According to IDC analyst projections, by the end of 2018 organizations will have spent $1.1 trillion on DX projects—a very healthy 16.8% boost over 2017. While many outside observers imagine those earmarks going toward sexy transformation projects in bleeding-edge technology, such as neural networks, virtual reality, or self-driving cars, the reality is more workaday.
“Many organizations are still in the early stages of their DX journey, internally focused on improving existing processes and efficiency,” says Craig Simpson, research manager at IDC’s Customer Insights & Analysis group.
While the eventual goal is to use DX funds to operationalize data and better leverage artificial intelligence to create new products and services, the truth is that organizations are pouring the most money into upgrading the back-end factories, facilities management, and processes that run their businesses before they can get to the really cool part of DX. Just under a third of all DX funding this year is flowing into some form of discrete or process manufacturing—so it’s no surprise that three of the five major spending priorities are within the manufacturing world.
Here’s where the investments are flowing as we speak.
All told, projections show that organizations are on track to spend $161 billion this year on smart manufacturing, which includes priorities on material optimization, autonomic operations, and robotic manufacturing. IDC says that manufacturers will be spending specifically on applications, connectivity services, and IT services as they build out their digital platforms for better competitiveness.
Smart Asset Management
Tightly entwined in the smart manufacturing trend is the prioritization of smart asset management, for which IDC pegs spend at about $91 billion. Smart asset management will have enterprises seeking more automated and predictive ways to bring down costs by optimizing the equipment, infrastructure, and inventory they have. In this respect, their transformation dollars are for technologies that help them better protect assets, maintain them more efficiently, and generally squeeze the most out of every investment.
For example, asset instrumentation is one huge use case—with $43 billion in spend this year, according to IDC. This is the bedrock for the Industrial Internet of Things (IIoT), as organizations begin to collect data that will enable them to manage those assets more effectively.
Instrumentation is also crucial for another one of the five top spending priorities—the predictive grid. Utilities and critical infrastructure companies are pouring funds into smart grid initiatives to narrow maintenance windows and amp up the efficiency of their energy management.
Digital Supply Chain Improvements
Digital supply chain and logistics spending: Organizations of all types will spend $93 billion in automation for this category in 2018 and $101 billion on digital supply chain optimization as they seek to automate and streamline how raw materials, finished goods, and everything in between gets to and from the factory floor. Freight management alone is seeing a huge boost in spending, with IDC reporting $56 billion going toward this priority.
Lest we forget what all of this transformation spending is all about, the last priority is aimed squarely at the customer. IDC reports that enterprises will spend a significant chunk of change on omni-experience engagement and omnichannel commerce as organizations recognize that the key to customer satisfaction today is giving customers better choices and more ways to customize how they interact and buy from companies.
Expect this category to take off in coming years: IDC analysts predict it will see the fastest spending growth in the next five years, with a breathtaking 38.1% compound annual growth rate through 2021.