Just What Is Digital Transformation, And How Big Will It Get?

June 10, 2024 Timothy Prickett Morgan

Sometimes, we really wonder what people are talking about. And not in a snotty way like “we know better,” but in a way that we truly are not sure what they mean. The term “digital transformation,” often abbreviated DX and not meaning “digital experience” like UX is short for “user experience,” is one of the things we think we understand until we scratch the surface.

We have been doing digital computing in the enterprise with electronic computers for more than six decades, and we using gussied up loom programming machines powered by punch cards since the US Census of 1890. So we have a sense of what digital computing means. Data has been encoded in digital formats throughout this time, in increasing volumes and complexities, and applications have been written in high level programming languages that are compiled down to a series of 1s and 0s that are digital in nature. To out mind, the digital transformation has already long since happened, and what we are seeing during the Generative AI revolution is really the birth – if one may use that word both literally and figuratively at the same time – of a new technology that is based on digital data and processing but which has a product that is essentially very human-like chattiness. Decidedly undigital and sometimes either wrong or insane but often useful and correct.

It is with these thoughts – and others – in mind that we ponder a recent statement put out by IDC that talks about spending on digital transformation. (Excuse me, DX.) And that prognosticates that the DX market comprised $1.9 trillion in spending in 2022 and will have a compound annual growth rate of 16.2 percent between 2022 and 2027, inclusive, to reach $3.9 trillion in spending by 2027. Spending on non-DX IT products and services will remain essentially flat over this time period, as you can see in this pretty chart from IDC:

We read this statement several times and we still do not have a clear idea of what – specifically – IDC means by DX and how it is distinct from non-DX investments. But we did learn from this Future Enterprise Awards program managed by IDC that “Digital Transformation (DX) is evolving into the Digital Business Era, a stepping-stone to the Future Enterprise.”

We infer that generative AI in particular and other machine learning technologies are part of DX, but we don’t know what else is. And from this document describing the Worldwide Digital Transformation Spending Guide, we learn that IDC is tracking DX spending globally across 12 markets, 19 industries, across three different platforms – 2^nd Platform, 3^rd Platform, and innovation accelerators. IDC is also tracking DX spending across seventeen geographies and nine regions, with a five year forecast cube to allow customers to query it.

We understand what application and database and user interface modernization are, and we also infer that these are part of DX and particularly relevant to IBM i shops. But we still have a less than clear idea about what DX really is. I guess we can probably say what it isn’t: Keeping green-screen applications running and doing modest updates on systems that were created decades ago. Perhaps that is what non-DX means in the IDC analysis.

So, here’s a question: How does your DX budget compare to your non-DX budget, and how is that compared to the global averages embodied in the chart above? And here’s another question: What do you think IDC is talking about?

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