Welcome to the paradox of digital transformation. The long-standing practice, which until recently was the focal point of business and technology change, will find itself toiling in the background as AI developments move front and center. But at the same time, digital transformation could spread across more practitioners than ever before.
Front-line employees, equipped with AI-powered low-code tools, are expected to take on more digitalization projects in a broad effort extending beyond the IT shop.
The economics of digital transformations reveal another irony. Spending on transformation continues to grow, with some market research estimates predicting a market approaching $4 trillion within a couple of years. But an expanding market could also mean a maturing one. Some sectors such as e-commerce will likely show slower growth, following a wave of rapid digital commerce adoption.
Here are five digital transformation trends set to shape 2025.
1. AI supercharges digital transformation
AI-driven transformation emerged as a trend in 2023, as more organizations began to view generative AI (GenAI) as a source of competitive advantage.
That pattern will continue in 2025 as AI as transformation becomes the rule rather than the exception. Expanding GenAI deployments and newer agentic AI projects will play important roles in reinventing business processes. It will become increasingly difficult to distinguish AI transformation from digital transformation.
Market researchers and industry executives confirmed the ascendence of GenAI. IDC forecasts digital transformation to grow to a $3.9 trillion market worldwide in 2027 on the strength of AI and generative AI investment. At Accenture, CEO Julie Sweet described GenAI to investors during an earnings call earlier this year as the "most transformative technology of the next decade."
In addition, agentic AI, which automates workflows through autonomous agents, is "emerging as a transformation force," according to research from GlobalData, a data and analytics firm based in London. The company said it expects agentic AI to redefine automation in industries such as healthcare, financial services, energy and retail.
GenAI and agentic AI have different attributes, but both will drive digital transformation in 2025.
2. Digital transformation operates in the background
For most of its history, digital transformation has been approached as a marquee project or an enterprise-wide initiative made up of several projects.
Business and technology forces, however, have compelled transformation to evolve. C-suite impatience with the speed and cost of initiatives has reduced their size and scope in recent years. Emerging AI technologies, meanwhile, have captured organizational attention and taken the spotlight from digital transformation.
As a result, IT leaders next year might see digital transformation become more of a general corporate directive rather than a specific, high-profile initiative. That directive will point toward ROI-justified business outcomes, with technology providing the means for getting there.
AI is the most visible transformation lever now, but earlier waves of technology such as ERP have also fulfilled that role. The technology catalyst changes over time and might outshine transformation as a rallying point, yet transformation persists. The background shift doesn't necessarily make digital transformation less important. In a way, the change in status underscores its importance as an accepted fact of business life that doesn't need top billing. The established methods and platforms of transformation set the stage for AI innovation.
3. Citizen developers take on transformation
Digital transformation could also see a change in who does the work. Recent research suggests the responsibility for digital transformation will be diffused across organizations, rather than concentrated in the IT department.
Thomas Davenport and Ian Barkin, authors of the MIT Sloan School of Management article "How AI-empowered 'citizen developers' help drive digital transformation," contended that frustration with transformation programs stems from businesses having too few centralized IT personnel to deliver digital capabilities.
"Digital transformation is taking too long, in part because millions of application development, coding, data science, and tech-associated jobs are going unfilled," according to the authors. "The only way for companies to fill the void is through greater emphasis on the skill development of their existing staff -- their citizens."
Davenport, a digital fellow at the MIT Initiative on the Digital Economy, and Barkin, co-founder of 2B Ventures, suggested companies can let front line employees "create applications, mobile apps, automated workflows, and data analyses."
Forrester Research believes that the citizen-development push will come through generative AI. The market research firm's "Predictions 2025: Automation" report, published in October, forecasted that citizen developers outside of the IT department will create 30% of "GenAI-infused automation apps" next year. Those developers' domain expertise, along with access to low-code tools, will let them effectively prompt generative AI's large language models and integrate the results into applications, according to Forrester Research.
AI innovation emerges from digital transformation methods and platforms such as cloud computing.
4. Digital transformation matures
While digital transformation remains a large and growing market, IT leaders might see signs of maturation in 2025. That trend could manifest itself in a couple of ways.
First, businesses will continue to carefully weigh transformation spending, a tendency that has gained prominence since 2023 when enterprises began to emphasize cost optimization. CompTIA, an IT industry association in Downers Grove, Ill., cited a higher bar for digital transformation as its No. 1 trend to watch next year.
"After heavy investments in digital tooling and resources after the pandemic, organizations will be hitting the pause button to evaluate the success of past initiatives and to determine their direction for the future," CompTIA noted in its "IT Industry Outlook 2025" report.
CompTIA said organizational debt -- cloud sprawl, inefficient workflows and insufficient technical skills -- limits the potential of technology deployments. Tech spending won't evaporate, but companies will take a closer look at the "real benefits" of prior investments as well as adjust how they run procurements and evaluate new projects, according to CompTIA's report.
Second, digital transformation will show maturity in less stellar growth in some sectors. For example, e-commerce has cooled following the COVID-19-inspired digitalization wave. FTI Consulting, a business advisory firm based in Washington, D.C., noted in its "2024 Online Retail Report" that the "most impressive growth days of the U.S. e-commerce retail environment have past."
FTI Consulting pegged the U.S. e-commerce market at $1.2 trillion in 2024, growing 9.8% year over year. Looking ahead, e-commerce will continue to take market share from brick-and-mortar retailers but at a decelerating rate, according to the company's research.
"[W]e have entered a maturing phase for the e-commerce channel, where it grinds ahead without fanfare," the report read.
5. Cloud migration continues as transformation focus
Digital transformation over the years has often conflated with cloud adoption, at least until the arrival of generative AI.
It will become increasingly difficult to distinguish AI transformation from digital transformation.
Cloud computing, however, continues as a transformation focus for many organizations. One of the reasons is GenAI. Organizations outgrowing on-premises proofs of concept find space to grow in the cloud, according to a December report from Wipro, a technology services and consulting company based in Bengaluru, Kanataka, India.
"As AI models have scaled up, our research shows that cloud has become a necessity for 9 out of 10 enterprises," the company's "Pulse of Cloud Quarterly Report" read.
The report, based on a survey of more than 500 senior executives and decision-makers, identified scalability as the No. 1 benefit of using cloud infrastructure for AI. Twenty-nine percent of the respondents cited scalability. Increased productivity and increased data security tied for a distant second, with each benefit cited by 16% of the executives polled.
Enterprises will increasingly rely on both cloud and AI as enabling technologies for digital transformation. But other factors will drive cloud transformation next year. Mainstream maintenance for SAP's ERP Central Component software is set to expire at the end of 2027, making 2025 a potential cloud migration milestone for businesses still using on-premises ERP.
John Moore is a writer for Informa TechTarget covering the CIO role, economic trends and the IT services industry.
