Why worldwide spending on digital transformation is growing at 17.1 pc
FOR ALMOST a decade now, companies have allocated significant chunks of their annual budget to digital transformation projects.
Unfortunately, not a lot of them did very well. According to experts, between 60 and 70 percent of all digital transformation projects have failed — but that isn’t going to stop organizations from chasing the digital agenda.
If anything, business leaders seem to be learning from their past experiences and failures to embark on a new ‘digital transformation 2.0‘ journey where deployments are made with more confidence and success stories are becoming more commonplace.
New forecasts from IDC indicate that the corporations around the world intend to spend heavily on digital transformation in the coming years, with a compounded annual growth rate (CAGR) of 17.1 percent between 2019 and 2023.
In fact, in 2023, the analyst firm believes that worldwide spending on technologies and services that enable the digitization of business practices, products, and organizations is expected to reach US$2.3 trillion.
To put that figure in perspective, consider the fact that the GDP of Singapore is about US$323.9 billion, that of Malaysia is about US$314.5 billion, and that of Hong Kong is US$341.4 billion.
“We are approaching an important milestone in digital transformation investment with our forecast showing the digital transformation share of total worldwide technology investment hitting 53 percent in 2023,” said IDC Customer Insights and Analysis Group Research Manager Craig Simpson.
“This will be the first time DX technology spending has represented the majority share of total worldwide information and communications technology (ICT) investment in our forecast, which is a significant milestone and reflective of the larger commitment to enterprise-wide digital transformation.”
According to IDC, discrete and process manufacturing will see the largest spend throughout the forecast, accounting for nearly 30 percent of the worldwide total — with autonomic operations and robotic manufacturing among top use cases.
After discrete and process manufacturing, the retail industry will be the third-largest spender with omnichannel commerce platforms and omnichannel order orchestration and fulfillment among leading use cases.
Professional services and transportation will be close behind retail in terms of overall spends, said IDC. The top use cases for these two industries are intelligent building energy management and freight management, respectively.
Overall, this year, autonomic operations will be the most prominent use case but will be overtaken by robotic manufacturing, which will more than double in size by 2023.
“Worldwide digital transformation technology investments will total more than US$7.4 trillion over the next four years,” said IDC Customer Insights and Analysis Group Program VP Eileen Smith.
In terms of geography, the United States will be the largest market for spending, delivering roughly one-third of the worldwide total throughout the forecast. Western Europe will be the second-largest market this year, followed closely by China — however, the latter is set to move ahead of Western Europe by the end of the forecast period.
In China, digital transformation spending will be led by discrete manufacturing and process manufacturing.
Overall, it is expected that digital transformation projects in the coming years will deliver better returns than investments made in previous years thanks to the lessons that managers, business leaders, and board members have learned in recent years.