Digital transformation projects to reach $1.2tn in 2019

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Enterprises around the world are forecast to spend around $1.2 trillion on digital transformation products and services in 2019, an increase of 17.9% over 2018.

This is according to International Data Corporation's (IDC) Worldwide Semiannual Digital Transformation Spending Guide, which found that global organisations are expected to show a compound annual growth rate (CARG) of 20.4% this year.

The two industries that will invest the most in digital transformation, will be discrete manufacturing ($221.6 billion) and process manufacturing ($124.5 billion), notes IDC.

Initiatives that will record the highest spending across all industries include autonomic operations ($52 billion), robotic manufacturing ($45 billion), freight management ($41 billion), and root cause analysis software ($35 billion).

"Worldwide digital transformation investments are expected to total more than $6 trillion over the next four years," says Eileen Smith, programme VP of IDC's Customer Insights and Analysis group.

"Strong digital transformation investment growth is forecast across all sectors, ranging between 15% and 20%, with the financial sector forecast to be the fastest, with a CARG of 20.4% between 2017 and 2022."

Other use cases that will see investments in excess of $20 billion in 2019 include self-healing assets and augmented maintenance in the healthcare sector, intelligent and predictive grid management for electricity, and quality and compliance.

Earlier this year, IDC had predicted that overall spending on ICT in the Middle East, Turkey and Africa (META) alone will reach $213 billion, as more organisations in the region experiment with technologies such as blockchain, Internet of things, artificial intelligence (AI) and data analytics in a bid to spur innovation and revolutionise their customer experience.

With Microsoft Azure launching two cloud data centres in SA in March, and Amazon Web Services expected to follow suit next year, IDC predicts more organisations in the META region will adopt hybrid clouds for their critical workloads, accelerating enterprise transformation and significantly impacting their ICT investments.

According to the Dell Digital Transformation Index, conducted in partnership with research firm Vanson Bourne, SA is ahead of the global digital transformation curve among the global countries leading the digital transformation change required to compete in 21st century economies.

The research ranks SA in ninth place, out of 41 countries that are home to firms leading the digital business maturity level across the globe.

"It's very good to see SA rank so highly, but not that much of a surprise," says Doug Woolley, GM of Dell EMC South Africa.

"Local businesses are careful and even conservative, but they are also interested in efficiency and progress. A few years ago, many were still holding back, but that has been changing fast. They are looking for efficiencies and to become more nimble. I also believe there's a greater sense of urgency and clarity in developing markets such as ours. The market environment has been tough and that's sharpening senses."

Tshilidzi Marwala, vice-chancellor and principal of the University of Johannesburg, explains that while local organisations are succeeding in some areas of digital transformation, they lag behind in other areas.

"The area that we are doing well is in adoption of digital technologies such as AI and big data analytics," he notes.

"The main problem is that we do not have enough people who understand these technologies. There is not enough university-industry collaboration that will collectively tackle problems using these technologies in a way that will give us a comparative advantage. Additionally, there is poor understanding of what these technologies mean: AI and machine learning are poorly understood concepts in SA."

According to research conducted by Accenture, digital technologies can generate more than R5 trillion in value for South African industry and society over the next decade, through the use of technologies in key industry sectors, including agriculture, public infrastructure and administration, financial services and manufacturing.

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