Forward-looking organizations have been pursuing digital transformation (DX) with the goal of creating new sources of value through digital products, services, and experiences. As an added benefit, the pandemic revealed that digital transformation efforts improve an organization's resilience against market disruptions. Given its importance to future success, global DX spending is forecast to reach $3.4 trillion in 2026 with a five-year compound annual growth rate (CAGR) of 16.3%, according to the International Data Corporation (IDC) Worldwide Digital Transformation Spending Guide.
"Despite strong headwinds from global supply chain constraints, soaring inflation, political uncertainty, and an impending recession, investment in digital transformation is expected to remain robust," said Craig Simpson, senior research manager with IDC's Data & Analytics Group. "The benefits of investing in DX technology, including automation, strong intelligence, operational transparency, and direct support around customer experience, all support targeted areas of business focus to weather the current environment of uncertainty and to make the most of any opportunities in the recovery."
The DX use case that will see the largest investments over the forecast period is Innovate, Scale, and Operate, a broad area covering large-scale operations, including making, building, and designing activities. Core business functions that make up this area include supply chain management, engineering, design and research, operations, and manufacturing plant floor operations. Innovate, Scale, and Operate will account for more than 20% of all DX investments throughout the forecast. The next largest use cases are Back-Office Support and Infrastructure at more than 15% of all DX spending and Customer Experience at more than 8%. The fastest growing among the more than 300 DX use cases identified by IDC include Digital Twins and Robotic Process Automation-Based Claims Processing with five-year CAGRs of 35.2% and 31.0% respectively.
Nearly 30% of worldwide DX spending throughout the forecast period will come from the Discrete and Process Manufacturing industries, where Robotic Manufacturing, Autonomic Operations, and Self-Healing Assets and Augmented Maintenance are among the leading use cases. The next largest industries for DX spending are Professional Services and Retail where Back-Office Support and Infrastructure is the leading DX use case. The Securities and Investment Services industry will experience the fastest growth in DX spending with a five-year CAGR of 20.6%, followed closely by Banking and Healthcare Providers with CAGRs of 19.4% and 19.3% respectively.
The United States will be the largest geographic market for DX spending throughout the forecast, accounting for nearly 35% of the worldwide total and surpassing the $1 trillion mark in 2025. Western Europe will be the second largest region with nearly a quarter of all DX spending. China will see the strongest growth in DX spending with a five-year CAGR of 18.6%, followed closely by Latin America with a CAGR of 18.2%.
To access the IDC Worldwide Digital Transformation Spending Guide, visit here.