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Second digital revolution to bring $4.8 trillion spend

By Heather Wright
Thu 15 Oct 2015
FYI, this story is more than a year old

A ‘second digital revolution’ is heading our way with Ovum predicting ‘all industries will be affected by this revolution’.

The analyst firm says digital economy spend will hit $4.8 trillion – up 29% on todays spend – during this second revolution, with enterprise technology spending doubling to more than $1.5 trillion by 2025, taking the largest slice of the pie.

Steven Hartley, Ovum practice leader for service provider and markets, says the second wave is driven by cost-effective connectivity, greater computing capacity and improvements in technology such as analytics and artificial intelligence and its impact will be felt across all industries.

“The first digital revolution – 1995 to 2015 – impacted key processes and consumer-facing sectors such as media and retail,” Hartley says. “However, the second will impact a far greater range of processes and industries across the enterprise space, thereby expanding the opportunity to support their transformation – albeit with less direct consumer impact than before.”

Hartley says players providing technology, connectivity and services to the digital economy will have ‘a huge opportunity to facilitate this transformation’.

While digital enablers – IT vendors such as IBM and SAP and communication service providers, as well as the likes of Google, Apple and Microsoft – will be the big winners, Ovum says success for digital enablers will depend on several capabilities.

“Chief among these will be prioritising customers and continuous innovation.

“Those organisations that win out will be those that work differently,” Ovum adds.

That means collaborating with competitors, partners and suppliers, putting the customer at the heart of their decision making process and consistently innovating.

“Increased competition, attracted by revenue growth and facilitated by more open ecosystems, will mean that organisations must place the needs of customers at the heart of their decisions and processes,” Hartley says.

“Innovation, partnerships, scale, agility and service bundling will all be vital to support this new outlook on the market,” he adds.

Ovum says digital enablers who become ‘smart’ players will be the ones to benefit most from the evolution of the digital economy.

“Smart players are those enabling Services, device and service Management, Applications, customer Relationship and the underlying Technology platforms through which customers and third parties access and distribute applications and content,” Ovum says.

“Embedded in many digital enablement segments and with significant breadth of reach, they’ll be able to capture a significant proportion of the total value.”

Ovum says today’s internet platform providers, such as Apple, Google, Facebook, Amazon and Microsoft are most likely to assume these roles, but new challengers are likely to evolve from the internet or media segments.

Enterprise technology’s 32% share of the total digital enablement market will see competition in this space intensify as CSPs, internet platform providers and network enablers move in.

Communications and broadband connectivity will account for a sizeable 28% share too, though spend will be down 8% overall in 2028.

Digital advertising will grow fastest, from $166 billion in 2015 to $385 billion in 2025, but will account for just 8% of total spending in 2025,” Ovum says.

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