09 Nov 2021
New IDC Spending Guide Shows Continued Growth for Digital Transformation as Organizations Focus on Strategic Priorities
NEEDHAM, Mass., November 9, 2021 – Global spending on the digital transformation (DX) of business practices, products, and organizations is forecast to reach $2.8 trillion in 2025, more than double the amount allocated in 2020. According to a new update to the International Data Corporation (IDC) Worldwide Digital Transformation Spending Guide, DX spending will have a compound annual growth rate (CAGR) of 16.4% over the 2021-2025 forecast period as organizations 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," said Craig Simpson, senior research manager with IDC's Customer Insights and Analysis Group. "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. 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."
Organizations 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 comprising 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. 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 virtualized 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, totaling 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, following 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.
"By 2025, DX spending in Europe will reach $653 billion, which is more than double the amount spent in 2020. Moreover, by 2023, DX spending will overtake non-DX spending, confirming the strong commitment of European companies toward digital transformation," said Angela Vacca, senior research manager, European Industry Solutions, Customer Insights & Analysis. "In this context, European finance, healthcare, and professional services companies will grow their DX spending the most with strong variations across use cases as priorities keep shifting with recovery mostly in place, and companies consequently moving away from emergency needs to more strategic and longer-term bets."
The IDC Worldwide Digital Transformation Spending Guide (V2 2021) quantifies enterprise spending for more than 300 DX use cases and 12 technology markets across 19 industries and 14 geographies. The guide provides spending data for 51 DX strategic priorities and 99 programs as well as technology spending by deployment type (cloud, non-cloud/other).
About IDC Spending Guides
IDC's Spending Guides provide a granular view of key technology markets from a regional, vertical industry, use case, buyer, and technology perspective. The spending guides are delivered via pivot table format or custom query tool, allowing the user to easily extract meaningful information about each market by viewing data trends and relationships.
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International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology, IT benchmarking and sourcing, and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly owned subsidiary of International Data Group (IDG), the world's leading tech media, data, and marketing services company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC and LinkedIn. Subscribe to the IDC Blog for industry news and insights.
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