Hell-bent on pushing their so-called “digital transformation” agendas, enterprises will spend almost $2 trillion a year by 2022 in order to get there, according to a new analysis from International Data Corp.

The research firm said enterprises will spend a combined $1.97 trillion on technologies that enable the digital transformation of their businesses in 2022, representing a compound annual growth rate of 16.7 percent. However, question marks remain over how much benefit this spending will return.

An exact definition of digital transformation is difficult to pin down, because the process will work differently for every company. Still, in general terms, it can be defined as the integration of digital technologies into all areas of a business, resulting in fundamental changes to how that business operates and how it delivers value to its customers. Digital transformation will therefore require organizations to examine all areas of their business, including supply chains and workflow, employee skill sets, board-level discussions and customer interactions.

The thinking behind digital transformation is that it can help companies to keep pace with emerging customer demands now and in the future. Those that do transform themselves will be better able to compete in an economy that’s constantly shifting as technology evolves, so the practice is seen as a necessity by the vast majority of organizations.

Putting a price on digital transformation is not easy either, since the efforts revolve around almost every new emerging technology, including artificial intelligence, automation, cloud computing, edge computing, the “internet of things” and many more.

Still, IDC has done its best to do so, and it reckons that 30 percent of global 2000 companies will dedicate around 10 percent of their revenue to fueling digital change by 2020 as executives perceive it as a crucial long-term investment.

It also said four industries will account for almost half of the estimated $1.25 trillion that will be spent on digital transformation next year. These include the discrete manufacturing industry, which will spend $220 billion in 2019, with “innovation” and “supply chain” accounting for the lion’s share of that amount.

Meanwhile, the process manufacturing industry will spend $135 million, while the transportation sector will shell out $116 billion. The retail sector will spend an additional $98 billion, IDC said.

Across each of these industries, the bulk of the spending will revolve around use cases that are “discretely funded,” including automation, intelligent infrastructure for energy and robotic manufacturing.

“Industry spending on DX technologies is being driven by core innovation accelerator technologies with IoT and cognitive computing leading the race in terms of overall spend,” said Eileen Smith, program director with IDC’s Customer Insights and Analysis Group. “The introduction of IoT sensors and communications capabilities is rapidly transforming manufacturing processes as well as asset and inventory management across a wide range of industries. Similarly, artificial intelligence and machine learning are dramatically changing the way businesses interact with data and enabling fundamental changes in business processes.”

Some 75 percent of the total digital transformation spend will go to hardware and services. Chinese and U.S. companies together will account for more than half the overall spend.

Image: IDC