By Emmanuel Oluebube, Correspondent UK
To bring more insight to technology spending across and within industries, International Data Corporation (IDC) recently published a series of Industry Spending Guides that provide in-depth forecasts for spending on 3rd Platform technologies (mobility, cloud, big data and analytics (BDA), social) and Innovation Accelerators (artificial intelligence (AI), augmented reality/virtual reality (AR/VR), 3D printing, Internet of Things (IoT), security, and robotics) as well as traditional, 2nd Platform technologies. The guides cover nine industries – banking, government, healthcare, insurance, manufacturing, oil and gas, retail, securities and investment services, and utilities – and provide detailed spending figures for nine geographic regions, 64 sub-industries and lines of business, and two delivery types (cloud and non-cloud).
“While IT spending is contracting in some areas, 3rd Platform spending will see healthy double-digit growth throughout the post-COVID recovery period and the investment priorities are somewhat varied across industries,” said research manager, Customer Insights & Analysis, Karen Massey. “The financial services industries, which include banking, securities and investment services, and insurance, rely more heavily on cloud, mobility and BDA, for example. But IoT is the primary investment focus in the other six industries, especially manufacturing, oil and gas, and utilities. However, mobility is a close second to IoT as an investment priority in government and healthcare.”
Within the banking industry, consumer banking is the largest line of business for technology spending with 2nd Platform technologies accounting for just over half the total in 2020. However, the shift from 2nd to 3rd Platform spending is evident with 3rd Platform and Innovation Accelerator spending enjoying compound annual growth rates (CAGR) of 10.4 per cent and 17.7 per cent respectively. Cloud and mobility spending will grow to nearly $53 billion combined in 2023 while cognitive AI spending will see a five-year CAGR of 21.6 per cent. By the end of the forecast, 2nd Platform spending will be nearly ten percentage points lower than in 2020.
A similar story plays out in the property and casualty insurance sub-industry, where 3rd Platform and Innovation Accelerator spending is currently about equal to 2nd Platform spending but will see strong growth over the next five years. In contrast to the other insurance sub-industries, property and casualty will see significantly more spending on IoT solutions, which is forecast to grow at a 16.8 per cent CAGR and overtake mobility spending by 2022.
In retail, 3rd Platform and Innovation Accelerator spending has already moved ahead of 2 Platform spending overall, although a few sub-industries are lagging. In the food stores sub-industry, technology spending is forecast to see a five-year CAGR of 8.9 per cent. All of this growth will come from 3rd Platform and Innovation Accelerator technologies with spending on IoT solutions expected to overtake 2nd Platform spending and become one of the largest technology categories in the industry. Meanwhile, combined spending on cloud and mobility will grow to near equal 2nd Platform spending in 2023.
“Tracking spending intent across all types of retailers, we find that there are some key areas of strategic investment like cloud and mobility,” said group vice president, IDC Retail Insights, Leslie Hand. “While most retail budgets have been stressed in 2020, many retailers are accelerating their digital transformation efforts through current and planned investments, such as cloud and mobile-based inventory management, self-checkout, fulfillment, demand forecasting, price and promo optimization and others.”
Hospitals account for nearly half of all IT spending in the healthcare industry. Like the retail industry, spending on 3rd Platform and Innovation Accelerator technologies is already greater than 2nd Platform spending and will account for all the sub-industry’s spending growth over the next four years. By 2023, cloud, mobility and IoT will represent nearly half of all technology spending by hospitals while 2nd Platform spending will decline to 30 per cent of the total. The technologies that will see the fastest spending growth among hospitals during the forecast period are AR/VR (97.8% CAGR), cognitive AI (23.7% CAGR) and robotics (14.8% CAGR).
Government technology spending is spread across nine functional areas with social programs representing the second largest function. Technology spending for social programmes will follow a similar trajectory to retail and healthcare with 2nd Platform spending in decline (-2.1% CAGR) while investment in 3rd Platform and Innovation Accelerators will grow at CAGRs of 9.5 per cent and 14.4 per cent respectively. By 2023, spending on IoT, cloud, and mobility will represent more than 45 per cent of all social programme technology spending.
“Tracking government spending within agencies and departments across all levels of government, we find that there are key areas of strategic investment,” said vice president, IDC Government Insights and Smart Cities & Communities Strategies, Ruthbea Yesner. “While government budgets have been under pressure in 2020, there is also increased constituent need in social programs, such as online access to unemployment benefits or improved constituent public health communications, and there is spending to meet the needs of these programs.”
IDC’s 3rd Platform Industry Spending Guides provide an in-depth industry market forecast for 3rd Platform and emerging technology markets including mobility, big data and analytics (BDA), social, Internet of Things (IoT), artificial intelligence (AI), augmented reality (AR)/virtual reality (VR), 3D printing, security, and robotics. The guides remove duplicative spending (overlap or double counting) that is inherent to individual technology forecasts.
This provides a wholistic industry and subindustry/line-of business forecast for emerging technology markets. Also, unique to the 3rd Platform Industry Spending Guide is the delivery type view (cloud/non-cloud) in a singular industry and subindustry/line-of-business segmentation. This version (V1 2020) of the Spending Guides incorporates updated estimates for the impact of COVID-19 and recovery across all technology and industry markets as of the end of May 2020.