Publication date: 26 Oct 2022
IDC Spending Guide Sees Worldwide Digital Transformation Investments Reaching $3.4 Trillion in 2026
NEEDHAM, Mass., October 26, 2022 – Forward-looking organizations have been pursuing digital transformation (DX) with the goal of creating new sources of value through digital products, services, and experiences. As an added benefit, the pandemic revealed that digital transformation efforts improve an organization's resilience against market disruptions. Given its importance to future success, global DX spending is forecast to reach $3.4 trillion in 2026 with a five-year compound annual growth rate (CAGR) of 16.3%, according to the International Data Corporation (IDC) Worldwide Digital Transformation Spending Guide.
"Despite strong headwinds from global supply chain constraints, soaring inflation, political uncertainty, and an impending recession, investment in digital transformation is expected to remain robust," said Craig Simpson, senior research manager with IDC's Data & Analytics Group. "The benefits of investing in DX technology, including automation, strong intelligence, operational transparency, and direct support around customer experience, all support targeted areas of business focus to weather the current environment of uncertainty and to make the most of any opportunities in the recovery."
The DX use case that will see the largest investments over the forecast period is Innovate, Scale, and Operate, a broad area covering large-scale operations, including making, building, and designing activities. Core business functions that make up this area include supply chain management, engineering, design and research, operations, and manufacturing plant floor operations. Innovate, Scale, and Operate will account for more than 20% of all DX investments throughout the forecast. The next largest use cases are Back-Office Support and Infrastructure at more than 15% of all DX spending and Customer Experience at more than 8%. The fastest growing among the more than 300 DX use cases identified by IDC include Digital Twins and Robotic Process Automation-Based Claims Processing with five-year CAGRs of 35.2% and 31.0% respectively.
Nearly 30% of worldwide DX spending throughout the forecast period will come from the Discrete and Process Manufacturing industries, where Robotic Manufacturing, Autonomic Operations, and Self-Healing Assets and Augmented Maintenance are among the leading use cases. The next largest industries for DX spending are Professional Services and Retail where Back-Office Support and Infrastructure is the leading DX use case. The Securities and Investment Services industry will experience the fastest growth in DX spending with a five-year CAGR of 20.6%, followed closely by Banking and Healthcare Providers with CAGRs of 19.4% and 19.3% respectively.
The United States will be the largest geographic market for DX spending throughout the forecast, accounting for nearly 35% of the worldwide total and surpassing the $1 trillion mark in 2025. Western Europe will be the second largest region with nearly a quarter of all DX spending. China will see the strongest growth in DX spending with a five-year CAGR of 18.6%, followed closely by Latin America with a CAGR of 18.2%.
"Consumers and enterprises within the Asia/Pacific (excluding Japan and China) (APeJC) region are growing in connected technology and they tend to show higher consumption of digital products and services," said Mario Allen Clement, associate research manager for the Asia/Pacific IT Spending Team. "Amidst the pandemic and recovery, organizations have accelerated their digital engagements, products, and services, which have been predominantly improved by deploying digital technology faster. More and more businesses have started to go digital as a source of resiliency and innovation, which is shown across the region as new offerings and solutions are widely available. The APeJC region is expected to grow in double digits across the forecast period where use cases from IoT and Robotics are showing a high potential within the Manufacturing sector. Customer experience, engagements, and personalized customer journey will be the highlight of pushing a stable growth in digital transformation."
The IDC Worldwide Digital Transformation Spending Guide (V2 2022) examines the digital transformation opportunity from a use case — technology, industry, and geography — perspective. The Spending Guide quantifies enterprise spending for more than 300 DX use cases and 12 technology markets across 19 industries and 14 geographic regions. 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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