Many enterprises are now investing in technologies and services that enable the digital transformation (DX) of their business models, products and services. According to the latest market study by International Data Corporation (IDC), global DX spending will reach $1.18 trillion in 2019 -- that's an increase of 17.9 percent over 2018.
"Worldwide DX technology investments are expected to total more than $6 trillion over the next four years," said Eileen Smith, vice president at IDC. "Strong DX technology investment growth is forecast across all sectors, ranging between 15 and 20 percent, with the financial sector forecast to be the fastest with a compound annual growth rate (CAGR) of 20.4 percent between 2017 and 2022."
Digital Transformation Market Development
The two industries that will invest the most in digital transformation in 2019 are discrete manufacturing ($221.6 billion) and process manufacturing ($124.5 billion). For both industries, the top DX spending priority is smart manufacturing, supported by significant investments in autonomic operations, manufacturing operations, and quality.
Retail will be the next largest industry in 2019, followed closely by transportation and professional services. Each of these industries will be pursuing a different mix of strategic priorities, from omni-channel commerce for the retail industry to digital supply chain optimization in the transportation industry and facility management – transforming workspace in professional services.
An expected CAGR of 21.4 percent will enable the professional services industry to move ahead of transportation in terms of overall DX spending in 2020.
The DX use cases – discretely funded efforts that support a program objective – that will see the largest investment across all industries in 2019 will be autonomic operations ($52 billion), robotic manufacturing ($45 billion), freight management ($41 billion), and root cause ($35 billion).
Other use cases that will see investments in excess of $20 billion in 2019 include self-healing assets and augmented maintenance, intelligent and predictive grid management for electricity, and quality and compliance.
The use cases that will experience the greatest spending growth over the 2018-2022 forecast period are virtualized labs (108.6 percent CAGR), digital visualization (53.5 percent CAGR), and augmented design management (43.9 percent CAGR).
From a technology perspective, hardware and services investments will account for more than 75 percent of all DX spending in 2019. Services spending will be led by IT services ($154 billion) and connectivity services ($102 billion).
Hardware spending will be spread across several categories, including enterprise hardware, personal devices, and cloud computing IaaS infrastructure. DX-related software spending will total $253 billion in 2019.
The fastest growing DX technology categories will be cloud IaaS (35.9 percent CAGR), application development and deployment software (26.7 percent CAGR), and business services (26.5 percent CAGR).
Outlook for Digital Transformation Regional Growth
According to the IDC assessment, the United States and China will be the two largest geographic markets for DX spending, delivering more than half the worldwide total in 2019.
In the U.S., the leading industries will be discrete manufacturing ($63 billion), professional services ($37 billion) and transportation ($34 billion) with DX spending focused on IT services, applications, and enterprise hardware.
In China, the industries spending the most on DX will be discrete manufacturing ($55 billion), process manufacturing ($31 billion), and state/local government ($21 billion). Connectivity services and enterprise hardware will be the largest technology categories in China.
"Worldwide DX technology investments are expected to total more than $6 trillion over the next four years," said Eileen Smith, vice president at IDC. "Strong DX technology investment growth is forecast across all sectors, ranging between 15 and 20 percent, with the financial sector forecast to be the fastest with a compound annual growth rate (CAGR) of 20.4 percent between 2017 and 2022."
Digital Transformation Market Development
The two industries that will invest the most in digital transformation in 2019 are discrete manufacturing ($221.6 billion) and process manufacturing ($124.5 billion). For both industries, the top DX spending priority is smart manufacturing, supported by significant investments in autonomic operations, manufacturing operations, and quality.
Retail will be the next largest industry in 2019, followed closely by transportation and professional services. Each of these industries will be pursuing a different mix of strategic priorities, from omni-channel commerce for the retail industry to digital supply chain optimization in the transportation industry and facility management – transforming workspace in professional services.
An expected CAGR of 21.4 percent will enable the professional services industry to move ahead of transportation in terms of overall DX spending in 2020.
The DX use cases – discretely funded efforts that support a program objective – that will see the largest investment across all industries in 2019 will be autonomic operations ($52 billion), robotic manufacturing ($45 billion), freight management ($41 billion), and root cause ($35 billion).
Other use cases that will see investments in excess of $20 billion in 2019 include self-healing assets and augmented maintenance, intelligent and predictive grid management for electricity, and quality and compliance.
The use cases that will experience the greatest spending growth over the 2018-2022 forecast period are virtualized labs (108.6 percent CAGR), digital visualization (53.5 percent CAGR), and augmented design management (43.9 percent CAGR).
From a technology perspective, hardware and services investments will account for more than 75 percent of all DX spending in 2019. Services spending will be led by IT services ($154 billion) and connectivity services ($102 billion).
Hardware spending will be spread across several categories, including enterprise hardware, personal devices, and cloud computing IaaS infrastructure. DX-related software spending will total $253 billion in 2019.
The fastest growing DX technology categories will be cloud IaaS (35.9 percent CAGR), application development and deployment software (26.7 percent CAGR), and business services (26.5 percent CAGR).
Outlook for Digital Transformation Regional Growth
According to the IDC assessment, the United States and China will be the two largest geographic markets for DX spending, delivering more than half the worldwide total in 2019.
In the U.S., the leading industries will be discrete manufacturing ($63 billion), professional services ($37 billion) and transportation ($34 billion) with DX spending focused on IT services, applications, and enterprise hardware.
In China, the industries spending the most on DX will be discrete manufacturing ($55 billion), process manufacturing ($31 billion), and state/local government ($21 billion). Connectivity services and enterprise hardware will be the largest technology categories in China.