"The financial services industries, which include banking, securities and investment services, and insurance, rely more heavily on cloud, mobility and BDA, for example. But IoT is the primary investment focus in the other six industries, especially manufacturing, oil and gas, and utilities. However, mobility is a close second to IoT as an investment priority in government and healthcare," said Karen Massey, research manager, Customer Insights & Analysis, IDC.
Within the banking industry, consumer banking is the largest line of business for technology spending with 2nd Platform technologies accounting for just over half the total in 2020.
However, the shift from 2nd to 3rd Platform spending is evident with 3rd Platform and Innovation Accelerator spending enjoying compound annual growth rates (CAGR) of 10.4% and 17.7% respectively.
Cloud and mobility spending will grow to nearly $53 billion combined in 2023 while cognitive AI spending will see a five-year CAGR of 21.6%. By the end of the forecast, 2nd Platform spending will be nearly ten percentage points lower than in 2020.
A similar story plays out in the property and casualty insurance sub-industry, where 3rd Platform and Innovation Accelerator spending is currently about equal to 2nd Platform spending but will see strong growth over the next five years.
In contrast to the other insurance sub-industries, property and casualty will see significantly more spending on IoT solutions, which is forecast to grow at a 16.8% CAGR and overtake mobility spending by 2022.
In retail, 3rd Platform and Innovation Accelerator spending has already moved ahead of 2 Platform spending overall, although a few sub-industries are lagging. In the food stores sub-industry, technology spending is forecast to see a five-year CAGR of 8.9%.
This growth will come from 3rd Platform and Innovation Accelerator technologies with spending on IoT solutions expected to overtake 2nd Platform spending and become one of the largest technology categories in the industry. Meanwhile, combined spending on cloud and mobility will grow to near equal 2nd Platform spending in 2023.
"Tracking spending intent across all types of retailers, we find that there are some key areas of strategic investment like cloud and mobility," said Leslie Hand, group vice president, IDC Retail Insights.
"While most retail budgets have been stressed in 2020, many retailers are accelerating their digital transformation efforts through current and planned investments, such as cloud and mobile-based inventory management, self-checkout, fulfilment, demand forecasting, price and promo optimization and others."
Hospitals account for nearly half of all IT spending in the healthcare industry. Like the retail industry, spending on 3rd Platform and Innovation Accelerator technologies is already greater than 2nd Platform spending and will account for all the sub-industry's spending growth over the next four years.
By 2023, cloud, mobility and IoT will represent nearly half of all technology spending by hospitals while 2nd Platform spending will decline to 30% of the total. The technologies that will see the fastest spending growth among hospitals during the forecast period are AR/VR (97.8% CAGR), cognitive AI (23.7% CAGR) and robotics (14.8% CAGR).
Government technology spending is spread across nine functional areas with social programs representing the second largest function. Technology spending for social programs will follow a similar trajectory to retail and healthcare with 2nd Platform spending in decline (-2.1% CAGR) while investment in 3rd Platform and Innovation Accelerators will grow at CAGRs of 9.5% and 14.4% respectively.
By 2023, spending on IoT, cloud, and mobility will represent more than 45% of all social program technology spending.
"Tracking government spending within agencies and departments across all levels of government, we find that there are key areas of strategic investment," said Ruthbea Yesner, vice president, IDC Government Insights and Smart Cities & Communities Strategies. "While government budgets have been under pressure in 2020, there is also increased constituent need in social programs, such as online access to unemployment benefits or improved constituent public health communications, and there is spending to meet the needs of these programs."