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article imageThe cost of digital transformation to reach $1.3 trillion by 2018

By Karen Graham     Dec 18, 2017 in Technology
Globally, businesses are investing heavily in mobility, big data, cloud computing and other technologies that enable digital transformation (DX), according to International Data Corporation (IDC), with spending expected to be nearly $1.3 trillion by 2018.
The figure represents a 16.8 percent jump compared to the $1.1 trillion already spent this year. In the IDC's new update to the Worldwide Semiannual Digital Transformation Spending Guide, they go so far as to predict DX spending will nearly double to more than $2.1 trillion by 2021.
Expect targeted spending
The majority of the spending in 2018 ($662 billion) will go toward technologies that support new or expanding operating models. This is because on DX spending worldwide, fully 59 percent of companies remain at either stage two or three of DX maturity, or what IDC calls a “digital impasse.”
Graph from a Microsoft study into digital transformation amongst small businesses
Graph from a Microsoft study into digital transformation amongst small businesses
This is addressed in IDC's Prediction No. 10, which states: By 2020, 60 percent of all enterprises will have fully articulated an organization-wide digital platform strategy and will be in the process of implementing that strategy.
According to Shawn Fitzgerald, research director, Worldwide Digital Transformation Strategies, IDC, "While we are seeing more companies becoming more digitally capable, there is a widening gap between leaders and laggards, with significant implications for those organizations that cannot make the transition to a digital-native organization.”
The second largest investment in 2018 ($326 billion), according to IDC will be in what they call "technologies supporting Omni-experience innovations" that reshape how stakeholders and customers communicate with one another and deliver personalized products and services. In other words, technologies that help companies to communicate better with their customers to give a unique and effective shopping experience.
Legacy networks are holding back digital transformation
Legacy networks are holding back digital transformation
Pixabay / Pexels
"While the investment strategies may differ from company to company, the objective remains the same: to reimagine and reconstruct the business to compete in the increasingly digital economy that's platform-powered and ecosystem-enabled," said IDC program director said Eileen Smith in a statement.
And finally, IDC says "Information will also be an important DX investment area ($240 billion in 2018) as organizations strive to obtain and leverage information for competitive advantage through better decisions, optimized operations, and new products and services."
"While some industries are more focused on the core technologies underlying the 3rd Platform, particularly cloud, big data and analytics, and mobility, many have shifted their investment focus toward the Innovation Accelerators, such as the Internet of Things, artificial intelligence, and cognitive computing, and robotics," said Smith.
The Danish headquarters of Nordea is located in Christianshavn  Copenhagen. The banking institution ...
The Danish headquarters of Nordea is located in Christianshavn, Copenhagen. The banking institution is undergoing digital transformation.
A New Approach To Digital Transformation
Did you ever wonder why so many companies seem to be falling behind in their quest for digital transformation? Forbes points out very succinctly that digital transformation has never been about updating a company's website or launching a new mobile app.
Digital transformation basically involves an overhaul of your entire business - It requires a cultural change, new skills and the courage to step outside the box of a company's past history. DX involves how a company interacts with its customers, how it maintains its quest for excellence, and how it approaches innovation.
We are seeing this approach being used by a number of old and well-established companies around the world, from banking institutions to manufacturers. Essentially, they are becoming legacy companies that have been transformed into new startups, focusing on innovation, technologies, and giving better customer service.
More about digital transformation, targeted spending, holistic approach, complete overhaul, reinventing business
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