All the R&D devoted to pushing the envelope of telecommunications and network computing has yielded what IDC dubs “digital transformation technologies,” a new category of information and communications technology (ICT) that the market research company forecasts will grow at a 17.9% CAGR from 2015-2020 to reach $2.0 trillion. Nearer term, IDC’s digital transformation spending forecast calls for an increase of 17.8% year-over-year in 2017, with revenue totaling $1.2 trillion.

“Changing competitive landscapes and consumerism are disrupting businesses and creating an imperative to invest in digital transformation, unleashing the power of information across the enterprise and thereby improving the customer experience, operational efficiencies, and optimizing the workforce,” commented Eileen Smith, program director in IDC’s Customer Insights & Analysis Group.

“In 2017, global organizations will spend $1.2 trillion on digital transformation with discrete and process manufacturers contributing almost 30% of this spending, while the fastest growth will come from retail, healthcare providers, insurance, and banking.”

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Connectivity services, IT services and application development and deployment will see the fastest growth within the digital transformation technology market segment, IDC says. Collectively, spending on these three “DX” sub-categories will account for nearly half the overall total this year.

Digital Transformation Spending Forecast
That said, spending in these DX sub-categories will vary across industry verticals. Discrete manufacturing and process manufacturing companies will invest about 20% of their DX budgets in AD&D and another 12-13% on IT services, according to IDC. Transportation sector companies, in contrast, will allocate nearly half their DX spending to connectivity services.

Looking out over the entire five-year forecast horizon, IDC foresees cloud infrastructure spending growing at a 29.4% CAGR, fastest among all DX sub-categories. DX spending on business services will follow at a 22.0% CAGR, with applications ranking third at 21.8%. Furthermore, AD&D spending will grow sufficiently fast enough (at a CAGR of 17.3%) to overtake IT services as the second largest DX technology category by 2020.

IDC also expects that more than half of overall DX investment this year will go towards technologies that support innovation in operating models. In the main, these focus on leveraging connected products, services, assets, people and trading partners to enhance responsiveness and the overall effectiveness of a business or company. The second largest area of DX technology investment will be technologies that help drive innovations to do with “omni-experience,” which facilitate enhanced communications among customers, partners, employees and connected devices and equipment, aka “things” in order to better meet individual wants and needs, IDC says.

Geographically, IDC forecasts 2017 DX investments will be largest in the Asia-Pacific (ex Japan region), which will account for 37% of the global total. The U.S. will rank second, accounting for 30%.

Image courtesy of flickr user Blue Coat Photos.

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