Since the start of the pandemic, the rate of digital transformation has increased exponentially.

With so much happening so quickly, it can be difficult to stay on top of it all — especially when you add factors such as inflation, supply chain disruption and an ever-tightening labor market into the mix.

So, just what should business leaders be focusing on in the year ahead?

To answer that question, IBM’s Institute for Business Value (IBV) reviewed its research from the past 12 months to produce a new report: 5 trends for 2022 and beyond. Let’s look at some of the key factors that they predict will shape technological and business decisions in the year ahead.

Digital transformation fueled by cloud and AI is here to stay

Of all the themes analyzed by the Institute for Business Value (IBV), one stood out as a “mega trend,” framing our understanding of all the others. Rapid digital transformation fueled by cloud, artificial intelligence (AI) and other technologies like the Internet of Things (IoT) is here to stay — so don’t expect life to slow down.

This doesn’t mean that we are all trapped in a state of permanent pandemic emergency, however. Rather, the technological changes initiated by the response to COVID have become permanent, and for businesses to succeed, digital transformation must become a way of life.

Just look at the numbers: the IBV found that that 60% of organizations accelerated their investments in digital technologies due to COVID-19, and more than half (55%) permanently course-corrected their organizational strategies in 2020. With operational agility and flexibility top of mind for so many business leaders, successful adoption and implementation of technologies such as cloud and AI will be central to efforts at achieving growth.

Businesses, however, will need to re-evaluate how they manage their assets, infrastructure and talent if they are to effectively automate and modernize systems while predicting where to go next. The winners will be those who can think holistically — blending thoughtful leadership, strong collaboration, an integrated approach and the right tools.

“Fail forward” to modernize business operations

Of course, the world of business operations is complex, and a few isolated improvements here and there will not be enough to guarantee successful modernization. IBV research shows that many businesses grasp this. Consider that since 2019, the number of CIOs reporting advanced hybrid cloud operations in their organizations has increased by an impressive 700%, while intelligent workflows have gone up by an almost equally striking 560%.

But successfully negotiating change also entails an enhanced appetite for risk. Insisting on an immediate return on innovation can lead to a fear of failure that actually stifles creativity. In fact, the IBV reports that companies that don’t penalize failure see a 10% revenue growth bump in the context of tech adoption and digital transformation. 

It’s time for a zero trust approach to security

Cloud-based technologies, platforms and ecosystems create new opportunities for innovation, but they can also introduce new threats. Worryingly, the IBV reports that 92% of organizations lack the ability to securely enable and extend new cloud-native capabilities to their internal and external partners.

It’s time, then, to go beyond outmoded approaches and to adopt a “zero trust” attitude to security — a preventative approach that assumes malicious actors are everywhere. After all, the IBV finds that organizations that integrate their cloud and security strategies more intentionally outperform peers by more than 2x, both in terms of revenue growth and profitability.

Digital transformation = social transformation

Today more than ever, businesses need to consider the social context of their actions. Increasingly, we see an focus on sustainability from consumers and according to the IBV, 54% of consumers say they’re willing to pay higher prices for a sustainable future. Yet, while the IBV found that 9 out of 10 companies say they will be working on sustainability initiatives across the enterprise, another study found that a mere 1 in 3 consumer companies are measuring their progress.

Digital transformation has a role to play here also. AI can help businesses achieve sustainability benchmarks through greater measurement, data collection and carbon accounting, as well as through improved predictiveness and greater supply chain resiliency.

Workplace cultures must also transform

Finally, there’s the human angle to consider. As organizational psychologist Tomas Chamorro-Premuzic observed in a recent article in Harvard Business Review: “Our world has changed dramatically… and adapting your organization to these changes cannot be achieved overnight, or simply by buying new technologies, or collecting more data. What is needed is a shift in mindset, culture, and talent, including upskilling and reskilling your workforce so that they are future-ready.”

We heard a lot last year about “The Great Resignation” and the IBV found that while 30% of employees were planning to change jobs before the end of 2021, a further 15% were looking to do so in 2022. In other words, it’s not over yet.

The virtualization of work has given companies greater access to global talent, but to keep that talent, companies will need to foster cultures that place a value on people.

To be truly successful, digital transformation must be accompanied by cultural transformation also.

Download the report and learn more

In this radically changed business landscape, IBM is partnering with organizations to deliver five levers of digital advantage that are designed to predict and shape data-driven outcomes, automate at scale for productivity and efficiency, secure all touchpoints all the time, modernize infrastructures and transform with new technology-driven digital business models.

Want to learn more about what lies ahead? Read the IBM Institute for Business Value full report: 5 trends for 2022 and beyond.

The IBM Institute for Business Value delivers thought leadership and insights to drive business value. Learn more by visiting our homepage

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