Top Five Digital Transformation Trends of 2023 and a Sneak Peek into 2024
Image: Markus Spiske
As we find ourselves midway through 2023, the trends shaping this dynamic space have crystallised, acting as ‘North Star’ guiding companies through a storm of operational modernisation. The global market has already earmarked $5.4 trillion for digital transformation by 2026, reaffirming the increasing dependence on technological innovations to reinvent operations, processes, products, and services.
The digital transformation movement resonates through four key areas - data, technology, people, and processes. The imprint of transformation is visible across sectors, with businesses adopting remote-first arrangements, retail spaces automating customer services, and healthcare providers offering e-portals for patients, among others. However, this year, certain trends have gathered an unprecedented momentum.
Fiora’s observations reveal that while the pandemic catalysed initial investment in digital transformation, sustaining this momentum requires a clear approach, skilled resources, and a paradigm shift in the organisation's culture. The challenge of talent competition and evolving skills, coupled with the need to adapt to new ways of working, has created a pivot towards alternative change delivery methods.
Now, let's delve into the top five digital transformation trends of 2023 that are reshaping the global business landscape:
Low Code No Code (LCNC): The democratisation of technology through LCNC platforms is the first dominant trend of 2023. It allows non-technical professionals to create functional software applications without intensive coding. This trend started gaining popularity in 2020, as businesses started seeking solutions for agility, productivity, and faster time-to-market. Now, the LCNC trend is at its peak, offering a much-needed boost to businesses that grapple with tech-talent shortage and swiftly evolving digital requirements.
Cloud Migration: Cloud migration was a powerful trend even before the pandemic, with companies realising the benefits of flexibility, scalability, and security offered by cloud environments. The sudden remote work shift in 2020 and the resultant need for seamless virtual collaboration accelerated this trend. In 2023, cloud migration has become an absolute necessity for businesses striving to stay competitive, agile, and resilient in a volatile market.
Automation: Automation has been a part of the digital transformation journey since its early stages. However, as the technology evolved and machine learning came into play, businesses began to automate complex, high-value tasks, thus boosting efficiency, reducing human error, and providing an enhanced customer experience. In 2023, the evolution of automation tools is allowing businesses to take a more strategic, ROI-based approach to automation, making it a prime trend for the year.
AI and ML: The rise of AI and ML technologies has empowered businesses with predictive insights and data-driven decision-making capabilities. Initially surfacing as a trend in 2016, AI and ML have now integrated with business intelligence tools, customer relationship management systems, and marketing automation platforms, making it an indispensable part of digital transformation in 2023.
Blockchain: Once a technology synonymous with cryptocurrencies, Blockchain has found broader applications in business operations, from supply chain management to contract enforcement and beyond. In 2023, as businesses begin to understand the power of blockchain's transparency and security features, it has emerged as a leading trend, ready to revolutionise business operations and customer experiences.
Entering the second half of 2023, businesses may not have the resources to adopt all these trends simultaneously. A strategic approach, focusing on the key prioritise, ensures proper implementation and seamless integration within the existing operations.
Regardless of the trend adopted, it is crucial that the chosen technology aligns with the organisation's culture and existing strategies. Building a specialised technical team that understands business nuances can greatly enhance the digitalisation efforts. Moreover, it is imperative to continuously measure the success of digital implementations, refining strategies accordingly.
A Sneak Peek into the Future
Looking beyond 2023, we observe a remarkable surge in the development and utilisation of digital twins powered by Artificial Intelligence (AI). To comprehend the significance and implications of this trend, let's delve into understanding what digital twins are and their far-reaching applications throughout the operational lifecycle.
A digital twin, as the name suggests, is a virtual replica of a physical object, or system, (from Power Stations, Railway Networks to business and supply chains and everything in between) designed to mimic the behaviour of the real-world counterpart. It serves as a dynamic simulation model that aids in comprehending the functioning of the system under various conditions. The most common application at present is a product digital twin, a complete digital representation of a product in development. These digital twins enable engineers to simulate the performance of a product built to specific mechanical, electrical, and software requirements. The benefits are manifold, from improving reliability, manufacturability, testability, and safety to allowing design optimizations in alignment with specific parameters, referred to as "designing for x".
Beyond individual products, digital twins can also simulate complex systems like shop floors and supply chains, providing valuable insights into their effectiveness and assisting in redesigning them for optimised efficiency. Moreover, service process digital twins provide visibility into field equipment performance, enabling prediction of service and maintenance needs.
A study in late 2021 revealed that while 85% of respondents were utilising or strategising around the use of digital twins, the derived value was less than anticipated. Only 15% reported using digital twins across the product lifecycle, with five percent on the shop floor, and less than five percent in service and maintenance.
Even when restricted to a single domain or 'silo', digital twins can potentially reduce costs by 20 to 30%. However, integrating various types of digital twins as part of a model-based enterprise (MBE) can result in a whopping total cost reduction of between 50 and 70%. By breaking down barriers within the product development lifecycle, an MBE allows stakeholders to view and share critical data seamlessly. It facilitates quicker development of higher-quality products, thereby reducing operational friction and improving efficiency across the organization, not just within specific silos.
As we progress towards 2024, the increasing computational power and advances in 3D printing technology are likely to pave the way for more innovative and cost-effective designs via MBEs. Early instances of this potential are visible in the rapid production of personal protective equipment (PPE), vaccines, and prosthetics for children.
Thus, as we move forward, it becomes clear that the development of AI-powered digital twins and their integration into a model-based enterprise framework is not just a trend for the future. It is, in fact, an imminent reality that will revolutionise the way businesses operate, driving them towards unprecedented levels of efficiency, innovation, and cost-effectiveness.
Micro Trend Alert: Apple's Vision Pro Ushering in the Era of Spatial Computing
It's important to take note of micro trends that hint towards significant shifts in the digital landscape. An intriguing development expected in early 2024 is the release of Apple's Vision Pro. While concrete evidence of its impact is yet to unfold, the industry is buzzing with anticipations, and for good reasons. Apple's track record of pioneering paradigm shifts in technology, from personal computers to smartphones, underscores these expectations.
Image: Reuters
Apple's Vision Pro, purported to be a groundbreaking device, is predicted to launch a new wave in spatial computing. Spatial computing, which integrates virtual and physical environments to create a three-dimensional digital space, marks the next big step in human-computer interaction. It weaves together elements of augmented reality (AR), virtual reality (VR), and AI, enabling users to interact with digital objects in the real world.
If Apple's Vision Pro can tap into the full potential of spatial computing, it could revolutionise numerous sectors. From immersive gaming and interactive education to advanced healthcare simulations and transformative retail experiences, the possibilities are endless. Given Apple's knack for intuitive design and user-friendly interfaces, the Vision Pro might be the key that unlocks the door to this new realm, paving the way for mass adoption of spatial computing.
While it's too early to confirm the impact, the anticipation surrounding Vision Pro attests to Apple's influence in shaping digital trends. As we move forward, this micro trend might morph into a digital transformation behemoth, marking 2024 as the year spatial computing took off.
Finally, remember that while these digital transformation trends hold immense potential, realising this potential demands the right people and a clear vision. As digital transformation reshapes the business landscape, partnering with Fiora’s consultants could be the missing piece in your digital transformation puzzle. From building specialised digital teams to helping you navigate this complex journey, Fiora is your ally in this digital revolution.