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Top 10 Digital Transformation Trends For 2023
by Daniel Newman | October 19, 2022
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Digital transformation is never going to be done. As technologies continue to evolve and emerge, companies need to keep up and continue with their own transformations. While some of my digital transformation trends predictions for 2022 were correct, others have just barely scratched the surface and will continue to be trending in 2023. So, what will we be seeing in the year ahead? Will customer experience and data make headlines or will the metaverse come to the forefront of the conversation. Based upon hundreds of conversations with the world’s most prolific tech companies and consumers, here are 10 trends that I feel will continue to be top of mind in 2023.

Automation on Tap to Drive Efficiency

Organizations everywhere are doing more with less. Many are still navigating staffing shortages as employees left the workplace in droves because of the pandemic. As a result, the employees that are left in the workplace are burnt out. They are jumping between platforms, searching for information, and spending a lot of time doing repetitive tasks. According to a survey from Asana, employees report spending only one-third of their day on work they were hired to do. That’s not conducive to business which is why I see many organizations finally starting to turn to technology as a solution.

The ability to streamline processes and drive efficiency can be huge for the bottom line, which is why I think automation and intelligent automation will be key in 2023. According to the Automation Now & Next Report, a survey our team at Futurum Research did in conjunction with Automation Anywhere, found that 61% of organizations are turning to automation to deal with staffing issues. For the year ahead, 94% say shifting employees to higher value work is a priority — which makes sense. Get employees working on tasks that will advance business instead of time-consuming and repetitive tasks that are a drain on resources and your bottom line is bound to improve.

I think there will be a focal point on solutions like Microsoft’s Power Platform, Red Hat’s Ansible, ServiceNow, and other low code or no code solutions that will fit easily into any organization’s tech stack. These solutions will streamline processes across the enterprise and will enable organizations to do less with more, and with more efficiency.

Regulation of Big Tech in Focus…Still

This was a trend that I predicted last year, and it will remain true for the coming year. Court rulings, antitrust legislation, and other regulations will continue to impact Amazon, Apple, Google, Meta, and other big tech companies as governments look to eliminate or mitigate the monopolistic practices in ecommerce, digital ads, search results, acquisitions, and app stores.

While most antitrust legislation has stalled or made very slight movement in congress here in the U.S., the EU has passed the Digital Markets Act which will be enforced starting in March 2023. The DMA will regulate big tech companies that act as “gatekeepers” due to their market position in areas around data collection, platform interoperability, bundling offerings, pre-installing apps and a few other areas.

We will have to wait and see how this is enforced, but if history is any indication, we will likely see some fallout that could impact several companies. But will it trickle down to consumers? Or will consumers get more choice and competition in the market like the act is setting out to accomplish? Again, only time will tell. It’s a complex topic, especially because I believe recent anti competition efforts have been less about protecting consumers and more about protecting competition given society’s attachment to ubiquitous platforms like Apple, Amazon, and Google. Regardless, I will also be watching to see how U.S. legislators respond either at federal or state levels just as it happened once the GDPR passed.

Big tech is crucial in our lives — we can’t live without it. So, I don’t think the cycle of alleged abuses, lawsuits, legislation, appeals, and more lawsuits will ever truly end. It will just be interesting to see what comes to fruition in the coming year or if big tech can continue their streak winning cases and avoiding strict regulations.

Observability is Red Hot

As the adoption of cloud-native infrastructure and serverless, container technologies have boomed in the last few years, IT departments have had to change their monitoring practices. What worked for legacy systems, no longer works for these new technologies. Observability enables complete visibility across complex infrastructures for everyone in IT from system administrators to developers. And with that visibility, IT can detect and fix errors before they become bigger problems, and security can detect and mitigate threats before they attack. Which is why observability will be a huge trend in 2023.

Companies like Splunk, IBM, Cisco and ServiceNow have all made big bets on observability. ServiceNow, for instance, made several acquisitions from Lightstep last year to Era Software just this week to unify observability throughout its platform, while Cisco shared its big bets on Observability at this year’s Cisco Live event.

ESG, ESG, ESG!

Did someone say environmental, social, governance? This was a major trend in 2021 and 2022 and will continue likely for years to come. Investments to make operations more sustainable, new partnerships to develop technologies to reduce our impact on the climate, and pledges to reduce carbon footprints have been in headlines this year and I believe they will be again in 2023.

The tech community has really taken climate efforts into their own hands with pledges to achieve carbon neutrality by 2050. And these efforts can’t start soon enough. A recent study from the U.N. showed that we have not done enough to stem the climate crisis yet and are currently on track to see a global 2.7°C temperature increase in the coming decades, a slight change that would have detrimental consequences for everyone.

Which is why I’m pleased to see so many companies continue to take part in Amazon’s climate pledge, which now has over 350 signatories. Other companies like Microsoft, Intel, and SAP (among many others) have beefed up their sustainability offerings, making it easier for other companies to track and report on their sustainability initiatives. This will likely continue in 2023 as consumers and shareholders alike put pressure on businesses to create ESG programs.

This topic will continue to be at the forefront, and while there is much to prove from the tech industry that this is more than just talk, it is encouraging to see progress so long as companies figure out how to balance sustainable practices, customer satisfaction, and profitable business operations.

Rethinking the Metaverse — Getting Practical

The metaverse was an honorable mention last year but has made the full list of predictions for 2023. The metaverse has slowly started to grow in the last year with more companies making plans for business in the metaverse. While I still think we are a few years away from a full-blown metaverse, I think we are going to see more practical plans for what it might look like.

We’ve already seen changes to how money flows in the metaverse, with NFTs, cryptocurrency and decentralized finance capturing more headlines in 2021. Companies will likely look to continue to capitalize on this growth with more offerings while they look to position themselves wisely in for the future of the metaverse. And while companies like Apple and Meta will squabble over what the future will look like, the fact that there are already proposed legislations for management of the metaverse in the EU, South Korea and Japan shows that this fad, as some have called it, isn’t going away any time soon.

For me, the metaverse is less what we are hearing from Mark Zuckerberg and more in line with what CEOs like NVIDIA’s Jensen Huang is sharing in the build out of its Omniverse offering. It’s going to be about bringing immersion into our physical world more than the other way around. We are in the era of creation. From data replication to the build out of virtual, autonomous, simulated environments, the Metaverse for industry like smart cities and digital twins is something that is being done now—and this will continue to gain strong momentum in 2023.

Collaboration is the New Normal

In 2022, hybrid work has really taken center stage with more and more organizations allowing employees to take advantage of flexible work schedules. As a result, collaboration companies have released new features and adjusted platforms to make collaboration easy, seamless, and equitable regardless of location.

This will be our new normal. And I think it will only get better as collaboration platforms will begin to be integrated with systems of record, making it easier for employees to do work across tech stacks in the enterprise. Siloes are collapsing everywhere and collaboration is now at the center of how we operate — and as businesses find more success, it will never change.

Microsoft Teams will continue to lead the pack bringing together synchronous and asynchronous collaboration and merging with applications and productivity tools. However, I like the recent moves made by Salesforce with Slack Canvas and Huddles. Of course, Zoom was the pandemic darling and has been aggressively expanding its platform as well. HP bought Poly last year to bring greater convergence of hardware and personal devices, and Cisco has always been deeply entrenched in the collaboration space as well.

Collaboration will be more and more a thing of physical and digital—true immersion, and it will be further enhanced by AI, Metaverse, and 5G connectivity. It is also more than just meeting and events, but collaboration on experiences, which is what drove the Adobe Figma deal to be one of the largest and most talked about of 2022.

EV + AV — Cars + Trucks Get Smarter

Automotive technologies have gone into hyperdrive in the last year with partnerships, investments, and technology developments from companies like Qualcomm, Mobileye, NVIDIA, Marvell, Luminar, and Plus happening left and right. The software-defined vehicle is the vehicle of the future. We have seen semiconductor companies take charge of the future of the vehicle. Tesla has done it with its largely home-grown technology, but the likes of Mercedes, VW, BMW, and GM are turning to chipmakers like those mentioned above to get it done. Qualcomm saw its design pipeline swell to $30 billion as large automakers are seeking to build the cars of the future on intelligent computing platforms. This trend is locked and will be a story line throughout 2023.

In 2022, we have seen the debut of impressive chips to power everything from infotainment systems to ADAS as well as more advanced LiDAR technology that will make self-driving cars safer. We’ve also seen a number of agreements with OEMs and automotive tech companies to equip everything from cars to semitrucks with next-generation technology. I think 2023 will be the year we will see sustained progress in getting safer, highly autonomous vehicles on the road. We will also probably see more tests of higher level ADAS (L3, L4) in a variety of road conditions as the safety of these systems will still be a major question for a lot of consumers.

As for electric vehicle production, now that California has passed a law outlawing the sale of gas-powered vehicles by 2035, there will likely be major infrastructure shifts in the year to come. This law will bring complexity to a state that has electric infrastructure challenges, but it is indicative of what is to come as we seek to be more sustainable. With this, we will need more batteries, more charging stations, and grids that can support the influx in electric power. We are just at the start of this change and as a bit of a car guy, I can’t wait to see what will be developed this year.

Say Hi to AI (Artificial Intelligence)

Much like automation, the proliferation of analytics and artificial intelligence will continue to make its way into every part of our business and life. Even these trends are deeply impacted by AI from autonomous vehicles to multicloud to better collaboration experiences.

As I see it, AI goes from being a self-contained subject of interest to a largely embedded technology that impacts more and more of our everyday work and life. For instance, we are seeing the continued improvement of conversational AI systems making our day-to-day brand interactions more valuable. From chatbots that can handle multi-turn conversations to smarter Alexa devices, we are having thoughtful interactions with machines, and it has happened almost seamlessly with new software and hardware updates.

Furthermore, recommender engines powered by technologies from companies like NVIDIA are making our digital interactions better, perhaps to the point of a little bit too good. The ability for AI and ML to understand our behavior and make intelligent suggestions for what we buy, where we eat, who we talk to, and how we work are becoming more and more integrated in our lives. This is improving our in-app experiences as well as delivering better proactive customer experience.

At the core of AI will continue to be our semiconductor designers and manufacturers. Software gets the credit, but it will be the continued innovation of Intel, AMD, Qualcomm, NVIDIA, and more that takes powers the CPUs, GPUs, IPUs, and DPUs that enable data to drive insight, optimization, and real-time interactions.

We are seeing the likes of Microsoft, Salesforce, Apple, Google, and Amazon embed AI deeply into our work apps, vehicles, and personal devices—this will snowball in 2023 as AI is part of almost every digital experience in our lives.

Multicloud Accelerates

While 2022 was all about hybrid cloud, 2023 will see further shift from hybrid to multicloud. Organizations want to optimize their cloud usage by tapping into offerings from numerous providers like AWS, HPE, Google, Azure, Dell, Oracle, IBM (Red Hat), and more. This is becoming more and more normal as organizations want to leverage the best that is available on the market, at greater price efficiency—especially in a tougher macroenvironment.

Public cloud players have made their offerings more extensible over the last few years, offering that desired flexibility, especially to deal with redundancy, scalability, compliance, and other challenges that are multicloud favorable. This will continue as providers offer more open-source solutions and modular offerings that will make it easier to orchestrate workloads across the IT environment. And as enterprise organizations find success, this trend will only continue to grow. Which is a great transition to my last trend…

More Consumption Economics as XaaS Meets Economic Complexity

Last year, I predicted we would witness peak Everything-as-a-Service in 2022, and boy did we. Capital expenditures and overspending on unused software and infrastructure have been replaced by operational expenses that are purchased as needed. This has led to major company pivots like the one that HPE made with its GreenLake offering moving almost its entire portfolio to as a service. Other traditionally large capex hardware and software providers like Splunk, Cisco, and Dell have all done the same.

2023 will see this continue to grow. As we face a looming recession and organizations are slashing budgets and limiting expenditures, I think we are going to see more XaaS offerings. From multicloud offerings like I was just talking about, to security, and collaboration services. Pay as you go allows organizations to scale up and down as needed. As a result, tech companies — that are also struggling with reduced revenue and tempered guidance — are realizing the value in transitioning from licensing to more flexible offerings. It will be interesting to see though, how tech companies will position and market themselves to win that revenue.

While we will have to wait to see how the economy fluctuates in 2023 — and right now it’s not looking too good — I think the convenience of consumption models will continue to be the reason that we see XaaS offerings last, once the economy does eventually rebound.

Wrapping Up

Ten is never enough, and I can think of others that deserve at least an honorable mention. I’m certain that cybersecurity will be a hot commodity in 2023 as companies look to shore up their data environments. And speaking of data, we will almost certainly see a bigger focus on first-party data and consumer privacy. Quantum computing will continue to gain momentum and grow, albeit not primetime ready yet. And semiconductor companies will take this slowing period in chips and the economy to continue to innovate on process and manufacturing capacity to reduce the risk of another shortage.

2023 is setting up to be another fascinating year in technology and while markets continue to make us all a bit uneasy, it’s all but certain technology is our best path forward as we seek to return to the next period of economic growth.

Disclosure: Futurum Research is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum Research as a whole.

Other insights from Futurum Research:

Six IT Infrastructure Observations in the Era of Accelerated Digital Transformation – The Six Five Summit Sessions

Kyndryl Expands Offerings with Kyndryl Bridge, a Platform Designed to Help Customers Accelerate their Digital Transformation Journeys

New Solutions from ServiceNow Help Enterprises Advance Digital Transformation

The original version of this article was first published on Forbes.

About the Author

Daniel Newman is the Principal Analyst of Futurum Research and the CEO of Broadsuite Media Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. Read Full Bio