Digital Transformation spending to hit $1.8 trillion in 2022

Digital Transformation spending to hit $1.8 trillion in 2022

Global investments on the digital transformation (DX) of business practices, products, and organizations is forecast to reach $1.8 trillion in 2022, an increase of 17.6% over 2021.

According to the International Data Corporation (IDC) Worldwide Digital Transformation Spending Guide, DX spending will sustain this pace of growth over the 2022-2026 forecast period with a five-year compound annual growth rate (CAGR) of 16.6%.

“IDC expects to see aggressive Digital transformation technology investment growth in 2022 following a minor slowdown during the pandemic period,” said Craig Simpson, Senior Research Manager, Customer Insights & Analysis at IDC.

“As organizations accelerate their pursuit of a digital-first strategy, they are channeling these investments into both internal operations and external direct engagement. The investments in internal operations are largely focused on improving efficiency and resilience while customer experience transformation has become a DX priority for many companies.”

Operational investments stand out among the 51 strategic priorities included in the Digital Transformation Spending Guide says IDC.

The DX priorities that will see the largest investment in 2022 include Back Office Support and Infrastructure, Smart Manufacturing, and Digital Supply Chain Optimization.

IDC says these three investment areas will represent more than $620 billion in DX spending this year.

Other operational priorities that will see significant digital transformation investments in 2022 include Connected Assets, Facility Management, and Operationalizing Data and Information.

Customer experience investments, such as Omni-Experience Engagement, and Omni-Channel Commerce, will account for more than $300 billion in DX spending in 2022, predicts the guide.

The DX strategic priorities that will experience the fastest spending growth over the five-year forecast include Frictionless Insurance (27.4% CAGR) and Legal (27.0% CAGR) as well as Enterprise and Resource Management (26.0% CAGR).

The DX guide also forecasts that manufacturing industry will account for nearly 30% of worldwide DX spending this year, followed by the professional services and retail industries.

The utilities and banking industries will also see DX spending of more than $100 million this year, while, the financial services sector will deliver the fastest DX spending growth over the 2022-2026 notes the guide.

The securities and investment services, insurance, and banking industries all forecast to have five-year CAGRs of 19% or more.

The United States will be the largest geographic market for DX spending in 2022, accounting for nearly 35% of the worldwide total. Western Europe will be the second largest region for DX spending, followed closely by China who will have a a five-year CAGR of 18.5%. Latin America will be the region with the second fastest growth with a CAGR of 18.2%.

“Digital transformation spending in EMEA will be nearly $469 billion in 2022, an increase of 16.7% over 2021 and underlining the strong importance of DX projects across industries in Europe,” said Angela Vacca, Senior Research Manager, European Industry Solutions, Customer Insights & Analysis.

“The highest growth will be in the finance and manufacturing industries where Big Data and Artificial Intelligence related use cases will dominate across financial institutions and IoT and robotics related use cases will be growing very dynamically among manufacturing companies.”

Read more in the Worldwide Digital Transformation Spending Guide.