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Digital transformation technology and services spending is on the rise

Research firm IDC posits that enterprises will ​ramp up spending this year on technologies and services that enable digital transformation, including applications, connectivity services, and IT services.

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Research firm IDC posits that enterprises will ramp up spending this year on technologies and services that enable digital transformation, including applications, connectivity services, and IT services.

The analyst house regularly doles out facts and figures related to digital transformation spending in the enterprise. For 2017, IDC estimates that worldwide spending on digital transformation technologies -- hardware, software, and services -- hit $1.3 trillion.

This latest spending guide aims to shed some more light on where digital transformation funding is being spent as well as what digital transformation priorities are most pursued. By IDC's estimates, businesses will spend $1.1 trillion in 2018 on digital transformation technology and services, an increase of 16.8 percent over the $958 billion spent in 2017.

Read also: What is digital transformation? Everything you need to know

Digital transformation involves using digital technologies to retool business models and processes to make them more efficient or effective. For large, legacy enterprises, digital transformation projects often provide a means to compete with nimbler, digital-only rivals.

By industry, IDC highlights discrete and process manufacturing as the heaviest spenders, with roughly $333 billion in combined total spending. These two industries will also set the agenda for many digital transformation priorities, programs, and use cases, IDC notes. The key spending areas include material optimization, logistics automation, smart asset management, autonomic operations, and digital supply chain optimization.

Construction and retail take second and third place, respectively, when it comes to spending on digital transformation services. IDC also points out digital grid, omni-experience engagement, omnichannel commerce, and innovation acceleration as priorities that will receive significant funding this year.

"Some of the strategic priority areas with lower levels of spending this year include building cognitive capabilities, data-driven services and benefits, operationalizing data and information, and digital trust and stewardship," said Research Manager Craig Simpson, of IDC's Customer Insights & Analysis Group.

"This suggests that many organizations are still in the early stages of their digital transformation journey, internally focused on improving existing processes and efficiency. As they move into the later stages of development, we expect to see these priorities, and spending, shift toward the use of digital information to further improve operations and to create new products and services."

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