Overall investments in digital resiliency have increased steadily throughout the year as businesses prioritize or accelerate adoption of cloud, collaborative, and digital transformation projects, IDC reveals.
Security has also been a major investment area, driven by the shift to more remote work and accelerated cloud adoption in 2020.
“Digital resiliency refers to an organization’s ability to rapidly adapt to business disruptions by leveraging digital capabilities to not only restore business operations, but also capitalize on the changed conditions,” said Stephen Minton, VP in IDC‘s Customer Insights & Analysis group.
“As the COVID-19 crisis has shown, the ability to respond quickly and effectively to unexpected changes in the business environment are critical to an organization’s short-term success. To prepare for future business disruptions, organizations need plans that will enable them to rapidly adapt as opposed to just respond.
“Investments in digital capabilities not only enable an organization to adapt to the current crisis but also to capitalize on the changed conditions.”
The Digital Resiliency Investment Index
The Digital Resiliency Investment Index is comprised of two factors – digital core investments and digital innovation investments.
Digital core investments are comprised of spending on the core components of digital resiliency: cloud, security, collaborative support for remote workers, and digital transformation projects. This score should increase over time as organizations shift budget away from traditional and legacy IT spending and toward these core components of digital resiliency.
Digital innovation investments are measured using a monthly survey of enterprises on their current and anticipated IT investment focus, including how much new or reallocated spending is targeted at digital resiliency and business acceleration versus crisis response measures. This score should also increase over time as organizations shift their spending focus back to building a digital enterprise.
Overall, investments in cloud, collaboration, and security have managed to grow throughout 2020, despite a decline in overall IT spending.
In recent, months, the focus on resiliency has increased as organizations realize the importance of being prepared for future business disruptions. As a result, digital resiliency spending is expected to accelerate in 2021 as the global economy improves.
Resiliency investments by location
On a geographic basis, resiliency investments grew fastest in Asia/Pacific, in line with the region’s overall response to the pandemic. Investments in the United States improved noticeably in October, which may reflect a combination of short-term and long-term factors.
Meanwhile, Europe’s results declined slightly in October as the region returned to crisis response mode with a surge in coronavirus cases and new socio-economic restrictions.
“The next several months may put increased pressure on some organizations to respond to second waves of COVID infections and economic lockdowns, which will be reflected in our monthly surveys throughout the winter,” said Minton.
“What we have learned already this year is that the organizations which were among the early adopters of cloud, digital, and collaborative technologies were best-positioned for a crisis no one could have predicted.
“Digital resiliency in the coming 6-12 months will to some extent reflect the speed at which others were able to pivot their tech investments in 2020, even as overall budgets were constrained by economic uncertainty.”
Qualys announced Container Runtime Security, which provides runtime defense capabilities for containerized applications. Qualys Runtime Container Security This new approach instruments an extremely lightweight snippet of Qualys code into the container image, enabling policy-driven monitoring, detection and blocking of container behavior at runtime. This capability eliminates the need for cumbersome management of sidecar and privileged containers by security solutions that are difficult to manage and administer on host nodes and don’t work in container-as-a-service environments. … More
The post Qualys Container Runtime Security: Defense for containerized applications appeared first on Help Net Security.
Despite a global pandemic, direct digital transformation (DX) investment is still growing at a compound annual growth rate (CAGR) of 15.5% from 2020 to 2023 and is expected to approach $6.8 trillion as companies build on existing strategies and investments, becoming digital-at-scale future enterprises, according to IDC.
Digital transformation investment predictions
Prediction 1: accelerated DX investments create economic gravity. The economy remains on course to its digital destiny with 65% of global GDP digitalized by 2022 and will drive over $6.8 trillion of direct DX investments from 2020 to 2023.
Prediction 2: digital organization structures and roadmaps mature. By 2023, 75% of organizations will have comprehensive digital transformation implementation roadmaps, up from 27% today, resulting in true transformation across all facets of business and society.
Prediction 3: digital management systems mature. By 2023, 60% of leaders in G2000 organizations will have shifted their management orientation from processes to outcomes, establishing more agile, innovative, and empathetic operating models.
Prediction 4: the rise of the digital platform and extended ecosystems. By 2025, driven by volatile global conditions, 75% of business leaders will leverage digital platforms and ecosystem capabilities to adapt their value chains to new markets, industries, and ecosystems.
Prediction 5: a digital first approach. While “digital first” prevails in every experience, 60% of enterprises will invest heavily in digitalizing employee experience in 2021, transforming the relationship between employers and employees.
Prediction 6: business model reinvention. By 2021, at least 30% of organizations will accelerate innovation to support business and operating model reinvention, fast-tracking transformation programs to future-proof their businesses.
Prediction 7: sustainability and DX. By 2022, the majority of companies will realize greater value by combining digital and sustainability, giving rise to digitally driven and sustainably enabled projects as the de-facto standard.
Prediction 8: digitally native cultures. To thrive in digital supremacy economy, 50% of enterprises will implement the organizational culture optimized for DX in 2025, based on customer-centric and data-driven.
Prediction 9: accelerating digital experiences. By 2022, 70% of all organizations will have accelerated use of digital technologies, transforming existing business processes to drive customer engagement, employee productivity, and business resiliency.
Prediction 10: business innovation platforms. By 2023, 60% of G2000 companies will build their own business innovation platform to support innovation and growth in the new normal.
According to Shawn Fitzgerald, research director, Worldwide Digital Transformation Strategies at IDC, “Organizations with new digital business models at their core that are successfully executing their enterprise-wide strategies on digital platforms are well positioned for continued success in the digital platform economy.
“Our 2021 digital transformation predictions represent areas of notable opportunity to differentiate your own digital transformation strategic efforts.”
As the chief owners of the digital infrastructure that underpins all aspects of modern enterprises, CIOs must play pivotal roles in the road to recovery, “seeking the next normal” while still performing their traditional roles. A new IDC study outlines concrete actions that CIOs can and must take to create resilient and adaptive future enterprises with technology.
“In a time of turbulence and uncertainty, CIOs and senior IT leaders must discern how IT will enable the future growth and success of their enterprise while ensuring its resilience,” said Serge Findling, VP of Research for IDC‘s IT Executive Programs (IEP).
“The ten predictions in this study outline key actions that will define the winners in recovering from current adverse events, building resilience, and enabling future growth.”
Predictions to keep CIOs resilient
Prediction 1 – #CIOAIOPS: By 2022, 65% of CIOs will digitally empower and enable front-line workers with data, AI, and security to extend their productivity, adaptability, and decision-making in the face of rapid changes.
Prediction 2 – #Risks: Unable to find adaptive ways to counter escalating cyberattacks, unrest, trade wars, and sudden collapses, 30% of CIOs will fail in protecting trust —the foundation of customer confidence — by 2021.
Prediction 3 – #TechnicalDebt: Through 2023, coping with technical debt accumulated during the pandemic will shadow 70% of CIOs, causing financial stress, inertial drag on IT agility, and “forced march” migrations to the cloud.
Prediction 4 – #CIORole: By 2023, global crises will make 75% of CIOs integral to business decision making as digital infrastructure becomes the business OS while moving from business continuation to re-conceptualization.
Prediction 5 – #Automation: To support safe, distributed work environments, 50% of CIOs will accelerate robotization, automation, and augmentation by 2024, making change management a formidable imperative.
Prediction 6 – #RollingCrisis: By 2023, CIO-led adversity centers will become a permanent fixture in 65% of enterprises, focused on building resilience with digital infrastructure, and flexible funding for diverse scenarios.
Prediction 7 – #CX: By 2025, 80% of CIOs alongside LOBs will implement intelligent capabilities to sense, learn, and predict changing customer behaviors, enabling exclusive customer experiences for engagement and loyalty.
Prediction 8 – #Low/NoCode: By 2025, 60% of CIOs will implement governance for low/no-code tools to increase IT and business productivity, help LOB developers meet unpredictable needs, and foster innovation at the edge.
Prediction 9 – #ControlSystems: By 2025, 65% of CIOs will implement ecosystem, application, and infrastructure control systems founded on interoperability, flexibility, scalability, portability, and timeliness.
Prediction 10 – #Compliance: By 2024, 75% of CIOs will absorb new accountabilities for the management of operational health, welfare, and employee location data for underwriting, health, safety, and tax compliance purposes.
The COVID-19 pandemic has largely proven to be an accelerator of cloud adoption and extension and will continue to drive a faster conversion to cloud-centric IT.
Global spending on cloud services to rise
According to IDC, total global spending on cloud services, the hardware and software components underpinning cloud services, and the professional and managed services opportunities around cloud services will surpass $1 trillion in 2024 while sustaining a double-digit compound annual growth rate (CAGR) of 15.7%.
“Cloud in all its permutations – hardware/software/services/as a service as well as public/private/hybrid/multi/edge – will play ever greater, and even dominant, roles across the IT industry for the foreseeable future,” said Richard L. Villars, Group VP, Worldwide Research at IDC.
“By the end of 2021, based on lessons learned in the pandemic, most enterprises will put a mechanism in place to accelerate their shift to cloud-centric digital infrastructure and application services twice as fast as before the pandemic.”
Strongest growth in the as a service category
The strongest growth in cloud revenues will come in the as a service category – public (shared) cloud services and dedicated (private) cloud services. This category, which is also the largest category in terms of overall revenues, is forecast to deliver a five-year CAGR of 21.0%.
By 2024, the as a service category will account for more than 60% of all cloud revenues worldwide. The services category, which includes cloud-related professional services and cloud-related management services, will be the second largest category in terms of revenue but will experience the slowest growth with an 8.3% CAGR. This is due to a variety of factors, including greater use of automation in cloud migrations.
The smallest cloud category, infrastructure build, which includes hardware, software, and support for enterprise private clouds and service provider public clouds, will enjoy solid growth (11.1% CAGR) over the forecast period.
Factors driving the cloud market forward
While the impact of COVID-19 could have some negative effects on cloud adoption over the next several years, there are a number of factors that are driving the cloud market forward.
- The ecosystem of tech companies helping customers migrate to cloud environments, create new innovations in the cloud, and manage their expanding cloud environments will enable enterprises to meet their accelerated schedules for moving to cloud.
- The emergence of consumption-based IT offerings are aimed at leveraging public cloud-like capabilities in an on-premises environment that reduces the complexity and restructures the cost for enterprises that want additional security, dedicated resources, and more granular management capabilities.
- The adoption of cloud services should enable organizations to shift IT from maintenance of legacy IT to new digital transformation initiatives, which can lead to new business revenue and competitiveness as well as create new opportunities for suppliers of professional services.
- Hybrid cloud has become central to successful digital transformation efforts by defining an IT architectural approach, an IT investment strategy, and an IT staffing model that ensures the enterprise can achieve the optimal balance across dimensions without sacrificing performance, reliability, or control.
International Data Corporation (IDC) published a new assessment of eleven companies offering the tools and frameworks for developing advanced machine learning (ML) models and solutions.
The IDC MarketScape report uses a comprehensive framework to assess these vendors relative to a set of criteria that explain both short-term and long-term success in the ML platform market.
The eleven advanced machine learning platform providers evaluated in this MarketScape report are: Alteryx, Amazon Web Services, Cloudera, Dataiku, DataRobot, Google, H2O.ai, IBM, MathWorks, Microsoft, and SAS.
Advanced machine learning platforms provide a range of ML methods primarily working with structured and semi-structured data to create predictive and prescriptive models that are then used in applications.
Advanced machine learning platforms can also include development, training, and deployment tools, including pretrained models and automatic machine learning methods that help developers and business users to experiment, automate machine learning, and build and deploy artificial intelligence models into production.
The platforms provide functionality to apply a broad range of supervised, unsupervised, reinforcement, and transfer learning methods into models and applications put into production and can be deployed in several ways.
Organizations across a variety of industries are using artificial intelligence and machine learning as a catalyst for business process disruption, digital transformation, and the creation of new economies of scale.
Machine learning is increasingly being utilized in business applications, with many solutions already implemented and many more being explored. Enterprises are embracing machine learning applications across all lines of business.
Implementations vary across a breadth of use cases from intelligent financial closing to sales next best action and from production recommendations to personalized recommendations for learning and career.
“Success in the rapidly evolving AI software platforms market requires advanced machine learning software platform vendors to continue to innovate and provide tools to help customers accelerate development and deployment and monitoring of machine learning models,” said David Schubmehl, research director, AI Software Platforms at IDC.
“AI adoption is past the tipping point. The rapid rise of digital transformation has pushed AI to the top of the corporate agenda and machine learning infusion is ubiquitous across all business processes,” added Ritu Jyoti, program vice president for AI Research.
“However, as we accelerate into the mainstream, organizations will need to embrace innovative machine learning platforms to realize AI/ML at scale and enjoy sustainable competitive advantage.”
IDC believes that the market for AI in general and advanced machine learning platforms in particular is evolving at a very rapid pace and that the next two to four years will be pivotal for the market as the techniques and approaches for developing and deploying new models advance.
Vendor revenue from sales of IT infrastructure products (server, enterprise storage, and Ethernet switch) for cloud environments, including public and private cloud, increased 34.4% year over year in the second quarter of 2020 (2Q20), according to IDC. Investments in traditional, non-cloud, IT infrastructure declined 8.7% year over year in 2Q20.
These growth rates show the market response to major adjustments in business, educational, and societal activities caused by the COVID-19 pandemic and the role IT infrastructure plays in these adjustments.
Across the world, there were massive shifts to online tools in all aspects of human life, including collaboration, virtual business events, entertainment, shopping, telemedicine, and education. Cloud environments, and particularly public cloud, were a key enabler of this shift.
Spending on public cloud IT infrastructure increased 47.8% year over year in 2Q20, reaching $14.1 billion and exceeding the level of spend on non-cloud IT infrastructure for the first time. Spending on private cloud infrastructure increased 7% year over year in 2Q20 to $5 billion with on-premises private clouds accounting for 64.1% of this amount.
Hardware infrastructure market reaching the tipping point
The hardware infrastructure market has reached the tipping point and cloud environments will continue to account for an increasingly higher share of overall spending.
While IDC increased its forecast for both cloud and non-cloud IT spending for the full year 2020, investments in cloud IT infrastructure are still expected to exceed spending on non-cloud infrastructure, 54.8% to 45.2%.
Most of the increase in spending will be driven by public cloud IT infrastructure, which is expected to slow in 2H20 but increase by 16% year over year to $52.4 billion for the full year.
Spending on private cloud infrastructure will also experience softness in the second half of the year and will reach $21.5 billion for the full year, an increase of just 0.3% year over year.
As of 2019, the dominance of cloud IT environments over non-cloud already existed for compute platforms and Ethernet switches while the majority of newly shipped storage platforms were still residing in non-cloud environments.
Starting in 2020, with increased investments from public cloud providers on storage platforms, this shift will remain persistent across all three technology domains.
Compute platforms to remain the largest segment of spending
Within cloud deployment environments in 2020, compute platforms will remain the largest segment (50.9%) of spending at $37.7 billion while storage platforms will be the fastest growing segment with spending increasing 21.2% to $27.8 billion, and the Ethernet switch segment will grow 3.9% year over year to $8.5 billion.
Spending on cloud IT infrastructure increased across all regions in 2Q20 with the two largest regions, China and the U.S., delivering the highest annual growth rates at 60.5% and 36.9% respectively. In all regions except Central & Eastern Europe and the Middle East & Africa, growth in public cloud infrastructure exceeded growth in private cloud IT.
At the vendor level, the results were mixed. Inspur more than doubled its revenue from sales to cloud environments, climbing into a tie for the second position in the vendor rankings while the group of original design manufacturers (ODM Direct) grew 63.6% year over year. Lenovo’s revenue exceeded $1 billion, growing at 49.3% year over year.
Long term, spending on cloud IT infrastructure is expected to grow at a five-year compound annual growth rate (CAGR) of 10.4%, reaching $109.3 billion in 2024 and accounting for 63.6% of total IT infrastructure spend. Public cloud datacenters will account for 69.4% of this amount, growing at a 10.9% CAGR.
Spending on private cloud infrastructure will grow at a CAGR of 9.3%. Spending on non-cloud IT infrastructure will rebound after 2020 but will continue to decline overall with a CAGR of -1.6%.
According to the IDC Worldwide Quarterly Server Tracker, vendor revenue in the worldwide server market grew 19.8% year over year to $24.0 billion during the second quarter of 2020. Worldwide server shipments grew 18.4% year over year to nearly 3.2 million units in 2Q20.
In terms of server class, volume server revenue was up 22.1% to $18.7 billion, while midrange server revenue declined 0.4% to about $3.3 billion and high-end systems grew by 44.1% to $1.9 billion.
“Global demand for enterprise servers was strong during the second quarter of 2020,” said Paul Maguranis, senior research analyst, Infrastructure Platforms and Technologies at IDC. “We certainly see areas of reduced spending, but this was offset by investments made by large cloud builders and enterprises targeting solutions that support shifting infrastructure needs caused by the global pandemic. Investments in Asia/Pacific were also particularly strong, growing 31% year over year.”
The worldwide server market ended 2Q20 with a statistical tie between, and Dell Technologies for the number 1 position. HPE/New H3C Group finished the quarter with market share of 14.9% while Dell Technologies captured a 13.9% share of worldwide revenues. Inspur/Inspur Power Systems took third place with 10.5% share and impressive 77% year-over-year growth.
Lenovo and IBM tied for fourth with 6.1% and 6.0% share, respectively. The ODM Direct group of vendors accounted for 28.8% of total server revenue at $6.9 billion with year-over-year growth of 63.4% and delivered 34.4% of all units shipped during the quarter.
On a geographic basis, the Asia/Pacific region performed very well this quarter growing at a combined 31.%. China outperformed the competitive set, growing 39.8% year over year, followed by Japan at 24.9%, and the rest of the region (Asia/Pacific excluding Japan and China) at 13.4%. The United States also grew 25.0% year over year while Canada declined 11.2%. Latin America was able to grow 15.6% while Europe, the Middle East and Africa (EMEA) declined 5.8% year over year.
Revenue generated from x86 servers decreased 17.4% in 2Q20 to $21.6 billion. Non-x86 servers grew revenues 47.4% year over year to around $2.4 billion.
The total security appliance market delivered solid unit shipment and revenue growth in the second quarter of 2020 (2Q20), according to IDC.
Worldwide revenue increased 7.5% year over year in 2Q20 to $4.2 billion. Unit shipments experienced similar growth, increasing 8.0% year over year to a little over 1.1 million units.
The unified threat management (UTM) market segment accounted for the most significant revenue growth. This segment saw an increase of $250 million in revenue for 2Q20 when compared to the same quarter a year ago.
UTM continues to drive market expansion and as the largest overall segment, accounting for 61.8% of the worldwide security appliance market, it is still showing double-digit growth at 10.7% year over year in 2Q20.
In addition to UTM, the Web security segment continues to show strong signs of growth, increasing by 10% year over year. The intrusion detection and intrusion prevention segments (IDS and IPS) declined by similar amounts year over year at -6.2% and -5.1% respectively.
The United States accounted for 44.3% of the total security appliance market revenue in 2Q 2020, up from 42.7% a year ago and with double-digit annual growth of 11.6%. The two other regions showing double-digit growth compared to 2Q19 are Asia/Pacific (excluding Japan and China) and Japan with growth of 10.2% and 14.1% respectively.
The Middle East and Africa (MEA) region grew 8.9% year over year, while Central and Eastern Europe (CEE) saw a 7.2% annual expansion. Western Europe grew 5.5% year over year.
Canada and Latin America showed growth for 2Q20 as well with a 5.4% and 4.6% annual increase respectively. The only region showing a slight decline for the quarter was China with the total security appliance market in the region declining 3%.
“Despite the ongoing pandemic, network security appliances experienced a strong 10.0% growth rebound in 2Q20 over the previous 1Q20 decline. This was due to the increased spending to enable the expanded remote workforce and to secure on-premise resources,” said Pete Finalle, senior research analyst, Security and Trust at IDC.
Global spending on AI is forecast to double over the next four years, growing from $50.1 billion in 2020 to more than $110 billion in 2024.
According to IDC, spending on AI systems will accelerate over the next several years as organizations deploy artificial intelligence as part of their digital transformation efforts and to remain competitive in the digital economy. The compound annual growth rate (CAGR) for the 2019-2024 period will be 20.1%.
“AI is the technology that will help businesses to be agile, innovate, and scale. The companies that become ‘AI powered’ will have the ability to synthesize information (using AI to convert data into information and then into knowledge), the capacity to learn (using AI to understand relationships between knowledge and apply the learning to business problems), and the capability to deliver insights at scale (using AI to support decisions and automation).”
Two of the leading drivers for AI adoption are delivering a better customer experience and helping employees to get better at their jobs. This is reflected in the leading use cases for AI, which include automated customer service agents, sales process recommendation and automation, automated threat intelligence and prevention, and IT automation. Combined, these four use cases will represent nearly a third of all AI spending this year. Some of the fastest growing use cases are automated human resources, IT automation, and pharmaceutical research and discovery.
AI spending forecast by industry
The two industries that will spend the most on AI solutions throughout the forecast are retail and banking. The retail industry will largely focus its AI investments on improving the customer experience via chatbots and recommendation engines while banking will include spending on fraud analysis and investigation and program advisors and recommendation systems.
Discrete manufacturing, process manufacturing, and healthcare will round out the top 5 industries for AI spending in 2020. The industries that will see the fastest growth in AI spending over the 2020-2024 forecast are media, federal/central government, and professional services.
“COVID-19 caused a slowdown in AI investments across the transportation industry as well as the personal and consumer services industry, which includes leisure and hospitality businesses. These industries will be cautious with their AI investments in 2020 as their focus will be on cost containment and revenue generation rather than innovation or digital experiences,” said Andrea Minonne, senior research analyst, Customer Insights & Analysis, IDC.
“On the other hand, AI has played a role in helping societies deal with large-scale disruptions caused by quarantines and lockdowns. Some european governments have partnered with AI start-ups to deploy AI solutions to monitor the outcomes of their social distancing rules and assess if the public was complying with rules. Also, hospitals across Europe are using AI to speed up COVID-19 diagnosis and testing, to provide automated remote consultations, and to optimize capacity at hospitals.”
“In the short term, the pandemic caused supply chain disruptions and store closures with continued impact expected to linger into 2021 and the outyears. For the most impacted industries, this has caused some delays in AI deployments,” said Stacey Soohoo, research manager, Customer Insights & Analysis, IDC.
“Elsewhere, enterprises have seen a silver lining in the current situation: an opportunity to become more resilient and agile in the long run. Artificial intelligence continues to be a key technology in the road to recovery for many enterprises and adopting artificial intelligence will help many to rebuild or enhance future revenue streams and operations.”
Software, hardware and geographical trends
Software and services will each account for a little more than one third of all AI spending this year with hardware delivering the remainder. The largest share of software spending will go to AI applications ($14.1 billion) while the largest category of services spending will be IT services ($14.5 billion).
Servers ($11.2 billion) will dominate hardware spending. Software will see the fastest growth in spending over the forecast period with a five-year CAGR of 22.5%.
On a geographic basis, the United States will deliver more than half of all AI spending throughout the forecast, led by the retail and banking industries. Western Europe will be the second largest geographic region, led by banking, retail, and discrete manufacturing.
China will be the third largest region for AI spending with state/local government, banking, and professional services as the leading industries. The strongest spending growth over the five-year forecast will be in Japan (32.1% CAGR) and Latin America (25.1% CAGR).
The worldwide public cloud services market, including Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS), grew 26% year over year in 2019 with revenues totaling $233.4 billion, according to IDC.
Spending continued to consolidate in 2019 with the combined revenue of the top 5 public cloud service providers (Amazon Web Services, Microsoft, Salesforce.com, Google, and Oracle) capturing more than one third of the worldwide total and growing 36% year over year.
“Cloud is expanding far beyond niche e-commerce and online ad-sponsored searches. It underpins all the digital activities that individuals and enterprises depend upon as we navigate and move beyond the pandemic,” said Rick Villars, group vice president, Worldwide Research at IDC.
“Enterprises talked about cloud journeys of up to ten years. Now they are looking to complete the shift in less than half that time.”
Public cloud services market has doubled since 2016
The public cloud services market has doubled in the three years since 2016. During this same period, the combined spending on IaaS and PaaS has nearly tripled. This highlights the increasing reliance on cloud infrastructure and platforms for application deployment for enterprise IT internal applications as well as SaaS and digital application delivery.
Spending on IaaS and PaaS is expected to continue growing at a higher rate than the overall cloud market over the next several years as resilience, flexibility, and agility guide IT platform decisions.
“Today’s economic uncertainty draws fresh attention to the core benefits of IaaS – low financial commitment, flexibility to support business agility, and operational resilience,” said Deepak Mohan, research director, Cloud Infrastructure Services.
“Cost optimization and business resilience have emerged as top drivers of IT investment decisions and IaaS offerings are designed to enable both. The COVID-19 disruption has accelerated cloud adoption with both traditional enterprise IT organizations and digital service providers increasing use of IaaS for their technology platforms.”
“Digitizing processes is being prioritized by enterprises in every industry segment and that is accelerating the demand for new applications as well as repurposing existing applications,” said Larry Carvalho, research director, Platform as a Service.
“Modern application platforms powered by containers and the serverless approach are providing the necessary tools for developers in meeting these needs. The growth in PaaS revenue reflects the need by enterprises for tools to accelerate and automate the development lifecycle.”
“SaaS applications remains the largest segment of public cloud spending with revenues of more than $122 billion in 2019. Although growth has slowed somewhat in recent years, the current crisis serves as an accelerator for SaaS adoption across primary and functional markets to address the exponential growth of remote workers,” said Frank Della Rosa, research director, SaaS and Cloud Software.
The combined IaaS and PaaS market
A combined view of IaaS and PaaS spending is relevant because it represents how end customers consume these services when deploying applications on public cloud. In the combined IaaS and PaaS market, Amazon Web Services and Microsoft captured more than half of global revenues.
But there continues to be a healthy long tail, representing over a third of the market. These are typically companies with targeted use case-specific PaaS offerings. The long tail is even more pronounced in SaaS, where nearly three quarters of the spending is captured outside the top 5.
Vendor revenue from sales of IT infrastructure products (server, enterprise storage, and Ethernet switch) for cloud environments, including public and private cloud, increased 2.2% in the first quarter of 2020 (1Q20) while investments in traditional, non-cloud, infrastructure plunged 16.3% year over year, according to IDC.
Pandemic as the major factor driving infrastructure spending
The broadening impact of the COVID-19 pandemic was the major factor driving infrastructure spending in the first quarter. Widespread lockdowns across the world and staged reopening of economies triggered increased demand for cloud-based consumer and business services driving additional demand for server, storage, and networking infrastructure utilized by cloud service provider datacenters.
As a result, public cloud was the only deployment segment escaping year-over-year declines in 1Q20 reaching $10.1 billion in spend on IT infrastructure at 6.4% year-over-year growth. Spending on private cloud infrastructure declined 6.3% year over year in 1Q to $4.4 billion.
The pace set in the first quarter is expected to continue through rest of the year as cloud adoption continues to get an additional boost driven by demand for more efficient and resilient infrastructure deployment.
For the full year, investments in cloud IT infrastructure will surpass spending on non-cloud infrastructure and reach $69.5 billion or 54.2% of the overall IT infrastructure spend.
Spending on private cloud infrastructure expected to recover
Spending on private cloud infrastructure is expected to recover during the year and will compensate for the first quarter declines leading to 1.1% growth for the full year. Spending on public cloud infrastructure will grow 5.7% and will reach $47.7 billion representing 68.6% of the total cloud infrastructure spend.
Disparity in 2020 infrastructure spending dynamics for cloud and non-cloud environments will ripple through all three IT infrastructure domains – Ethernet switches, compute, and storage platforms.
Within cloud deployment environments, compute platforms will remain the largest category of spending on cloud IT infrastructure at $36.2 billion while storage platforms will be fastest growing segment with spending increasing 8.1% to $24.9 billion. The Ethernet switch segment will grow at 3.7% year over year.
Vendor revenues by region
At the regional level, year-over-year changes in vendor revenues in the cloud IT Infrastructure segment varied significantly during 1Q20, ranging from 21% growth in China to a decline of 12.1% in Western Europe.
Long term, spending on cloud IT infrastructure is expected to grow at a five-year CAGR of 9.6%, reaching $105.6 billion in 2024 and accounting for 62.8% of total IT infrastructure spend.
Public cloud datacenters will account for 67.4% of this amount, growing at a 9.5% CAGR. Spending on private cloud infrastructure will grow at a CAGR of 9.8%. Spending on non-cloud IT infrastructure will rebound somewhat in 2020 but will continue declining with a five-year CAGR of -1.6%.
Worldwide IoT spending has been significantly impacted by the economic effects of the pandemic in 2020, although a back to double-digit growth rebound is expected both in the mid and long-term, according to IDC.
IoT spending is growing 8.2% year over year to $742 billion in 2020 down from 14.9% growth forecast in the November 2019. Nevertheless, global IoT spending is expected to return to double-digit growth rates in 2021 and achieve a compound annual growth rate (CAGR) of 11.3% over the 2020-2024 forecast period.
“Although the current pandemic forced many organizations to pause some innovative IoT deployments, IoT will be a key ‘return to growth’ accelerator with selected use cases being safe bets for end users to focus on in order to reach a new level of automation, remote everywhere experience, and hyper-connectivity,” said Andrea Siviero, associate research director with IDC’s Customer Insights & Analysis group.
Spending by industry
The industries that will see the slowest year-over-year growth in IoT spending are the ones experiencing the greatest impact from the economic downturn caused by the pandemic. Personal and consumer services, which includes hotels, theme parks, casinos, and movie theaters, will be the only industry with a decline in IoT spending this year, down 0.1% from last year.
The next three industries with the slowest growth in 2020 are discrete manufacturing (4.3% growth), resource industries including oil and gas (5.0% growth), and transportation (5.7% growth).
However, these three industries will still manage to achieve a double-digit CAGR at the end of the forecast period. Healthcare, insurance, and education will deliver the strongest industry gains in IoT spending this year with growth rates of 14.5%, 12.3%, and 11.9% respectively. Consumer spending on IoT solutions will grow 13.9% year over year in 2020.
IoT spending by use cases
Spending on IoT use cases follows a similar pattern with spending growth affected by the pandemic’s impact on the host industry. Two use cases (air traffic monitoring and connected oil field exploration) will experience a decline in spending this year while some of the largest use cases in terms of total spending (manufacturing operations, production automation, and freight monitoring) will see the slowest spending growth in 2020 (5.6%, 5.2%, and 4.7% respectively).
The use cases that will see the fastest spending growth in 2020 (electric vehicle charging, bedside telemetry, and remote health monitoring) are in industries where overall IoT spending is on the rise. Smart home spending, consumer driven and the second largest use case in terms of overall spend, will grow 14.4% year over year in 2020.
“COVID-19 adds a new force shaping IoT maturity evolution as the companies have been forced to adjust their technology roadmaps in response to the crisis. It may further widen the divide between the two types of IoT adopters – determined advanced users and those who were struggling to understand ROI and monetize their IoT initiatives and to go beyond mere data collection.
“The second group will likely postpone their IoT investment, not seeing clear benefits in the near and long terms, and fall further behind, while others will leverage their IoT expertise focusing on the use cases that will help them secure a more advanced position in the next normal,” said Svetlana Khimina, senior research analyst with IDC’s Customer Insights & Analysis group.
IoT spending by technology group
IoT services, composed of the IT and Installation Services and Ongoing Service or Content as a Service categories, will be the largest technology group in 2020 and through the end of the forecast. Together, these two categories account for roughly a third of all IoT spending.
Hardware spending is dominated by module/sensor purchases and will be nearly as large as IoT services. Software will be the fastest growing technology category with a five-year CAGR of 13.5% and a focus on application and analytics software purchases.
IoT spending by region
China, the United States, and Western Europe will account for roughly three quarters of all IoT spending throughout the forecast. Although the three regions will have similar spending totals initially, China’s spending will grow at a faster rate than the other two regions – 13.4% CAGR compared to 9.0% and 11.4% – enabling it to become the dominant region for IoT spending.
The fastest IoT spending growth will be in the Middle East & Africa (19.0% CAGR), Central & Eastern Europe (17.6% CAGR), and Latin America (15.8% CAGR) regions.
“COVID-19 has caused a significant disruption in China’s IoT market – especially in the areas of supply chain, production, and delivery and deployment, resulting in delays that have significantly reduced IoT spending across all industries and use cases in early 2020.
“As China continues along its road towards recovery, we expect the market to bounce back in the following years as enterprises begin to grasp the vital role of IoT in epidemic prevention and control, as well as their capabilities in mitigating market disruptions,” said Jonathan Leung, senior market analyst, IDC China.
Vendor revenue in the worldwide server market declined 6.0% year over year to $18.6 billion during the first quarter of 2020 (1Q20). Worldwide server shipments declined 0.2% year over year to just under 2.6 million units in 1Q20, IDC reveals.
In terms of server class, volume server revenue was down 2.1% to $15.1 billion, while midrange server revenue declined 23.0% to just under $2.6 billion, and high-end systems declined by 9.1% to just under $1.0 billion.
“Server market performance was relatively similar to the fourth quarter, albeit a bit more muted, with bright spots including the ODM Direct vendor group realizing solid demand from its core hyperscaler and cloud provider customer set, and continued strength in the non-x86 server space,” said Sebastian Lagana, research manager, Infrastructure Platforms and Technologies at IDC.
“That said, the OEM market faced stiff headwinds due to a combination of slowing enterprise demand for x86 servers and supply chain constraints, both driven largely by macroeconomic impacts.”
Overall server market standings, by company
The number one position in the worldwide server market in 1Q20 belonged to Dell Technologies with a revenue share of 18.7%. HPE/New H3C Group took the second position at 15.5%, followed by Inspur/Inspur Power Systems at 7.1%. Lenovo and IBM were tied for the fourth position with market shares of 5.6% and 4.8%, respectively.
The ODM Direct group of vendors accounted for 25.9% of total server revenue and was up 6.1% year over year to nearly $4.83 billion. Dell Technologies led the worldwide server market in terms of unit shipments, accounting for 18.4% of all units shipped during the quarter.
Top server market findings
On a geographic basis, all regions declined in aggregate during the quarter. Japan outperformed the competitive set, down 0.5%, followed by Latin America at -2.3%, China at -2.6%, and Asia/Pacific (excluding Japan and China) at -3.0%.
The United States was down 6.1%, and Canada declined 8.3%. Europe, the Middle East and Africa (EMEA) declined by double digits, down 11.8% year over year.
Revenue generated from x86 servers decreased 9.1% in 1Q20 to $16.8 billion. Non-x86 servers grew 38.2% year over year to just under $1.8 billion.
79% of organizations experienced DNS attacks, with the average cost of each attack hovering around $924,000, according to EfficientIP.
The 2020 Global DNS Threat Report, conducted in collaboration with IDC, shows that organizations across all industries suffered an average 9.5 attacks this year. These figures illustrate the pivotal role of the DNS for network security, as threat actors make use of DNS’ dual capacity as either a threat vector or a direct objective.
In terms of regional damage from DNS attacks, North America leads the way with the average cost of attack at $1,073,000. This is a modest decrease by about 1.36% from the year prior. And while the United States saw nearly a 4% decrease in attack damages, it still has the highest cost globally at $1,082,710.
Attackers appear to increasingly target the cloud. As the number of business-critical applications hosted in hybrid-cloud environments has increased, so has the attack surface for cybercriminals. The report shows that companies that suffered cloud service downtime increased from 41% in 2019 to 50% in 2020, a sharp growth of nearly 22%. The increased adoption of cloud services during the global COVID-19 pandemic could make the cloud even more attractive for attackers.
In-house app downtime remained extremely high: 62% this year compared to 63% last year. As a whole, application downtime—whether in-house or in the cloud—remains the most significant result of DNS attacks; of the companies surveyed, 82% said that they had experienced application downtime of some kind.
The report, now in its sixth year, shows the broad range and changing popularity of attack types ranging from volumetric to low signal. This year phishing led in popularity (39% of companies experienced phishing attempts), malware-based attacks (34%), and traditional DDoS (27%). Crucially, the size of DDoS attacks is also increasing, with almost two-thirds (64%) being over 5Gbit/s.
Despite these worrying numbers, enterprise awareness of how to combat these attacks is improving: 77% of respondents in the 2020 Threat Report deemed DNS security a critical component of their network architecture, compared to 64% in the previous year. Additionally, use of Zero Trust strategies is maturing: 31% of companies are now running or piloting Zero Trust, up from 17% last year. Use of predictive analytics has increased from 45% to 55%.
“Recognition of DNS security criticality has increased to 77% as most organizations are now impacted by a DNS attack or vulnerability of some sort on a regular basis,” says Romain Fouchereau, Research Manager European Security at IDC. “The consequences of such attacks can be very damaging financially, but also have a direct impact on the ability to conduct business. Ensuring DNS service availability and integrity must become a priority for any organization.”
DNS offers valuable information against would-be hackers that is currently going underutilized. According to results from the 2020 Threat Report, currently 25% of companies perform no analytics on their DNS traffic (compared to 30% last year). 35% of organizations do not make use of internal DNS traffic for filtering, and only 12% collect DNS logs and correlate through machine learning.
“In this era of key IT initiatives like IoT, Edge, SD-WAN and 5G, DNS should play a much larger role in the security ecosystem,” says Ronan David, VP of Strategy for EfficientIP. “It offers valuable information that can make security strategies against hackers much more proactive and preventative. The pandemic has exacerbated the need to shore up DNS defenses, when any network or app downtime has major business implications.”
There are several ways that companies can make better use of DNS with threat intelligence and User Behavioral Analytics, to enhance attack protection capacity. A DNS security solution can feed SIEMs and SOCs with actionable data & events, thus simplifying and accelerating detection and remediation. Of companies surveyed, 29% used SIEM software to detect compromised devices, and 33% of companies passed DNS information to SIEM for analysis (up from 22% in 2019).
Business confidence in IT spending levels declined in the last week of May, according to IDC.
IT buyers in the US, Western Europe, and some parts of Asia/Pacific indicated that they now expect total IT spending to decline by more than previously anticipated. This is in spite of a general stabilization in other market indicators over the past month, as many countries prepare to tentatively move into a gradual recovery phase.
2020 IT spending levels in the USA
Confidence levels are still especially weak in the USA, where they have continued to trend down since the crisis began. US firms are a little more confident about the overall economy than two weeks ago, but conversely less confident about their own IT budgets for the year as a whole.
Significant spending declines are predicted for traditional technologies including PCs, peripherals, software applications, and project-oriented IT services. Survey results also deteriorated in Europe, especially in France, Italy, and Russia.
“The survey results have diverged with businesses in most countries now expressing less confidence about their own spending than about the broader economy,” said Stephen Minton, vice president with IDC‘s Customer Insights & Analysis group.
“This could just reflect the fact that we’re still in the middle of the second quarter when the biggest spending cuts are likely to be concentrated and the scale of the short-term impact has been even worse than some firms expected. In fact, survey results are now closer in line with market indicators in terms of the scale of IT spending decline projected for 2020 as a whole.”
The index is based partly on a global survey of enterprise IT buyers, and partly on a composite of market indicators which are calibrated with country-level analyst inputs relating to medical infection rates, social distancing, travel restrictions, public life, and government stimulus.
A score above 1000 indicates that IT spending is expected to increase, while a score below 1000 points towards a likely decline.
Unpredictable recovery phase
Business confidence had been improving steadily in Asia/Pacific, but the picture is more complex according to the latest poll. IT spending is still projected to increase in China, where the economy has moved more quickly from a containment to recovery mode, but confidence levels plunged in India and even declined in Korea where moves to ease lockdown measures appeared to trigger some instances of infections increasing again.
“The recovery phase in the second half of the year will be unpredictable and there may be volatility in survey results as businesses react to anxiety around a possible second wave of infections,” said Minton.
“The first phase of this crisis was uniformly bad for everyone, but the next chapter will be very localized and dependent on a delicate balance of medical and economic factors. Not surprisingly, the latest survey results support a sense that IT buyers remain cautious in this type of economic climate and continue to be vigilant in the near term.
“Moreover, we have now entered a phase where some companies are being forced into bankruptcy or employee reductions, which will have inevitable implications for tech spending in the second half of the year.”
The combined consumer and enterprise WLAN market segments rose 2.3% year over year in the first quarter of 2020 (1Q20), according to IDC. The enterprise segment fell 2.2% year over year in 1Q20 with $1.3 billion in revenue.
The impact of COVID-19
The first quarter of 2020 began showing the impact of the COVID-19 global pandemic on the enterprise WLAN market. The novel coronavirus began spreading in China early in the quarter then expanded into Europe and North America later in the quarter. The subsequent lockdown of economies represented a headwind for the enterprise WLAN market.
A driver for the enterprise WLAN market is the new Wi-Fi 6 standard, also known as 802.11ax. Across the enterprise market, Wi-Fi 6-supported dependent access points (APs) made up 11.8% of unit shipments and 21.8% of revenues. The previous generation standard, 802.11ac, still made up the majority of shipments (80.9%) and revenues (76.2%).
Meanwhile, the consumer WLAN market grew 5.5% year over year in 1Q20. Within the consumer market, 62.5% of shipments and 79.4% of revenues were for 802.11ac products. APs supporting the older 802.11n standard still made up 36.9% of unit shipments and 17.6% of revenues, not surprising given the price sensitivity seen across many emerging markets.
“Wireless connectivity remains an important technology for organizations around the world as more users and devices than ever rely on mobile devices to connect to bandwidth-intensive applications,” said Brandon Butler, senior research analyst, Network Infrastructure at IDC.
“The WLAN market is not immune to the impacts from the pandemic that has been sweeping across the world over the last few months. Results from the market’s first quarter of 2020 show the early effect of the pandemic and subsequent lockdown, which will continue to impact the market into the second quarter of 2020.”
The geographic perspective
From a geographic perspective, the WLAN market saw strong growth in the Middle East and Africa region, which increased 8.4% year over year in 1Q20. The United Arab Emirates was up 12.0% and Turkey’s market grew 15.7%. North American markets fared well in the quarter too: The USA market grew 6.9% in 1Q20 while the Canadian enterprise WLAN market was up 10.6% in 1Q20.
The market in the People’s Republic of China declined in 1Q20 by a significant 23.0%. The broader Asia/Pacific region, excluding Japan and China, was off 10.6%, with India declining 13.6% and Australia down 15.6%. Japan’s market fell 2.8%.
European markets had mixed results, with Central and Eastern Europe up 1.8% year over year, driven by Russia’s enterprise WLAN market growing 6.0% and Poland increasing 6.6%. Western Europe was off 6.2% with declines in the United Kingdom (-3.9%), Germany (-7.7%), and France (-9.8%).
“The enterprise WLAN market saw mixed results across geographies, based largely on the spread of the COVID-19 pandemic,” noted Petr Jirovsky, research director, Worldwide Networking Trackers.
“The pandemic initially hit Asian countries, which resulted in many regional economies slowing investments in WLAN technology. Given the pandemic has now spread across the rest of the world, IDC expects impacts on the enterprise WLAN market to continue into the second quarter of 2020.”
Key enterprise WLAN vendor updates
- Cisco’s enterprise WLAN revenues decreased 6.7% year over year in 1Q20 to $611 million. Cisco remains the market share leader, finishing the quarter with 45.7% share, up from 44.6% for the full year 2019.
- HPE-Aruba revenues rose 14.2% year over year in 1Q20. The company’s market share increased from 13.8% for the full year 2019 to 14.4% in 1Q20.
- Ubiquiti saw its enterprise WLAN revenues rise 24.8% year over year. The company’s market share stood at 9.5% in 1Q20, up from 7.0% for the full year 2019.
- CommScope (formerly ARRIS/Ruckus) revenues declined in 1Q20 by 4.7% year over year. The company held 5.2% market share in 1Q20.
- Huawei’s revenues declined 15.0% year over year in 1Q20; its market share stood at 3.8% to end the quarter.
Worldwide revenue from the Open Compute Project (OCP) infrastructure market will reach $33.8 billion in 2024, according to IDC.
While year-over-year growth will slow slightly in 2020 due to capital preservation strategies during the COVID-19 situation, the market for OCP compute and storage infrastructure is forecast to see a compound annual growth rate (CAGR) of 16.6% over the 2020-2024 forecast period.
The forecast assumes a rapid recovery for this market in 2021-22, fueled by a robust economic recovery worldwide. However, a prolonged crisis and economic uncertainty could delay the market’s recovery well past 2021, although investments in and by cloud service providers may dominate infrastructure investments when they occur during this period.
“By opening and sharing the innovations and designs within the community, IDC believes that OCP will be one of the most important indicators of datacenter infrastructure innovation and development, especially among hyperscalers and cloud service providers,” said Sebastian Lagana, research manager, Infrastructure Systems, Platforms and Technologies.
“IDC projects massive growth in the amount of data generated, transmitted, and stored worldwide. Much of this data will flow in and out of the cloud and get stored in hyperscale cloud data centers, thereby driving demand for infrastructure,” said Kuba Stolarski, research director, Infrastructure Systems, Platforms and Technologies at IDC.
OCP technology by segment
The compute segment will remain the primary driver of overall OCP infrastructure revenue for the coming five years, accounting for roughly 83% of the total market. Despite being a much larger portion of the market, compute will achieve a CAGR comparable to storage through 2024. The compute and storage segments are defined below:
- Compute: Spend on computing platforms (i.e., servers including accelerators and interconnects) is estimated to grow at a five-year CAGR of 16.2% and reach $28.07 billion. This segment includes externally attached accelerator trays also known as JBOGs (GPUs) and JBOFs (FPGAs).
- Storage: Spend on storage (i.e., server-based platforms and externally attached platforms and systems) is estimated to grow at a five-year CAGR of 18.5% and reach $5.73 billion. Externally attached platforms are also known as JBOFs (Flash) and JBODs (HDDs) and do not contain a controller. Externally attached systems are built using storage controllers.
Buyer type highlights
OCP Board Member purchases make up the bulk of the OCP infrastructure market and are poised to grow at a 14.8% CAGR through 2024, when they will account for just under 75% of the total market.
Conversely, non-member spending is projected to increase at a five-year CAGR of 23.2% and will expand its share of the OCP infrastructure market by just over 600 basis points during that period.
In terms of end user type, hyperscalers account for the largest portion of the market at just over 78% in 2019 and are projected to expand spending at a 14.2% CAGR through 2024, although this will result in erosion of total share.
Conversely non-hyperscaler purchases will expand 23.8% over the same period, increasing this group’s market share by approximately 650 basis points from 2019 to 2024.
Nearly 80% of the companies had experienced at least one cloud data breach in the past 18 months, and 43% reported 10 or more breaches, a new Ermetic survey reveals.
According to the 300 CISOs that participated in the survey, security misconfiguration (67%), lack of adequate visibility into access settings and activities (64%) and identity and access management (IAM) permission errors (61%) were their top concerns associated with cloud production environments.
Meanwhile, 80% reported they are unable to identify excessive access to sensitive data in IaaS/PaaS environments. Only hacking ranked higher than misconfiguration errors as a source of data breaches.
“Even though most of the companies surveyed are already using IAM, data loss prevention, data classification and privileged account management products, more than half claimed these were not adequate for protecting cloud environments,” said Shai Morag, CEO of Ermetic.
“In fact, two thirds cited cloud native capabilities for authorization and permission management, and security configuration as either a high or an essential priority.”
Excessive access permissions may go unnoticed
Driven by the dynamic and on-demand nature of public cloud infrastructure deployments, users and applications often accumulate access permissions beyond what is necessary for their legitimate needs.
Excessive permissions may go unnoticed as they are often granted by default when a new resource or service is added to the cloud environment. These are a primary target for attackers as they can be used for malicious activities such as stealing sensitive data, delivering malware or causing damage such as disrupting critical processes and business operations.
As part of the study, IDC surveyed 300 senior IT decision makers in the US across the Banking (12%), Insurance (10%), Healthcare (11%), Government (8%), Utilities (9%), Manufacturing (10%), Retail (9%), Media (11%), Software (10%) and Pharmaceutical (10%) sectors. Organizations ranged in size from 1,500 to more than 20,000 employees.
Some of the report’s key findings include:
- 79% of companies experienced at least one cloud data breach in the past 18 months, and 43% said they had 10 or more
- Top three cloud security threats are security misconfiguration of production environments (67%), lack of visibility into access in production environments (64%) and improper IAM and permission configurations (61%)
- Top three cloud security priorities are compliance monitoring (78%), authorization and permission management (75%), and security configuration management (73%)
- Top cloud access security priorities are maintaining confidentiality of sensitive data (67%), regulatory compliance (61%) and providing the right level of access (53%)
- Top cloud access security challenges are insufficient personal/expertise (66%), integrating disparate security solutions (52%) and lack of solutions that can meet their needs (39%)
Spending on the digital transformation (DX) of business practices, products, and organizations will continue at a solid pace despite the challenges presented by the COVID-19 pandemic, IDC reveals.
Global spending on DX technologies and services is forecast to grow 10.4% in 2020 to $1.3 trillion. While this is notably slower than the 17.9% growth in 2019, it remains one of the few bright spots in a year characterized by dramatic reductions in overall technology spending.
“COVID-19 has upended the global economy, with direct negative implications on the way businesses invest in IT,” said Craig Simpson, senior research manager with IDC’s Customer Insights and Analysis Group.
“DX technology investment has not gone unscathed, but so far it has been affected to a lesser extent since many large-scale DX projects underway or planned are instrumental to broader strategic business initiatives. Compared to IDC’s pre-COVID-19 forecast, the five-year growth rate for digital transformation spending has declined by less than two percentage points.”
Spending by industries
The industries that will see the slowest year-over-year growth in DX spending are the ones experiencing the greatest impact from the economic downturn caused by the pandemic. Personal and consumer services, which includes hotels, theme parks, casinos, and movie theaters, will only see an increase of 5.3% in its DX spending this year, down from 18.4% growth in 2019.
Similarly, discrete manufacturing, the industry with the largest digital transformation spending amount, will only grow 6.6% this year, down from 14.5% growth in 2019. The industries expected to see the strongest growth in DX spending in 2020 are construction (16.3%) and healthcare (15.7%), both of which will see spending grow more slowly than last year.
“COVID-19 has wiped off almost $500 billion of worldwide DX technology investment between 2020-2023 from our pre-COVID-19 forecast,” added Eileen Smith, program vice president with IDC‘s Customer Insights and Analysis Group.
“Yet despite these losses, pockets of growth opportunities exist across most industries when diving deep into specific use cases that solve specific business problems. A few examples include RPA-based claims processing in insurance, digital visualization in education, omnichannel commerce platforms in telecommunications, and clinical trial operational excellence in process manufacturing.”
DX use cases
The DX use cases – discretely funded efforts that support a particular program objective – that will receive the most spending this year include autonomic operations ($51 billion), robotics manufacturing ($47 billion), and root cause ($35 billion), all of which will be driven by the manufacturing sector.
The DX use cases that will see the greatest year-over-year growth in spending are virtualized labs and digital visualization in the education sector, robotic process automation-based claims processing in insurance, and augmented design management in the professional services industry. Of the 278 DX use cases identified, only nine will see a decline in spending this year.
The United States will remain the largest geographic market for DX spending, delivering roughly one third of the worldwide total in 2020. Western Europe will be the second largest region for DX spending, following closely by China. These two regions will also deliver the strongest year-over-year growth in DX spending at 13.6% for China and 12.8% for Western Europe.