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Wednesday, December 05, 2018

Innovation Acceleration Technologies Drive IT Spending

Successful vendors enable business and IT decision makers to better understand the scope and direction of their investments for digital transformation. It's a global phenomenon, where those savvy vendors with a client-centered view of how to quickly achieve commercial outcomes will gain the most market share.

European spending on information technologies and services that enable the digital transformation (DX) of business practices, products, and organizations is forecast to reach $378.2 billion in 2022, according to the latest worldwide market study by International Data Corporation (IDC).

Digital Transformation Market Development

Within Europe, DX spending is expected to steadily expand throughout the 2017-2022 forecast period, achieving a five-year compound annual growth rate (CAGR) of 15.1 percent.

Europe is the third largest geography for DX spending, after the United States and China. Four industries will be responsible for nearly 44 percent of the $256 billion in European DX spending in 2019 -- discrete manufacturing ($39 billion), process manufacturing ($25 billion), retail ($26 billion), and utilities ($23 billion).

For the European manufacturing sector, IDC expects the industry to invest more than $27.6 billion in smart manufacturing next year along with significant investments in digital innovation ($8.8 billion) and digital supply chain optimization ($5.5 billion).

In the retail space, the leading strategic priority is omni-channel commerce, which translates to nearly $5 billion in spending for related platforms and order orchestration and fulfillment.

Meanwhile, the top priority for the utility industry is the digital grid, which will drive investments of more than $13.6 billion in intelligent and predictive grid management and digital grid simulation.

IDC says the largest investments in DX use cases across all industries in 2019 will be freight management ($11 billion), autonomic operations ($7 billion), robotic manufacturing ($8 billion), and intelligent and predictive grid management ($12 billion).

"European manufacturing companies are increasingly adopting innovation accelerator technologies," said Neli Vacheva, senior analyst at IDC. "The sector is introducing innovation-enabled production processes, advanced asset and inventory management, and new sales models based on IoT, robotization, artificial intelligence, machine learning, and 3D printing."

Outlook for DX Infrastructure Investment in Europe

From a technology perspective, hardware and services will account for more than 78 percent of all DX spending in 2019. Services spending will be led by IT services ($43 billion) and connectivity services ($25 billion), while business services will post the highest growth (19.8 percent CAGR) over the five-year forecast period.

Hardware spending will be spread across several categories, including enterprise hardware, personal devices, and IaaS infrastructure. DX-related software spending will total $55 billion in 2019 and will be the fastest-growing technology category with a CAGR of 18.1 percent, according to the IDC assessment.