DX spending set to grow in 2020 despite pandemic woes
FYI, this story is more than a year old
Spending on digital transformation (DX) will not slow down despite the slew of challenges presented daily by the COVID-19 pandemic, according to new data from IDC.
Spending on DX technologies and services is forecast to grow 10.4% worldwide in 2020 to an eye-watering US$1.3 trillion, highlighting the growing significance being placed on adoption of emerging technologies.
Of the 278 DX use cases identified in the IDC’s DX Spending Guide, only nine will see a decline in spending this year.
"COVID-19 has upended the global economy, with direct negative implications on the way businesses invest in IT," says IDC senior research manager of customer insights Craig Simpson.
“DX technology investment has not gone unscathed, but so far it has been affected to a lesser extent since many large-scale DX projects underway or planned are instrumental to broader strategic business initiatives.
“Compared to IDC's pre-COVID-19 forecast, the five-year growth rate for DX spending has declined by less than two percentage points."
Research from IDC’s report confirms that the degree of economic hardship experienced as a result of the pandemic is directly tied to the degree of digital transformation growth in 2020.
This means hotels, theme parks, casinos, movie theatres, and any other business forced to close their doors due to isolation measures will still see some DX growth, but a comparatively low amount at 5.3% - compared to 18.4% in the prior-year period.
Similarly, discrete manufacturing, the industry with the largest DX spending amount, will only grow 6.6% this year, down from 14.5% growth in 2019.
Meanwhile, the construction (16.3%) and healthcare (15.7%) industries are expected to see the strongest growth in DX spending in 2020, with spending growth growing since last year.
“COVID-19 has wiped off almost $500 billion of worldwide DX technology investment between 2020-2023 from our pre-COVID-19 forecast," says IDC program vice president of customer insights Eileen Smith.
"Yet despite these losses, pockets of growth opportunities exist across most industries when diving deep into specific use cases that solve specific business problems.
“A few examples include RPA-based claims processing in insurance, digital visualisation in education, omnichannel commerce platforms in telecommunications, and clinical trial operational excellence in process manufacturing."
In terms of DX use cases, virtualised labs and digital visualisation in the education sector will see the biggest year-on-year growth.
This is followed by robotic process automation-based claims processing in insurance, and augmented design management in the professional services industry.
The United States market remains the largest in terms of DX spending, representing roughly a third of the worldwide total in 2020.
This is followed by Western Europe as the second-largest region for DX spending, trailed closely by China. These two regions will also deliver the strongest year-over-year growth in DX spending at 13.6% for China and 12.8% for Western Europe.