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Digital Transformation Investment will Reach $2.3 Trillion

Digital transformation is a strategic priority for many organizations. It involves managing the legacy IT environment while building a new infrastructure to enable digital growth. Savvy CIOs and CTOs will adopt intelligent platforms that enhance their internal business processes and improve external stakeholder engagement.

That's why enterprise investment in the technologies and services that enable digital transformation is forecast to reach $2.3 trillion in 2023, according to the latest worldwide market study by International Data Corporation (IDC).

Digital Transformation (DX) spending is expected to steadily expand throughout the 2019-2023 forecast period, achieving a five-year compound annual growth rate of 17.1 percent.

Digital Transformation Market Development

"We are approaching an important milestone in DX investment with our forecast showing the DX share of total worldwide technology investment hitting 53 percent in 2023," said Craig Simpson, research manager at IDC. "This will be the first time DX technology spending has represented the majority share of total worldwide information and communications technology (ICT) investment."

Worldwide DX technology investments will total more than $7.4 trillion over the next four years. The financial services sector will see the fastest overall growth with the banking, insurance, security and investment services industries each delivering CAGRs of more than 19 percent over the forecast period.

The distribution and services sector -- which includes industries like retail and professional services -- will also outpace the overall market with an 18 percent CAGR while public sector spending growth will match the overall market at 17.1 percent.

Discrete and process manufacturing will deliver the largest DX spending amounts throughout the forecast, accounting for nearly 30 percent of the worldwide total. The leading DX use cases -- discretely funded efforts that support a program objective -- in these industries are autonomic operations, robotic manufacturing, and root cause.

Retail will be the third-largest industry for DX spending with omnichannel commerce platforms and omnichannel order orchestration and fulfillment of the leading DX use cases. Professional services and transportation will be close behind retail in terms of overall DX spending.

The top DX use cases for these two industries are intelligent building energy management and freight management, respectively.

Of the 219 DX use cases identified by IDC, three will see the largest investment amounts throughout the forecast. Autonomic operations will be the largest use case in 2019 but will be overtaken by robotic manufacturing, which will more than double in size by 2023.

The third-largest use case will be freight management, followed by root cause, self-healing assets and automated maintenance, and 360-degree customer and client management.

The use cases that will see the fastest spending growth will be virtualized labs (109.5 percent CAGR), digital visualization (49.9 percent CAGR) and mining operations assistance (41.6 percent CAGR).

Outlook for Geographic Growth of DX Applications

The United States will be the largest geographic market for DX spending, delivering roughly one-third of the worldwide total throughout the forecast. The U.S. industries that will lead the way are discrete manufacturing, professional services, transportation, and process manufacturing.

Western Europe will be the second-largest geographic market in 2019, followed closely by China, which is forecast to move into the second position by the end of the forecast period. The leading industries in Western Europe will be discrete manufacturing, retail, and professional services.

In China, DX spending will be led by discrete manufacturing and process manufacturing. In all three regions, the top DX spending priorities will be smart manufacturing and digital supply chain optimization.

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