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Top 5 digital transformation trends of 2024

This year, look for digital transformation trends to revolve around AI, cost containment, revamped delivery methods and a bigger commitment to change management.

Digital transformation trends this year will hinge on AI, cost containment and the ability to handle rapid and unrelenting change.

As 2024 gets underway, technology leaders face a similar set of technological, economic and geopolitical challenges that complicated the previous 12 months. Organizational adaptability, spend optimization and selective innovation will be much on the minds of CIOs and CTOs. The digital transformation efforts they manage will reflect those demands.

The coming months could hold anything from a recession to a soft landing to the beginning of an economic growth spurt. C-suite executives rated recession as their No. 1 external concern for 2024, according to the Conference Board, a think tank that surveyed 1,247 executives worldwide. On the other end of the spectrum, Goldman Sachs earlier this month predicted an economic super cycle, with the company citing AI and decarbonization as the key contributors.

With that background in mind, here are five developments in store for digital transformation.

1. AI becomes a key transformation catalyst

That technology leaders will focus on incorporating AI into their digital transformation initiatives seems a safe call for 2024. The last few months have seen organizations experiment with generative AI and expand their use of machine learning, in general. This year will see more of the same, but also efforts to scale AI across the enterprise.

Businesses will pursue AI to increase productivity, boost customer experience (CX) and improve decision-making. That push will put AI on a collision course with digital transformation projects, which aim to do the same thing. The task for CIOs and CTOs is finding ways to effectively incorporate AI into digital transformation.

This melding will become particularly evident in fields like CX. Here, generative AI has the potential to provide customers with better and faster answers, with more organizations tracking time-to-insight as a performance metric. Any CX digital transformation effort would have to consider using AI, whether as a standalone chatbot or a virtual assistant for customer-facing employees. Similarly, AI is likely to influence transformation projects involving process automation or developer productivity.

2. Cost savings endures as a primary objective

Digital transformation is often associated with forward-looking, revenue-generating initiatives such as launching digital products and services. In a challenging economic climate, however, the emphasis shifts to internal drivers. Indeed, operational efficiency has been topping the list of digital transformation objectives in recent years.

Expect that pattern to continue in 2024 and manifest itself in a couple of ways:

  • First, the COVID-inspired proliferation of cloud applications and services -- the tools of rapid digitalization -- will compel CIOs to seek out and eliminate redundant or underutilized resources. In SaaS, for example, more than half of businesses' software licenses go unused, according to Productiv, a SaaS management company in Palo Alto, Calif. Cloud inflation, likely to continue regardless of broader economic trends, provides an additional incentive to scrutinize as-a-service investment. Against that backdrop, more technology leaders will rely on cost management practices such as FinOps to meet the financial objectives of their cloud-heavy transformation initiatives.
  • Second, the focus on efficiency will encourage process automation initiatives. While automation software has traditionally focused on repetitive processes, the latest crop of AI-based tools aims to tackle a wider range of processes. This development puts end-to-end process automation within reach and opens more cost savings opportunities than discrete task automation.

Coincidentally, the cost-take-out potential of digital transformation could free up funding for innovation -- including wider AI deployment.

Chart showing digital transformation trends.
Digital transformation in 2024 will challenge CIOs to expand AI, cut costs and find ways to manage it all.

3. Digital transformation gets a leaner look

While transformation aims to boost business efficiency, the practice itself could benefit from streamlining. Senior executives have criticized initiatives for taking too much time. The uncertainties of the current business climate threaten to overtake slow-moving projects before they can produce results.

As a result, organizations are deconstructing digital transformation initiatives into smaller pieces. Agile methods have taken on higher importance here, since those approaches promote smaller projects as opposed to large-scale endeavors. Critically, leaner projects can provide faster turnarounds and quicker financial returns. Such projects can also react more readily to the unexpected -- the emergence of a disruptive competitor or a dramatic downturn or uptick in the economy.

Top executives will favor transformation projects that generate results early on, given that business prospects remain uncertain and budgets tight.

4. Platforms lift transformation

Technology platforms will play a bigger role in digital transformation as organizations push shorter time horizons. CIOs will employ various types of platforms to accelerate change:

  • Industry cloud platforms. Cloud computing already serves as the core platform for many, if not most, digital transformation initiatives. But within that technology, industry clouds geared to vertical markets are poised to gain prominence. Those platforms aim to cover most a business' industry-specific needs, reducing application development chores and accelerating transformation. More than 70% of enterprises will use industry cloud platforms by 2027, compared with 15% deploying such clouds in 2023, according to a Gartner report.
  • Platform engineering. This approach revolves around a common platform of software development toolchains and workflows. The shared resource lets an organization's coders accelerate software delivery, which, in turn, propels digital transformation. Gartner ranked platform engineering among its 10 strategic technology trends for 2024. The market researcher views platform engineering, AI-augmented development and industry cloud platforms as related trends that help software developers and nonspecialists create software. Specialized AI development platforms, meanwhile, should continue to gain ground in the coming months as businesses look to ease the task of building and training AI models.
  • SaaS-based platforms. Some IT shops are building their digital transformation efforts around a primary SaaS vendor and its partner ecosystem. This platform strategy offers the advantages of simplicity and cost reduction compared with managing a multitude of SaaS tools. In addition to supporting an organization's cloud cost containment strategy, SaaS platform consolidation also improves interoperability and data integration. This approach comes at some risk of vendor lock-in, so enterprises may seek a compromise between over-reliance on a few suppliers versus over-spending on many.

5. Change management gets more respect

Change management should be a part of every digital transformation initiative. That said, technology enthusiasts sometimes gloss over the effects new tools may have on people.

The current pace and scale of change, however, demands a closer link between digital transformation and change management. Generative AI, which entered the mainstream just over a year ago, is already altering employees' job roles. The number of people subject to abrupt workplace change will only grow as enterprise AI deployments expand in scope.

But transformation involves more than just emerging technologies. Workplace processes and entire business models can change as well. Ninety-one percent of CEOs expect to revamp their business models over the next 12 months "due to disruptive forces," according to a survey published by AlixPartners, a New York City-based consulting firm. The company's 2024 Disruption Index survey polled more than 3,000 senior executives.

Expect a greater focus on change management in the coming months.

John Moore is a writer for TechTarget Editorial covering the CIO role, economic trends and the IT services industry.

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