Digital transformation industry overview 2020

Best way to understand digital transformation (DX) is to see the facts & stats about it so you can understand

  • how it makes the organization more efficient
  • how it helps businesses make deeper connections with their customers
  • how it enables revenue growth

Based on a survey of 1,200 mid to large scale US companies, the average digital transformation budget was $14 million in 2018 and it is expected to increase. Knowing more about digitization can help you make more data-driven decisions about your digital transformation investments.

Our comprehensive list of digital transformation stats for business leaders and researchers comes from authoritative sources such as Gartner, Mckinsey, etc.  These can help you better assess your digitalization needs, start taking actions and stay ahead of the competition.

Digital Transformation Forecasts

According to most research and consulting firms, digital transformation is an even more important topic after the pandemic. Businesses are likely to invest more in emerging technologies such as AI, IoT, and AR/VR in upcoming years.

Market growth rate

  1. Direct digital transformation investment is growing at a compound annual growth rate (CAGR) of 18% from 2020 to 2023 and is expected to approach $7 trillion as companies build on existing strategies and investments, becoming digital-at-scale future enterprises. (IDC)
  2. The digital transformation market is expected to grow at a CAGR (compound annual growth rate) of 23% from 2019 to $3.3 trillion by 2025. (Research and Markets)

Digital transformation initiatives

  1. 40% of all technology spending will go toward digital transformation, with enterprises spending in excess of $2 trillion in 2019. (IDC)
  2. While 52% of companies plan to cut or defer investments because of COVID-19, just 9% will make those cuts in digital transformation. (PwC)

Emerging technologies

  1. At least 90% of new enterprise apps will insert AI technology into their processes and products by 2025. (IDC)
  2. Internet of Things (IoT) had the largest share of the overall digital transformation market in 2019, but AR/VR technology is predicted to have the fastest growth until 2025. (Research and Markets)

Current Business Adoption of Digital

Though a larger proportion of companies are still at the beginning of their transformation process, they acknowledge that a digital-first business strategy can lead them to success.

Digital strategy

  1. 89% of all companies have already adopted a digital-first business strategy or plan to do so. (IDG)
  2. 70% of companies either have a digital transformation strategy in place or are working on one. (Tech Pro Research)

Importance of digital to businessees

  1. 87% of companies think digital will disrupt their industry, but only 44% are prepared for potential digital disruption. (Deloitte)
  2. Only 23% of companies are not dependent on digital products or operations. (Harvard Business Review)
  3. Market pressures are the leading drivers of digital transformation as most efforts are spurred by growth opportunities (51%) and increased competitive pressure (41%). With high-profile data breach scandals making daily headlines, new regulatory standards like GDPR are also providing a reason for organizations to transform (38%). (Prophet)

Cloud

  1. Almost 60% of enterprises in North America rely on public cloud platforms. That’s five times the percentage that did only 5 years ago. (Forrester)
  2. 70% of businesses use a multi-cloud strategy in 2019, up from less than 10% in 2017. (Information Age)
  3. Just 36% of contact centers use any kind of cloud technology. (Aberdeen)

Other

  1. 21% of companies believe they’ve completed their digital transformation. (Forrester)
  2. Less than 30% of the organizations’ technology vendors are currently active partners in their digital transformation initiatives although partnering with vendors is one of the best practices to avoid failure. (Futurum)
  3. CIOs are reported as most often owning or sponsoring digital transformation initiatives (28%), with CEOs increasingly playing a leadership role (23%). (Prophet)
  4. Intelligent systems will drive 70% of your customer engagements by 2022. (Forrester)

Impact of digital on Customer Experience

Customers are at the core of the digital transformation. As businesses enhance customer experiences, they will gain a competitive edge that will help them surpass their competitors in the increasingly competitive marketplace.

Prevalence of CX projects in digital transformation

  1. Most transformation efforts continue to focus on modernizing customer touch points (54%) and enabling infrastructure (45%). But many organizations are not doing their due diligence when it comes to understanding their customers, with 41% of companies making investments in digital transformation without the guidance of thorough customer research. (Prophet)
  2. By 2020, more than 40% of all data analytics projects will involve customer experience. (Gartner)
  3. Nearly half of all companies say improving customer experience and customer satisfaction were the leading influences to start a digital transformation. (PwC)
  4. 81% of marketers expect to be competing mostly or completely on the basis of customer experience with their competitors in two years. (Gartner)

Benefits of customer experience digital transformation

  1. Companies that earn $1 billion a year earn an additional $700 million over three years by investing in customer experience. (Qualtrics)
  2. Digital transformation and a focus on customer experience can generate a 20-30% increase in customer satisfaction and economic gains of 20-50%. (Mckinsey)
  3. Two-thirds of a company’s competitive edge comes from its customer experience. (Deloitte)
  4. Consumers who have an emotional connection with a brand have a 306% higher lifetime value. (Motista)
  5. 67% of consumers will pay more for a great experience. (Salesforce)
  6. 70% of customers say connected processes — such as seamless handoffs or contextualized engagement based on earlier interactions — are very important to winning their business. (Salesforce)
  7. 84% of customers say being treated like a person, not a number, is very important to winning their business.(Salesforce)
  8. 70% of customers say understanding how they use products and services is very important to winning their business. (Salesforce)
  9. 59% of customers say tailored engagement based on past interactions is very important to winning their business. (Salesforce)
  10. Customers are 2.1x more likely to view personalized offers as important versus unimportant. (Salesforce)

Potential negative impact of outdated customer experience systems

  1. 61% of consumers won’t return to a mobile site that had trouble accessing. (Forbes)
  2. 40% of consumers end up visiting a competitor’s website if they have trouble accessing a company’s mobile site. (Forbes)
  3. 32% of customers would stop interacting with a brand they loved after one bad experience. (PwC)
  4. 57% of customers are uncomfortable with how companies use their personal or business information (Salesforce)

Omnichannel

Customers expect businesses to be at where they are. With that said, omnichannels enable businesses to provide a centralized experience across all channels and touchpoints for customers. Thanks to omnichannel retailing, organizations can increase their revenue by retaining their customers.

  1. 84% of customer-centric companies focus on the mobile customer experience. (Vision Critical)
  2. Companies with the strongest omnichannel experiences retain 89% of their customers on average, compared to 33% retention for companies with weak omnichannel customer experience. (Aberdeen)
  3. 89% of customers get frustrated when they have to repeat their questions to multiple customer service agents. (Accenture)
  4. The percentage of companies investing in omnichannel experience has increased to more than 80% from 20%. (PwC)
  5. 73% of shoppers use more than one channel during their shopping journey. (Harvard Business Review)
  6. 78% of consumers use mobile devices to connect with brands for customer service. The number jumps to 90% of Millennials. (Genesys)
  7. Some 63% of customers are satisfied by getting customer service from a bot, as long as they can re-route to a live agent if needed. (Forrester)

Digital Transformation Benefits

  1. Executives say the top benefits of digital transformation are improved operational efficiency (40%), faster time to market (36%) and the ability to meet customer expectations (35%). (PTC)
  2. 56% of CEOs say digital improvements have led to increased revenue. (Gartner)
  3. Digitally mature companies are 23% more profitable than their less mature peers. (MIT)
  4. Customer experience leaders are almost three times more likely than their peers—and digital-first companies are 64% more likely than their peers to have exceeded their top 2018 business goal by a significant margin. (Adobe)
  5. Employees at companies with less than 100 employees are nearly three times more likely to say their digital transformation was a success than employees at companies with more than 50,000 employees. (Mckinsey)
  6. High-tech B2B companies have reported a 10% to 20% cost reduction and revenue growth of 10% to 15% from transforming their customer experience processes. (Mckinsey)
  7. 74% of business buyers say they’ll pay more for a better B2B experience. (Salesforce)

Digital Transformation Failures

  1. More than 50% of digital transformation efforts fizzled completely in 2018. (Forrester)
  2. 70% of digital transformations fail, most often due to resistance from employees. (Mckinsey)
  3. Only 16% of employees said their company’s digital transformations have improved performance and are sustainable in the long term. (Mckinsey)

Digital Transformation Challenges

To get the most from digital transformation, companies need to know the challenges and avoid pitfalls such as resistance to chance, challenges in finding the right skill set, compliance concerns slowing down initiatives or the difficulty of measuring its ROI.

  1. Companies report digital transformation is still often perceived as a cost center (28%), and data to prove ROI is hard to come by (29%). Cultural issues also pose notable difficulty, with entrenched viewpoints, resistance to change (26%), and legal and compliance concerns (26%) stymieing progress. (Prophet)
  2. According to survey conducted among retailers, the biggest challenge overall is the complexity of the implementation, with more than three quarters (76%) rating it as somewhat challenging or highly challenging. Other key challenges are the availability of talented staff (75%), upfront costs (75%), the time necessary to achieve benefits (75%), and security and privacy concerns (74%). (Fujitsu)
  3. A survey of employees found the most common obstacle for digital transformation was the CEO at 35%. (Futurum)
  4. More than a third of CIOs anticipate difficulty in finding appropriate skill sets in the tech areas of cybersecurity and data science. (IDG)
  5. 45% of executives don’t think their company has the right technology to implement a digital transformation. (PwC)

Digital Transformation Best Practices

Most digital transformation efforts and pilot initiatives fail that’s why learning the best practices is important.

  1. Up to 93% of companies agree that innovative technologies are necessary to reach their digital transformation goals. (Forrester)
  2. Companies with an engaged Chief Digital Officer are 1.6 times more likely to report a successful digital transformation. (Mckinsey)
  3. Experience-led companies have 1.6 times higher customer satisfaction rates and 1.9 times higher average order value. (Adobe)
  4. 39% of outperforming companies have a fully integrated digital-physical strategy. (Vision Critical)

Digital Transformation Industry Specific Stats

Retail

  1. More than two thirds (71%) of respondents agree that DX is an essential part of retail technology. (Fujitsu)
  2. Most retailers are planning to use social media (79%), digital marketing (79%), and smartphone apps (68%) to enhance the Customer Experience. (Fujitsu)
  3. Most retailers are well advanced with their digital transformation programs. The most mature areas are finance, where 64% have a mature implementation or are well underway. This is closely followed by sales (62%), customer service (60%) and their frontline retail operations (59%). (Fujitsu)
  4. Only one in ten retailers say they are very early adopters, with another quarter (27%) saying they are somewhat early. 37% say they are neither late adopters nor early adopters. (Fujitsu)
  5. Key drivers of digital transformation in retail are strengthened competitiveness (70% reporting high or very high importance), improved efficiency and reduced cost (69%), strengthened customer relationships (69%), and increased revenue (67%). Less important, but still significant, are improved employee satisfaction (60%) and transformed business models or processes (53%). (Fujitsu)
  6. Retailers increased funding to e-commerce in Q2 of 2020 because of the pandemic. Additionally, social commerce startups, resale platforms, and virtual shopping tools all received attention to improve the online shopping experience. (CBInsights)
  7. Shoppers who use 4+ channels spend 9% more compare to those who use only one channel. (Harvard Business Review)

Healthcare

  1. The top industries for digital-first business strategies are services (95%), financial services (93%) and healthcare (92%). (IDG)
  2. During the 2020 pandemic, there was a 15 percentage point increase in the use of digital tools for health support by consumers. And, 37%of consumers are very likely to use telehealth in the future. (McKinsey)
  3. Up to $250 billion of current US healthcare expenditure (20% of total expenditure) is available for virtualization. (Mckinsey)
  4. After pandemic, use of telehealth has increased from 11% to 76%. (Mckinsey)
  5.  Total revenue opportunity for the healthcare AI market will exceed $34 billion by 2025. (BusinessWire)

Banking and Insurance

  1. 47% of digital investments made by financial institutions is failing to make a greater return than the cost of capital. (Mckinsey)
  2. Only 34%of banks and insurers are including marketing in their transformation efforts. (Forrester)
  3. 81% of insurers acknowledge that technology has become an inextricable part of the human experience. (Accenture)
  4. An average insurer can reduce the cost of insurance by 15-20% with digitization. (Bain)
  5. 39% of US citizens who canceled a contract with a company in the past 24 months canceled it due to customer experience and 11% of them were canceling insurance policies. 18% of them canceled after a one-time crisis. (TechSee)
  6. 25% of the insurance industry will be automated in 2025 thanks to AI and machine learning techniques, since the industry is full of bottlenecks and manual processes such as claims processing, underwriting, policy administration and customer service. (Mckinsey)
  7. More than half (53%) of consumers of financial institutions have changed the primary financial provider they use and an additional 9% said they are considering it. Banks should provide what customers want if they want to retain their existing customers. (Everfi)
  8. 22% of consumers are using online and mobile app channels 10+ times per month to handle their banking needs. Since digital is the most frequently used channel by consumers, financial institutions should invest more in digital. (Deloitte)
  9. Financial service executives across the world believe enhancing customer experience is the top priority for digital transformation projects, 76% of participants value investing in customers while 16% prioritizes productivity and operational cost reduction in digital transformation strategy. (McKinsey)

Real Estate

  1. Construction technology, AI, and Big Data analytics are the top three biggest disruptors in the real estate industry (Pwc Canada)
  2. 58% of real estate companies have a digital strategy in place, up from 52% in 2018 and 2017. (KPMG)
  3. Most of the people leading digital transformation at real estate companies (65%) do not have a background in digital technology from outside the industry. A significant number (40%) comes from a real estate, construction, or finance background. (KPMG)

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