Transforma Insights today published its first forecast of the market opportunity associated with Digital Transformation (DX). The ‘DX Investment Forecast’ looks at the amounts invested by enterprises on software and services for DX initiatives, both on internal development and purchasing products and services from third parties.
Investment in Digital Transformation software and services will amount to USD5 trillion between 2020 and 2030. IoT will account for the lion’s share (54%), with AI representing 22% of spend.
There are three major geographical poles: North America (accounting for 35% of global investment), followed by Europe (24%) and China (18%). Japan accounts for 10%. North America ranks highest for all categories of technology although China is very close for 3D Printing & Additive Manufacturing, Autonomous Robotic Systems, Edge Computing and Product Lifecycle Management.
Over the forecast period, annual spend will grow from USD94 billion to USD961 billion, a Compound Annual Growth Rate (CAGR) of 26%. The fastest growth technologies will be 3D Printing & Additive Manufacturing (50% CAGR) and Autonomous Robotic Systems (49%).
Manufacturing (accounting for 37% of all global spend between 2020 and 2030) is easily the biggest sector, followed by Retail (15%) and Utilities (15%). Primary and secondary industries including Agriculture, Mining, Manufacturing and Utilities will all invest greater than 60% of their total DX software and services spend in IoT. The service sectors, in contrast, are much more focused on Artificial Intelligence, with Real Estate, ICT, Professional Services and Education all spending over 70% on AI.
The forecast goes into very granular detail on 76 different Use Cases which leverage varying combinations of the different DX technologies. Just twelve Use Cases account for almost 70% of all DX investment between 2020 and 2030. The most prominent are Asset Tracking & Monitoring, Precision Specialist Robots, Remote Process Control and Smart Grid. The requirement to support multiple technologies to deliver real-world Use Cases is another important issue. For instance, AI may only account for 22% of revenue, but it is a constituent part of Use Cases that account for 48% of spend. Any vendor looking to own a customer relationship will need to find a way to deliver these other technology components in order to lead delivery of use case solutions, and any company deploying DX technologies must avoid silo-ed thinking about a single type of technology.
Commenting on the research, Founding Partner at Transforma Insights Matt Hatton said: “The results provide key guidance for end users considering where to place their investments in DX. There is a plethora of potential use cases and technologies out there, but this research identifies which will be critical to end users in each industry sector.”
Jim Morrish, Founding Partner at Transforma Insights commented: “Understanding the scale of investment made by enterprises in Digital Transformation technologies is clearly critical for technology vendors. The distribution of investment varies significantly depending on the geography and vertical. Vendors need to understand where they should be specialising and the countries upon which they should be focusing their attention. These forecasts are a fantastic tool to help do that.”
Hatton elaborated on one of the key findings: “One of the most interesting things was that there is a clear division of the world into three categories of country/region. The first category is ‘Industrial’ Economies such as China, Japan and South Korea which focus greater attention on 3D Printing & Additive Manufacturing, Autonomous Robotic Systems and Product Lifecycle Management. The second is ‘Human’ Economies like India, MENA and Russia have higher proportions of revenue coming from technologies that are largely driven by population such as IoT and Hyperconnectivity. The final category is ‘Information’ Economies such as Europe and North America have greater focus on Artificial Intelligence, RPA and Distributed Ledger.”
About the research
The Transforma Insights Digital Transformation Investment Forecast focuses on annual investment by enterprises in the software and services used to deliver Digital Transformation. The highly granular forecast covers the following:
About Transforma Insights
Transforma Insights is a leading research firm focused on the world of Digital Transformation (DX). Led by seasoned technology industry analysts we provide advice, recommendations and decision support tools for organisations seeking to understand how new technologies will change the markets in which they operate.