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IDC forecasts digital transformation spending to reach $2.8 trillion in 2025

The latest data from International Data Corp. (IDC) Worldwide Digital Transformation Spending Guide shows that global spending on the digital transformation (DX) of business practices, products, and organizations is forecast to reach $2.8 trillion in 2025.

According to IDC, the figures are more than double the amount allocated in 2020 and will have a compound annual growth rate (CAGR) of 16.4% over the 2021-2025 forecast period as organizations pursue a holistic digital strategy for people, processes, technology, data, and governance.

“For the first time, IDC has forecast global DX spending to exceed $10 trillion over a five-year period,” said Craig Simpson, senior research manager with IDC’s Customer Insights and Analysis Group. “While most DX projects remained on track in 2020 and into 2021 during the pandemic, IDC forecasts DX technology investments to accelerate in 2022, with a renewed drive toward more long-term strategic digital objectives. Beyond operational DX investments, customer experience is garnering some of the largest DX technology investments from consumer-oriented industries such as securities and investment services, banking, and retail.”

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The IDC said organizations allocate their DX investments toward a number of strategic priorities that align with what they expect to accomplish over an extended period in pursuit of their digital mission.

“Many of these priorities coalesce around operational objectives, including back office support and infrastructure for core business functions such as accounting and finance, human resources, legal, security and risk, and enterprise IT. Similarly, innovate, scale, and operate priorities refer to a broad area covering large-scale operations, including making, building, and designing activities,” the IDC said.

Use cases

The DX use cases — discretely funded efforts that support a particular program objective — that will receive the most spending will be spread across the three strategic priorities. Investment in robotic manufacturing will grow to $120.6 billion in 2025, followed by autonomic operations and 360-degree customer and client management at $90.9 and $74.7 billion, respectively. The DX use cases with the fastest spending growth will be virtualized student workspaces (43.8% CAGR), mining operations assistance (39.1% CAGR), and augmented design management (34.5% CAGR). Of the more than 300 DX use cases identified by IDC, only five will have five-year CAGRs of less than 10% over the forecast period.

The industries that will see the largest DX spending throughout the forecast are discrete and process manufacturing, followed by professional services and retail. Combined, the two manufacturing industries will account for nearly 30% of all DX spending, totaling more than $816 billion in 2025. The industries that will experience the fastest growth in DX spending over the 2020-2025 forecast are construction (21.0% CAGR), securities and investment services (19.2% CAGR), and banking (19.0% CAGR). All 19 industries covered in the DX Spending Guide are forecast to deliver double-digit growth over the five-year forecast.

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