At the beginning of 2022 many parts of the world were adapting to living with the Covid-19 pandemic -- which is far from over and seems to be settling into a pattern of repeated new-variant waves and a relentless build-up of Long Covid.
Then, in February, the Russian invasion of Ukraine delivered another global shock, further disrupting supply chains and pushing up energy prices. For businesses, the consequent rise in inflation and threat of recession has added further pressure after a difficult two-and-a-half years.
The pandemic drove many changes in the relationships between businesses and their customers and employees -- most notably a shift towards online and remote rather than in-person interaction. Last year, ZDNet outlined how digital transformation had "proved its worth during the pandemic, with more digitally mature businesses generally proving resilient in the face of serious disruption".
The signs are that these pandemic-driven structural changes will become permanent: for example, many employees who pivoted to remote or hybrid work have no desire to return to the office on a permanent basis.
All this means that businesses will need a clear roadmap for the deployment of new technologies to help them survive and prosper, whatever social and economic headwinds they may face in the future -- 'smart' digital transformation, if you like.
For example, in 'emergency' digital transformation mode, IT managers rushed to equip remote workers with new laptops and other devices, and train them up on collaboration tools in order to stay connected during lockdowns. By contrast, in 'smart' mode, organisations will need to examine how their entire employee experience (EX) programmes can be retooled for greater flexibility and productivity going forward. Clearly, companies that had already done this before the pandemic are now in a much better position.
Successful digital transformation requires an understanding not only of the capabilities of new technologies, but also of customers' and employees' evolving requirements, and the overall direction of the business. Companies must also have the leadership in place to make the correct decisions on technology investments.
That's the focus of this article, and the remainder of ZDNet's 2022 digital transformation special report.
Digital transformation predictions for 2022
Towards the end of 2021, with the Covid-19 pandemic in full flow despite widespread vaccine rollouts (in developed countries) and with the Ukraine crisis still to come, IDC released its predictions for digital transformation in 2022 and beyond.
The analyst firm made 10 specific predictions (listed below), which were underpinned by a series of drivers, including: a multi-platform digital ecosystem; the need to embrace 'digital first' business strategies; the reimagining of engagement with customers, business partners, suppliers and other constituents; environmental and social responsibility; 'globalization 2.0' and supply chain issues; pervasive disruption across industries and environments; and future digital enterprises that will thrive via agile innovation.
Here are some of the key elements of IDC's digital transformation predictions for 2022 (ZDNet emphasis), with selected comments from IDC executives:
Direct digital transformation investments accelerate to 16.5% CAGR 2022-2024 becoming 55% of all ICT investment by the end of 2024.
"Two years ago, 73% of all companies did not have a digital roadmap: regardless of their approach to strategy, they didn't have a plan that says 'how do I go from where I am today to where I'll be in the future?' Now we see a full 50% of organizations have either a roadmap where the digital plan mirrors the business plan, or the digital plan is the business plan. That's a dramatic increase," (Shawn Fitzgerald, research director, worldwide digital transformation strategies, at IDC).
2. By 2023, 90% of worldwide organizations will prioritize investments in digital tools to augment physical spaces and assets with digital experiences.
3. By 2025, 60% of organizations will capitalize on disruption with an enterprise- and ecosystem-wide approach to automation, leveraging model-based enterprise concepts, and low/no-code platforms.
4. By 2026, 54% of CIOs drive business transformation, empowering digitally resilient organizations via strategic technology roadmaps, and replatforming to enable an agile, data-driven, collaborative workforce.
"What the CIO is trying to do is create a fertile ground for innovation: it's not just about optimising spending on costs (cloud, infrastructure, applications, the ecosystem), it's more about creating options for the line of business to do things, to innovate, to get to that contextualization, which is the phase [of digital transformation] we're on the doorstep of now," (Bob Parker).
5. Leveraging low code/no code tool and data utilization capability, the majority of employees at 60% of enterprises will lead transformation and embody digital resiliency at their roles by 2024. And by 2025, companies with cross functional leadership, a digital dream team, enjoy faster rates of innovation, higher market share gains, and greater operational efficiencies than their contemporaries.
IDC's predictions and analysis provide an excellent framework for thinking about how digital transformation is developing, and where it's likely to go next. For another snapshot of the state of play, we examined a sizeable sample (25) of articles on the subject and assigned the cited trends and predictions to different categories.
Here's the overall picture that emerged:
Let's examine the leading trends and predictions.
Analytics, AI, ML & RPA
Companies are awash with data, both structured and unstructured, and a key component of digital transformation is finding ways to unlock business value from all that information, preferably in real time. 'Analytics' is an umbrella term that covers the processing of business data using algorithms to identify patterns and elucidate underlying processes, with the aim of improving the organisation's performance. When data sets are used to train algorithms to perform various operations automatically when presented with similar information, it's called artificial intelligence (AI) -- or, to avoid confusion with actual human intelligence, machine learning (ML). RPA (robotic process automation) is the application of analytics, AI and ML to specific business processes that previously required human action. Developments in all these areas are set to continue apace in 2022 and beyond.
Businesses might have access to copious data and employ teams of analysts and developers to streamline core business processes, but they often struggle to satisfy the demand for innovative apps and services from business units -- which in many ways is the engine room of real digital transformation.
This is where low-code and no-code tools come in, as they allow non-developers to build applications using common building blocks and simple graphical interfaces. A key requirement for successful low-code development is controlled access to well-managed APIs and data, the latter increasingly delivered via a data fabric, which analyst firm Gartner describes as a "flexible, resilient integration of data sources across platforms and business users, making data available everywhere it's needed regardless where the data lives".
According to Gartner, 70% of new applications developed by organisations will use low-code or no-code technologies by 2025, up from less than 25% in 2020. Other recent developments include: fusion teams comprising both coders and non-coders; tools that convert low code from graphical tools into code that can be incorporated into CI/CD pipelines; and AI-assisted code analysis.
Early cloud migrations employed a 'lift-and-shift' approach, rehosting on-premises workloads to cloud infrastructure with minimal application-level changes. However, more profound digital transformation is available if applications are rebuilt, or developed from scratch, to be cloud-native, making use of containers, microservices, REST APIs and other technologies that can deliver improved flexibility, scalability and resilience. Gartner predicts that over 95% of new digital workloads will be deployed on cloud-native platforms by 2025, up from 30% in 2021.
Most organisations -- 89% in Flexera's 2022 State of the Cloud Report -- use multiple cloud providers, for various reasons, including access to particular services, vendor lock-in avoidance, compliance, and hedging against outages. However, multi-cloud adoption comes in several forms: in the survey, only 25% of organisations reported using 'intelligent workload placement', compared to 45% who had 'apps siloed on different clouds' and 44% who employed 'DR/Failover between clouds'.
Going beyond the traditional pillars of the cloud 'as-a-service' model (infrastructure [IaaS], platform [PaaS] and software [SaaS]), XaaS, or 'everything as a service', has expanded to include storage, containers, functions, security, unified communications and video, among other things. As the barriers to cloud adoption -- security, lack of resources and expertise, cloud spend management, for example -- continue to fall, this list can only get longer.
Cybersecurity and privacy protection are intimately connected and increasingly important digital transformation issues. As we've noted, businesses and other organisations routinely process and store enormous amounts of data, including personal information about their customers -- names, addresses, bank and credit card details, purchase history and more. This data allows companies to create personalised experiences that deliver value to customers and competitive advantage to the business. However, customers need to know that they can trust companies with this sensitive data -- and the endless parade of breaches clearly demonstrates that this is currently far from the case.
More internal and external business processes are being digitised and migrated to the cloud, and organisations are becoming more physically dispersed, all of which increases the attack surface, and therefore the likelihood of security breaches. As companies pursue their digital transformation strategies, the new technologies they deploy will need to be secure by default, and adhere to a zero-trust model.
The emergency shift to remote working for many employees during lockdown has now evolved into the widespread, and likely permanent, adoption of a hybrid model in which workers divide their time flexibly between home and office. We're now in a phase where organisations are working out precisely which implementation of this hybrid model works best for them -- and, of course, some businesses might lean closer to traditional working practices than others, depending on the sector they occupy.
Digital transformation in the hybrid-work era will focus on creating and servicing 'distributed enterprises' with a mix of office- and home-based employees. By 2023, according to Gartner, 75% of organisations that exploit distributed enterprise benefits will see revenue growth 25% faster than competitors.
The automation of a wide range of business processes will be a key focus for digital transformation efforts in 2022 and beyond, ranging from the elimination of simple menial tasks from human to-do lists to the creation of composable event-driven IT architectures. Workflows in the latter category, which will increasingly leverage low code/no code and AI/ML technologies, go under the banner of 'hyper-automation', which Gartner describes as "a business-driven, disciplined approach that organizations use to rapidly identify, vet and automate as many business and IT processes as possible".
"Gartner research shows that the top-performing hyper-automation teams focus on three key priorities: improving the quality of work, speeding up business processes, and enhancing the agility of decision-making," according to Gartner research vice president David Groombridge.