Digital transformation spending forecast to skyrocket to $6.8 trillion
Global spending on digital transformation (DX) between 2020 and 2023 is expected to total a whopping $6.8 trillion, as business adapts to ‘the new normal’.
This estimate came from IDC, which said this week it expects 65 percent of the world’s GDP to be digitised by 2022.
“The demand for IT has changed dramatically as a result of COVID-19, with almost every segment of the market being impacted by massive changes in customer behaviour,” said IDC’s global president, Crawford Del Prete. “We predict that direct investment in digital transformation will grow at a healthy compound annual growth rate (CAGR) of 15.5 percent globally between 2020 and 2023, while non-DX ICT investment will contract at a CAGR of -1.4 percent over the same period.”
However, it could also be argued that some aspects of ‘the new normal’ might only be temporary.
Lockdown restrictions imposed in many developed economies could well have created pent-up demand for what could best be described as ‘analogue’ interactions. A consumer who has had no choice but to conduct their work and personal life online for several months might jump at the chance to do something as arcane as to go out shopping, or go into the office, or maybe even visit their local bank branch. Just for the sheer novelty of it.
Yes, digital transformation provides the tools that companies require in order to be productive when the majority of staff are working from home, for instance. Or to replace physical customer interactions with digital interactions. Broadly speaking, it helps with cost efficiencies too, which will be all the rage given the economic impact of COVID-19.
But when lockdowns lift, and the world begins talking about coronavirus in the past tense, end-user demand may well swing the opposite way. After all, this is what has been missed more keenly than anything else throughout this pandemic. Not access to goods and services, but access to people.
“Most economists predict a return to economic growth in 2021 as a vaccine becomes widely available. As this recovery begins, the focus of end-user organisations will revert to business growth and new investment,” predicted Jyoti Lalchandani, IDC’s group vice president and managing director for the Middle East, Turkey and Africa.
“But the technology investments made during the pandemic will ensure that the ‘next normal’ that emerges will be very different from the pre-COVID economy,” he said, predicting that “by 2022, 70 percent of all organisations globally will have accelerated their use of digital technologies, transforming existing business processes to drive customer engagement, employee productivity, and business resiliency.”