European spending on digital transformation (DX) is forecast to exceed $550-billion in 2023, a year-on-year increase of 15,9% from 2022.
According to International Data Corporation’s (IDC) latest Worldwide Digital Transformation Spending Guide, DX spending in Europe will continue to grow in double digits till 2026, with a CAGR of 16,6% for 2021-2026.
DX spending will be driven by investments in discrete manufacturing, professional services, and process manufacturing. Together, these industries will account for over a third of total European DX spending in 2023.
Sustainability will be a key strategic priority that will boost European digital spending as it matures from being a “nice-to-have” to a key driver of customer engagement, trust and business development. Spending on sustainability is expected to grow by 23,8% CAGR to 2026 in Europe, driven by strong regulation, stakeholders’ increasing expectations, and initiatives to cut costs due to the energy price hikes brought on by the Russia-Ukraine War.
“Digital transformation spending in Europe is driven by many factors, including the need for European companies to develop a strong and credible sustainability strategy,” says Angela Vacca, senior research manager, Customer Insights & Analysis at IDC. “Companies recognize the business benefits of a digital-first strategy, with sustainability gaining center stage, especially across European companies operating in the manufacturing, transport, and utilities industries.”
European spending on sustainability-related use cases — such as environmental resource optimization/resource management and representation, tracking and reporting of CO2 emissions — will more than double between 2022 and 2026. Investments will be led by Germany, the UK, and France.