Worldwide spending on Digital Transformation will surpass $2 Billion in 2019

According to the new Worldwide Digital Transformation Spending Guide from International Data Corporation (IDC), worldwide spending on digital transformation (DX) technologies will grow to more than $2.1 billion in 2019 with a compound annual growth rate (CAGR) of 16.8% over the 2014-2019 forecast period. Spending on DX technologies in the United States will follow a similar trajectory, reaching nearly $732 million in 2019.

  • 8 years ago Posted in

IDC defines Digital Transformation as the continuous process by which enterprises adapt to or drive disruptive changes in their customers and markets (external ecosystem) by leveraging digital competencies to innovate new business models, products, and services that seamlessly blend digital and physical and business and customer experiences while improving operational efficiencies and organizational performance. Digital transformation involves enterprise-wide change requiring innovation in at least one of the following areas – Organization (i.e., workforce); Omni-Experience (i.e., customer); Operating Model (i.e., business model/process changes); Information; or Leadership – as a part of a technology implementation.

Enterprises are forecast to invest the most (nearly half the worldwide total in 2019) on DX technologies that support operating model innovations. These investments will focus on making business operations more responsive and effective by leveraging digitally-connected products/services, assets, people, and trading partners. Investments in operating model DX technologies help businesses redefine "how" work gets done by integrating external market connections with internal digital processes and projects.

Technologies that support information innovations will be the fastest growing segment throughout the forecast, approaching one third of all DX spending by 2019. These investments will focus on technologies that help companies to better extract and develop the value and utility of information relative to customers, markets, transactions, products, services, assets and business experiences. Information is not only used to inform better decisions and optimize operations and products, but is also monetized in the form of products and services.

"Digital transformation is not just a technology trend, it is at the center of business strategies across all industry segments and markets," said Robert Parker, Group Vice President at IDC. "Enabled by the 3rd Platform, digital transformation represents a critical opportunity for companies to redefine their customers' experience, achieve new levels of enterprise productivity, and create competitive advantage. Enterprise investments in digital transformation will constitute the majority of growth in technology markets over the next five years, making it a priority for technology vendors as well."

The vertical industries with the largest DX spending worldwide in 2015 were discrete manufacturing at $224.7 billion, followed by process manufacturing and transportation. These three industries were also the DX spending leaders in the United States in 2015. However, DX spending by U.S. retail and healthcare providers is forecast to move these two industries into the number 3 and 4 positions by 2019.

The retail industry is forecast to have the fastest growing DX spending, both worldwide and in the U.S., with a five-year CAGR of more than 21%. Worldwide, healthcare providers and resource industries will follow closely, while telecommunications and healthcare providers will be the next fastest growing industries in the U.S.

"Digital transformation has altered, and will continue to alter, the landscapes of business, education, and government, making this one of the fastest growing areas of technology spending," said Eileen Smith, Program Director, Customer Insights and Analysis. "Organizations must apply these technology-enabled changes to unleash productivity gains and significant competitive advantage across their organizations."

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