How big is digital transformation? Huge.
How huge? How about more than half of all IT spending by 2023?
That’s the latest prediction from market watcher IDC. It expects worldwide spending on digital transformation to nearly double over the next four years, rising from about $1.2 trillion this year to $2.3 trillion in 2023. Assuming that pans out, this would represent a compound average growth rate (CAGR) of 17%.
IDC also expects that $2.3 trillion to represent 53% of total IT spending worldwide in 2023. In other words, more than half of every dollar spent on IT that year will go toward digital transformation.
Cumulatively, this also means that worldwide spending on digital transformation between now and ’23 will total a stunning $7.4 trillion. Told you it was huge!
What it is
What exactly is (and isn’t) digital transformation? Depends on who you ask.
But most authorities agree that digital transformation refers to the use of data analytics to improve decision-making. It’s done “at scale,” meaning not just in an individual department or group, but across an enterprise. And it involves a lengthy journey, not a one-time hop.
Digital-transformation projects are far from simple, and the promised results can be difficult to achieve. One in three senior business and government leaders say they’ve received little or no measurable benefits from their digital strategies, according to a recent Economist Intelligence Unit survey.
“Like changing the engine of a plane while in flight,” is how IDC research manager Ashutosh Bisht describes it. That’s because digital transformation needs to be done while simultaneously running and maintaining legacy systems.
Yet digital-transformation projects are widespread. Only 4% of organizations worldwide have no digital initiative at all, says Gartner.
Some industries have adopted digital transformation with gusto. Three industries in particular will increase their digital-transformation spending the fastest, IDC predicts: financial services, distribution and services, and public sector.
Two other industries will spend the most on digital transformation: discrete and process manufacturing. Together, they’ll account for fully 30% of all funds invested in digital transformation by 2023, IDC expects.
The next 3 biggest spenders are predicted to be retail, professional services and transportation. Retailers are creating omni-channel platforms. Professional services firms are creating energy-management systems. And transportation providers need freight management.
By region, the U.S. will be the biggest spender on digital transformation, IDC expects, accounting for roughly a third of all investment through 2023. The second largest spenders will be Western Europe and China.
Digital transformation isn’t only for big enterprises. Many of its core technologies — including cloud, analytics and machine learning — are becoming affordable for midsize companies, too. With spending so big and fast-growing, digital transformation is a market opportunity you won’t want to miss.