Published on November 9, 2023, 5:19 am

Organizations that are embracing digital transformation (DX) have a specific goal in mind: creating new sources of value through digital products, services, and experiences. The COVID-19 pandemic has also highlighted another advantage of DX – it enhances an organization’s resilience against disruptions in the market.

According to IDC’s Worldwide Digital Transformation Spending Guide, global spending on DX is expected to reach a staggering $3.4 trillion by 2026, with a five-year compound annual growth rate (CAGR) of 16.3%. Despite challenges such as supply chain constraints, inflation, political uncertainty, and the impending recession, investment in digital transformation is anticipated to remain strong. Craig Simpson, senior research manager with IDC’s Data & Analytics Group, emphasized the benefits of DX technology, including automation, strong intelligence, operational transparency, and customer experience support that contribute to navigating today’s uncertain environment and capitalizing on recovery opportunities.

When it comes to DX use cases, the highest investments over the forecast period will be seen in Innovate, Scale, and Operate. This broad category encompasses large-scale operations such as making, building, and designing activities. Supply chain management, engineering, design and research, operations, and manufacturing plant floor operations are key components under this umbrella.

Innovate, scale, and operate will account for over 20% of all DX investments during the forecast period. Following closely behind are back-office support and infrastructure at more than 15% of total DX spending and customer experience at over 8%. Among the more than 300 identified DX use cases by IDC, Digital Twins and robotic process automation-based claims processing show the fastest growth with five-year CAGRs of 35.2% and 31.0%, respectively.

Examining industries leading the DX spend reveals that nearly 30% of worldwide DX spending will come from the Discrete and Process Manufacturing sectors. These industries prioritize use cases such as robotic manufacturing, autonomic operations, self-healing assets, and augmented maintenance. The Professional Services and Retail industries follow as the next largest sectors for DX spending, with Back-Office Support and Infrastructure being the primary use case.

In terms of growth in DX spending, the Securities and Investment Services industry takes the lead with a five-year CAGR of 20.6%. Banking and Healthcare Providers closely trail with CAGRs of 19.4% and 19.3%, respectively.

The United States will be the dominant geographic market for DX spending throughout the forecast period, accounting for nearly 35% of the worldwide total. It is projected to surpass the $1 trillion mark by 2025. Western Europe will occupy second place, representing almost a quarter of all DX spending. China stands out for its strong growth in DX spending with a five-year CAGR of 18.6%, followed closely by Latin America at 18.2%.

Mario Allen Clement, associate research manager for Asia/Pacific IT Spending Team at IDC, emphasized Asia’s growing adoption of connected technology among consumers and enterprises in the region. He noted that organizations have accelerated their digital engagements, products, and services during times of pandemic and recovery by leveraging digital technology more rapidly.

Clement also highlighted that new offerings and solutions are widely available across the Asia/Pacific region due to businesses gravitating toward digital transformation as a means of resiliency and innovation. Double-digit growth is expected across various sectors within this region from IoT (Internet of Things) and Robotics use cases within Manufacturing.

It is clear that customer experience, engagement, and personalized customer journeys will play a pivotal role in driving stable growth in digital transformation moving forward.

In conclusion, digital transformation is crucial for organizations looking to create value through digital endeavors such as products, services, and experiences. Not only does it bring about improved resilience against market disruptions but also opens doors to new opportunities for success. With significant investments in DX use cases, industries leading the charge, and geographic markets driving spending, the future of digital transformation looks promising.


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