Digital Transformation Market

Market Overview

The global digital transformation market size had a revenue holding of USD 724.84 billion in 2022. It is expected to reach USD 2,560.81 billion by 2031, growing at a CAGR of 15.1% during the forecast period (2023–2031).  

Digital co-creation and digital transformation are becoming prevalent business practices in the new digital society. The subsequent changes have ushered in a new era of how businesses manage their operations to support business strategies, deliver better results, and interact with customers online. The use of digital technologies like cloud computing, big data, mobility, and social media to enhance business processes is known as digital transformation. The integration of digital tools and technologies across all corporate operations and functional domains is known as digital transformation. This fundamentally alters how companies run and provide value to their clients. Businesses must undergo a digital transformation to grow, reduce operating costs, increase productivity, and track real-time business activities. Organizations that undergo digital change are better able to manage the risks of handling disruption, including those related to reorganizing their businesses, market volatility, and unpredicted geopolitical conditions that may result in unpredictable results.

By replacing manual processes with automated ones, digital transformation lowers the likelihood of user error. The increased demand for cutting-edge technologies like cloud computing and the Internet of Things (IoT) encourages organizations and enterprises to adopt linked devices and data-rich analytics solutions. These solutions enable incorporating intelligence capabilities into organizational processes and procedures to enhance and effectively engage customers while promoting operational efficiencies. Throughout the forecast period, the market will likely be driven by the rising use of mobile devices, smartphones, and programs across business processes and departments, driving digitization.

Market Dynamics

Market Driving Factors

• Digitalization of Business Operations to Foster Market Growth

Advanced technologies have encouraged innovation and transformation in the business environment, leading to an increase in income. Examples include cloud, IoT, big data and analytics, mobility, and social media. Incorporating digital technologies within corporate operations is known as "digital transformation." It aims to change how resources and technology are employed to provide customers with better value. Companies worldwide have sped up their digital transformation through IoT, cloud migrations, and other initiatives. Modern, effective methods quickly replace outdated ones, owing to digital technologies.

To achieve a competitive advantage, businesses need to receive rapid, accurate, and real-time feedback using extensive data analysis to create new goods and services or enhance existing ones. Companies are rapidly using big data and business intelligence to gather current data, gain insights that can be put to use, better understand customer needs, and increase productivity. Due to the increased usage of contemporary technology, clients frequently use the digital customer experience as their primary criterion when rating firms. Businesses are putting into practice digital transformation plans that mainly concentrate on transforming digital connections with customers to improve on this front. As a result, more and more industry verticals need digital transformation solutions. Thus, enhancing the global digital transformation market.

Market Restraining Factors

• Security Concerns for Data Breaching to Hinder Market Growth

The security and privacy of crucial corporate data are significant concerns when implementing digital technologies, and these concerns grow when firms invest in new technology. Organizations request more robust security and privacy as IoT becomes increasingly prevalent to prevent intrusions. Implementing digital transformation initiatives across various enterprises may be hampered by difficulties controlling privacy and security threats in the digital sphere. The business's goals for digitization may be jeopardized by security challenges, such as cybersecurity hazards, strict technological infrastructures, regulatory environments, risk management issues, and/or compliance issues. Each endpoint, gateway, sensor, and smartphone are potentially a hacking target due to the increased profusion of IoT devices across businesses. This is anticipated to increase the amount of security and privacy issues. These factors hamper the growth of the digital transformation market.

Market Opportunities

• Demand for Customized Digital Transformation to Boost Market Opportunities

Concerning expertise in some areas, such as sales activities, business partnerships, and a clientele connected to the internet, businesses face various growth problems. Digital transformation solutions aid in the resolution of these and a variety of other issues. Additionally, market suppliers provide highly customized digital transformation solutions to address their client's business concerns. This level of personalization is made possible by the suppliers' data, resulting in customized digital transformation satisfying client needs and demands. Custom development has quickly established itself as one of the critical strategies businesses use to engage people with their products and brand. For a brand, customized development entails creating a unique user experience. Apps are the primary source of client growth, and their prevalence indicates their demand. Consequently, the need for digitally accessible apps and services that create a personalized user experience is growing and creating opportunities.

Regional Analysis

By region, the global digital transformation market is analyzed across North America, Europe, Asia-Pacific, and LAMEA.

APAC Acquires Maximum Market Share

Asia-Pacific will command the highest market share, expanding at a CAGR of 16.5% over the forecast period. The advantage of cloud-based solutions like cost-effectiveness encourages the regional market for digital transformation. Most smartphone owners in Asia-Pacific use their phones to access social media. Consequently, the region presents a wide range of options for digital transformation technologies. Due to developing companies working primarily in quickly expanding sectors like BFSI and retail, which progressively embrace sophisticated digital transformation solutions, Asia-Pacific is emerging as a significant market for essential providers.

One of the key reasons influencing the expansion of the regional market is the increasing usage of AI-driven advanced analytics solutions and IoT-based sensors and devices to provide tailored services for B2C and B2B consumers. Small and medium-sized enterprises (SMEs) are becoming more and more prevalent in nations like India, and many SMEs are prioritizing incorporating digital transformation strategies as a part of their initiatives to grow their regional and international operations.

North America is expected to generate USD 596.54 billion by 2031, growing at a CAGR of 13%. One of the factors influencing the expansion of the regional market is the ongoing digital transformation occurring across numerous industries and industry verticals, including retail, finance, IT & telecom, and hospitality. As part of their attempts to follow a customer-centric business strategy, brands and enterprises are being prompted to undergo a digital transformation and embrace solutions due to the growing demand for posting reviews and sharing experiences on digital media. As a result, businesses in the US and Canada are investing heavily and setting aside a specific budget for marketing and digital media.

Numerous organizations and institutions in the United States, like the National Cloud Technologists Association and the Cloud Native Computing Foundation, promote the use of cloud computing for the deployment of various high-tech solutions, including content management, marketing automation, and CRM on cloud platforms. Businesses in the US prioritize digital transformation and are frequently regarded as early adopters of cutting-edge technologies like IoT, big data analytics, AI, and ML. It is, therefore, encouraging for the market's expansion that American businesses continue to employ the most recent technologies.

Segmental Analysis

The global digital transformation market is segmented into solution, service, deployment, enterprise size, end-user, and region.

On the Basis of Solution

By solution, the global digital transformation market includes Analytics, Cloud Computing, Mobility, Social Media, and Others.

The Analytics section is projected to advance at a CAGR of 16.1% and hold the largest market share over the forecast period. Applications for analytics-based solutions are diverse and cross numerous sectors. For instance, they can be used in manufacturing for preventative maintenance programs to boost output and decrease downtime. Enterprises are being encouraged to digitize their processes by the expanding avalanche of data, including structured, unstructured, and raw data, with enormous velocity or volume. Businesses must put their attention on the notion of enhancing corporate value through the use of organizational data. They may use analytics to make faster, wiser decisions, significantly improving corporate performance.

The Cloud Computing section will hold the second-largest share. A crucial concept and foundation of the digital transition is cloud computing. The need for cloud computing is rising due to quicker deployment, development, delivery, and flexibility. Cloud computing also makes it easier to make well-informed decisions, which allows for the actionable intelligence necessary for developing and putting into practice digital transformation initiatives.

On the Basis of Service

By service, the global digital transformation market includes Professional Services and Implementation & Integration.

The Professional section is projected to advance at a CAGR of 13.4% and hold the largest market share over the forecast period. The professional services market is expected to increase significantly since it will aid firms in resolving problems brought on by going digital. The issues could be anything from vendor selection to a cultural shift. Additionally, businesses must choose professional services because a workforce with a specific skill set is needed for the digital transformation of an operation. The proper resource may be found and deployed to the right project with the assistance of professional service providers.

The Implementation & Integration section will hold the second-largest share. The business's digital transformation strategy and effort depend on the products and services integration or back-end transformation. While considering digital transformation, it's essential to ensure that the various business functional units are integrated with the digital products and services. Companies will turn to services firms for digital solution installation and integration. This will integrate digital transformation into the business model.

On the Basis of Deployment

By deployment, the global digital transformation market includes Hosted and On-premise.

The Hosted section is projected to advance at a CAGR of 15.6% and hold the largest share over the forecast period. Due to this deployment type's flexibility, the hosted deployment segment is expected to experience significant development. Users can use desktop PCs and mobile devices to access the tools. It also provides low cost, simple setup, convenient accessibility, and minimal upkeep and upgrades requirements.

The On-premise section will hold the second-largest share. Numerous companies pick on-premise solutions because of how easily they can be customized during implementation. These solutions offer top-notch data protection and make it simple to comply with various laws. Large enterprises have more control over confidential data due to the on-premise deployment.

On the Basis of Enterprise Size

By enterprise size, the global digital transformation market includes Small & Medium Enterprises (SMEs) and Large Enterprises.

The Large Enterprises section is projected to advance at a CAGR of 12.6% and hold the largest market share over the forecast period. Large corporations are investing considerably to improve or preserve market dominance in a cutthroat industry. They are also quickly embracing technology innovations to stay current in the field. They also engage in several strategic activities to obtain new technology, such as alliances, mergers, and acquisitions.

The Small & Medium-Sized Enterprises section will hold the second-largest share. Small and medium-sized enterprises (SMEs) are starting to recognize the benefits of becoming digital with their operations. Although they were first reluctant to invest in solutions, the degree of competition is forcing them to do so to provide clients with better services. This makes it crucial for SMEs to adopt cutting-edge technologies to maintain their competitiveness.

On the Basis of End-User

By end-user, the global digital transformation market includes BFSI, Government, Healthcare, IT & Telecom, Manufacturing, Retail, and Others.

The BFSI section is projected to advance at a CAGR of 15.3% and hold the largest market share over the forecast period. Due to the popularization of the industry's goods and services, this sector has seen tremendous growth due to banking and financial service providers diverting their attention to improving client experiences. BFSI businesses continuously seek out a customer-centric strategy while working to satisfy customers' expectations and provide seamless technical support.

The Government section will hold the second-largest share. The government sector is undergoing a digital transformation that improves transparency and efficiency, streamlines processes, creates smart cities and smart government, attracts new investors, transforms access to, and management of information for citizens transforms government transaction services, boosts citizen satisfaction, and adapts to the needs of a rapidly changing demographic while maximizing efficiency.

Recent Developments

• 2022- Accenture plc acquired Romp, an Indonesian brand and experience agency. The expansion will improve Accenture Song's capacity to provide customers in Southeast Asia with tech-driven and creative brand experiences.
• 2022- Adobe Systems Incorporated launched Frame.io, providing its Creative Cloud users with a top-tier video collaboration platform.