, unleashing the power of information across the enterprise and thereby improving the customer experience," said Eileen Smith, program director at IDC.

In 2017, global organizations will invest $1.2 trillion on digital transformation projects with discrete and process manufacturers contributing almost 30 percent of this spending, while the fastest growth will come from the retail, healthcare, insurance, and banking sectors.

The categories that will see the greatest DX spending in 2017 are connectivity services, IT services, and application development & deployment (AD&D). Combined, these categories will account for nearly half of all DX spending this year.

However, investments in these categories will vary considerably from industry to industry. The discrete and process manufacturing industries will invest roughly 20 percent of their DX budgets in AD&D and another 12-13 percent in IT services. Meanwhile, the transportation industry will devote nearly half of its spending to connectivity services.

The fastest growing technology categories are cloud infrastructure (29.4 percent CAGR), business services (22 percent CAGR), and applications (21.8 percent CAGR). And, despite a CAGR that is slower than the overall market, AD&D spending will grow fast enough to overtake IT services as the second largest DX technology category by 2020.

More than half of all DX investments in 2017 will go toward technologies that support operating model innovations. These investments will focus on making business operations more responsive and effective by leveraging digitally-connected products or services, assets, people, and trading partners.

Outlook for New Digital Growth Investment

Investments in operating model DX technologies help businesses redefine how work gets done. The second largest investment area 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.

According to the IDC assessment, Asia-Pacific (excluding Japan) will see the largest investments in DX technologies in 2017 with 37 percent of the worldwide total. DX spending in this region will be led by the discrete and process manufacturing industries as well as professional services firms.

The United States will be the second largest region with 30 percent of the worldwide total, led by professional services, discrete manufacturing, and the transportation industries. Latin America and the Middle East and Africa will experience the fastest growth in DX spending with five-year CAGRs of 23.4 percent and 22.6 percent, respectively.

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