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Digital transformation initiatives on the rise as organisations focus on strategic priorities

By Ryan Morris-Reade
Thu 11 Nov 2021

Global spending on the digital transformation of business practices, products, and organisations is set to reach $2.8 trillion in 2025, according to new forecasts from IDC.

The figure shows spending is set to more than double the amount allocated in 2020. 

The IDC Worldwide Digital Transformation Spending Guide reveals DX spending will have a compound annual growth rate of 16.4% over the 2021-2025 forecast period, as organisations pursue a holistic digital strategy for people, processes, technology, data, and governance.

"For the first time, IDC has forecast global DX spending to exceed $10 trillion over a five-year period," says IDC's Customer Insights and Analysis Group, senior research manager, Craig Simpson. 

"While most DX projects remained on track in 2020 and into 2021 during the pandemic, IDC forecasts DX technology investments to accelerate in 2022, with a renewed drive towards more long-term strategic digital objectives," he says.

"Beyond operational DX investments, customer experience is garnering some of the largest DX technology investments from consumer-oriented industries such as securities and investment services, banking, and retail."

According to IDC, organisations allocate their DX investments toward a number of strategic priorities that align with what they expect to accomplish over an extended period in pursuit of their digital mission. Many of these priorities coalesce around operational objectives, including back-office support and infrastructure for core business functions such as accounting & finance, human resources, legal, security and risk, and enterprise IT. 

Similarly, innovate, scale, and operate priorities refer to a broad area covering large-scale operations, including making, building, and designing activities. Core business functions in this area include supply chain management, engineering, design and research, operations, and manufacturing plant floor operations. 

Finally, customer experience is a specific area covering all customer-related functions and related technologies supported by DX. Core business functions comprising this area include customer services, marketing, and sales. While the back office support and infrastructure and innovate, scale, and operate priorities will see significantly larger spending totals throughout the forecast, customer experience investments will see faster investment growth.

The DX use cases – discretely funded efforts that support a particular program objective – that will receive the most spending will be spread across the three strategic priorities, IDC says.

Investment in robotic manufacturing will grow to $120.6 billion in 2025, followed by autonomic operations and 360-degree customer and client management at $90.9 and $74.7 billion, respectively. 

The DX use cases with the fastest spending growth will be virtualised student workspaces (43.8% CAGR), mining operations assistance (39.1% CAGR), and augmented design management (34.5% CAGR). 

Of the more than 300 DX use cases identified by IDC, only five will have five-year CAGRs of less than 10% over the forecast period.

The industries that will see the largest DX spending throughout the forecast are discrete and process manufacturing, followed by professional services and retail. Combined, the two manufacturing industries will account for nearly 30% of all DX spending, totalling more than $816 billion in 2025. 

The industries that will experience the fastest growth in DX spending over the 2020-2025 forecast are construction (21.0% CAGR), securities and investment services (19.2% CAGR), and banking (19.0% CAGR). All 19 industries covered in the DX Spending Guide are forecast to deliver double-digit growth over the five-year forecast.

The United States will be the largest geographic market for DX spending, delivering roughly one-third of the worldwide total throughout the forecast. Western Europe will be the second-largest region for DX spending, followed closely by China. China will also deliver the strongest year-over-year growth in DX spending, with a five-year CAGR of 18.4%. Latin America will be the region with the second-fastest growth, with a 17.5% CAGR.

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