Digital transformation trends 2023

What is in store for the future of digital transformation? To help you navigate this particularly rough and unpredictable sea, we have gathered the most essential trends facing businesses and organizations in the upcoming months.

AR/VR

The industry for augmented reality (AR) and virtual reality (VR), colloquially known as XR, is looking forward to a bright 2021, according to Virtual Reality News. Citing a report by Strategy Analytics, the key takeaways for XR in 2021 and beyond are:

• XR hardware revenues will reach $28 billion annually in 2025
• Total XR shipments—combined VR and dedicated AR headsets—will increase sixfold through 2025
• 2021 and 2022 will see a "slight comeback" for smartphone-tethered VR headsets due to the rise of 5G networks

Data privacy

GDPR continues to dominate the realm of data privacy also in 2021. A recent survey by PwC highlights the following:

• 44% of CEO respondents rank data privacy among top 3 policies most impactful to their business
• 69% of respondents are "very actively" looking to shape data privacy policy

Security IT Summit has asked several industry professionals for their insights, and they point out the following as key issues in data privacy:

• Increased consumer awareness about company practices on collecting and using personal data
• Trust has become a core element of brand protection
• More data and applications are shifting to the cloud—40% of large UK businesses expect to be cloud-only by 2021
• The privacy industry is booming—over the past five years there has been a 75% increase in jobs with "privacy" in the title
• Identity management functionality gains importance

AI and machine learning

According to MobiDev, these are the main trends for AI and machine learning in the foreseeable future:

• ML framework competition: PyTorch is most commonly used for research, while TensorFlow is mostly used by business
• AI analysis for business forecasts: ML-based time series analysis aggregates data and analyses it over time, allowing managers to easily make data-driven decisions. Research into this and similar technologies have made substantial progress the last few years, but no industry application is available yet
• Reinforcement learning: RL technology uses its own experiences to improve itself and is achieving important progress, where self-improving chatbots are but one real-life example
• AI-driven biometric security solutions: The efficiency, accuracy, and security of ML-driven biometrics are increasing into 2021, with face anti-spoofing systems and Amazon's Alexa as two examples
• Automated machine learning: AutoML discovers patterns in input data and decides what model is best suited for handling it—Lenovo used e.g. DataRobot by AWS to reduce model creation time for their demand forecasts from 3–4 weeks to 3 days
• Explainable AI: A relatively new field based on the EU tasking ML designers to make AI more understandable to users by providing reasons for a given output
• Conversational AI: Several developments are on their way, including BERT—which allows for bidirectional reading of texts—and XLNet, an autoregressive pre-training model that is able to predict words from a set of texts using context clues
• Generative adversarial networks: GAN technology's most famous implementation is NVIDIA's fake face generator and the deepfakes roaming the web, but can on a more serious note be used in police sketches and in detecting anomalies
• Convergence of IoT and AI: Industrial IoT is not as efficient as possible, leaving room for AI to step in and help increase efficiency and reduce downtime. An example is Rolls Royce partnering with Azure IoT Solutions to check the health of their aircraft engines

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IoT

Speaking of IoT, LORIOT lists 10 IoT trends that will make an impact also in 2021:

• Security: With hundreds of millions attacks on IoT, as well as large-scale M&As in IoT cyber security, the efforts to increase security in IoT is heavily underway by 2021
• SaaS: Software as a Service is becoming increasingly popular, with customers enjoying cost reduction and service providers being able to develop and sell more sophisticated solutions on a large scale
• Edge computing: Executing code and delivery in nearby, local servers also work well for IoT, reducing bandwidth use and cost, as well as improved compliance with privacy regulations
• Data analytics: Tying in with AI and ML mentioned above, the IoTs gathering of vast amounts of data demands smarter and more efficient management and analysis 
• Smart cities: With 60% of the world's population living in cities, utilizing IoT to improve lives is a natural development of the IoT saga
• Industrial Internet of Things: IIoT has a potential to increase productivity, enable better optimization of resources and processes, reducing operating costs, and improving operator safety in industrial settings 
• Smart homes: Devices with voice interfaces are becoming more widespread, cementing the rising trend of home automation
• Healthcare: The healthcare sector can benefit from IoT via new drugs and implants, chronic disease and post-surgery monitoring, early warning systems for risk groups, smart tricorders and wearable devices, and medical and diagnostic smart tools for clinicians. The Internet of Medical Things (IoMT) is expected to grow to over $72 billion by 2021
• Environment: The IoT industry focuses on environmental protection and waste reduction, while simultaneously researching solutions for monitoring and protecting endangered species and natural disaster prevention and management technology
• Global connectivity: In an increasingly global world, the tracking and management of assets, food production and delivery, manufacturing, and medical applications need immediate and perpetual connectivity to ensure consistency and security

Cloud

The global cloud computing market size was valued at $266 billion in 2019 and is expected to expand at a Compound Annual Growth Rate (CAGR) of 14.9% from 2020 to 2027, according to Grand View Research. In this context, Analytics Insight lists the following cloud trends:

• Serverless computing: Cloud serverless implements functions in the cloud as required, reducing the stress of operating and managing the servers for enterprises concentrating on working on their core product
• Hybrid cloud: Analytic firms predict a continued and substantial growth for hybrid cloud solutions—mixed computing, storage, and services environment made up of on-premises infrastructure, private cloud services, and/or a public cloud
• Containers and Kubernetes: The rise of container technology and Kubernetes is illustrated by the prediction that 95% of new microservices will be deployed by containers by 2021

Forbes supplies with some numbers for the industry:

• Enterprises' average cloud spending is up 59% from 2018 to $73.8 million in 2020 
• Cloud technologies are now embedded in enterprises' business strategies, as 92% say their IT environment (infrastructure, applications, data analytics, etc.) relies on the cloud, predicted to grow to 95% in 18 months
• 54% of enterprises' cloud-based applications moved from an on-premises environment to the cloud, while 46% were purpose-built for the cloud
• Financial services, government/non-profit and manufacturing enterprises are the most likely to use only a single public cloud platform due to security and privacy concerns

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Headless CMS and content hubs

According to Thomas Sigdestad, CTO of Enonic, headless CMS and content hubs will be one of the biggest trends within content and technology in 2021:

– Headless CMS is becoming the preeminent tool to practice content first and distributing your content from one source. Headless CMS represents the contrast to page-oriented CMSs, and traditional web pages. With headless, you focus on structured content, and the ability to distribute to any channel via APIs, potentially making it a content hub. We should not forget that most Headless CMSs are also delivered as a service, taking away another level of complexity as well.

Voice and conversational UI

Another potential digital transformation trend is the incursion of voice and conversational UI. HubSpot states that it’s likely that 40% of all Google search queries are made by voice and that the same number applies to people planning to buy smart speakers. It’s of vital importance to realize that the growth of voice assistant usage and supporting hardware will inevitably be used for both marketing and operational purposes.

While HubSpot focuses primarily on the B2C aspects of voice, G2 discusses the B2B aspects as well. Detailing how voice already fuels interaction with mobile devices, thermostats, and automobiles, G2 Crowd explains how conversational UI likely will be adopted on top of existing business systems, like IaaS platforms.

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More trends

Other digital transformation trends that will make an impact in 2021 and beyond include:

• 5G: 5G has already hit the mainstream, and in 2021 and beyond we will see increased adoption of the ultra-fast infrastructure make an impact in AI and ML, as well as industrial IoT, security, telecom, and financial services
• Blockchain: Major blockchain trends include BaaS, stablecoins, interoperability, governmental agency integrations, AI integration, federated blockchain, social network problem solutions, and IoT integration.
• Cyber security: In 2021 cyber security trends will revolve around skills shortage and AI, cyber crime, GDPR and data protection, and security in cloud computing
• Environmental technology: Trends within ecological sustainability include chemical recycling for plastics, blockchain (e.g. transparency in supply chains and verifying fair trade suppliers), circular economy apps, platforms, and other tech, vertical farms, water infrastructure tech, agrivoltaics, and edible packaging
• ERP: As traditional software is being replaced by robotic process automation (RPA), new tech emerges, and the economy becomes less stable, ERP vendors and buyers must adjust their strategies accordingly.
• Fintech: Already a volatile industry for years, fintech will in 2020 face RPA, mobile banking, unsuretech, open banking, and smart contracts.
• Online: The COVID-19 pandemic and resulting governmental efforts have forced everyone online: whether it be meetings, conferences, shopping, or remote working. The impact may be a widescale cultural change, and more businesses opting in for remote working and smarter connectivity tech
• XaaS: Everything as a Service—referring to the extensive variety of the emerging services and applications to be accessed over the Internet—is expected to skyrocket to more than $345 billion, according to Research Insights.

First published 15 May 2019, updated 7 October 2020.