Digital transformation is more than AI: you still need a customer-focused strategy

Every year is a year of disruption. But 2023 felt different. Generative AI captured the world’s imagination and received unprecedented attention. Businesses and governments are scrambling to understand the implications of this technology, now at the fingertips of everyday consumers.

In such exciting times, it might be tempting to assume that shiny new technologies will dominate digital transformation trends in 2024. While every technology leader is excited about Al, most of our digital transformation challenges, initiatives, and priorities actually remain unchanged from the last several years. Regardless of the latest technology, business leaders are still asking: How can we execute a successful strategy to engage our customers, improve efficiencies, and future-proof the business?

This is one of the core takeaways from our latest research, Investing in Digital Transformation and Product Development, featuring insights from 377 product development decision-makers in the US and UK. The data is consistent with my ongoing conversations with chief innovators across several industries. Let’s dive deeper into five digital transformation trends shaping 2024 for enterprise leaders.

1. AI is top of mind… but executives need more information

I don’t need to tell you that AI is undoubtedly transforming our economy. According to a Forbes Advisor survey, 64% of businesses believe that artificial intelligence will help increase their overall productivity. PwC predicts AI will boost the North American GDP by 14% in 2030.

However, that doesn’t mean every executive is jumping into AI without doing a little more strategy work. As enterprise leaders, we need to figure out how AI augments and supports overall digital initiatives before blindly investing. According to our research, only 22% of large enterprises (10,000+ employees) cite Generative AI and/or ML algorithms as a focus for 2024. Planned AI spending ranks well below traditional digital transformation initiatives like IT modernization and cybersecurity.

Many businesses are looking at how to use existing AI tools to increase productivity rather than build their own models. For example, they’ll use AI pair programmers like GitHub Copilot, AI-workflow experts like Atlassian Intelligence, and roll out guidelines for using language models. However, some enterprises in high-integrity industries like pharma and finance will invest in their own private AI models to prevent instances like leaking enterprise secrets via ChatGPT.

So, while AI will continue to be a major factor in digital transformation, it’s important not to jump on the hype train. Instead, focus on how AI can help solve specific challenges for your business and help deliver a better customer experience.

2. Strategy is still a core challenge to digital transformation

Not only do executives need an AI strategy, our research revealed that strategy overall remains a serious barrier to scaling product development and digital transformation efforts. Almost one-third of decision-makers say thatlacking a digital strategy is a top challenge to the overall success of their organization. And even when there is a defined strategy in place, 79% say they are unable to follow through, hindering overall success.

We all know the common problem of having too much strategy and not enough execution — or vice versa. As technology leaders, we must work to bridge the strategy and delivery divide, removing silos between leadership and development teams, using the customer journey as the north star for all of our efforts. In our own consulting at Modus Create, we recommend a “stratactical” approach – integrating strategic thinking with actionable steps and codified learnings to prioritize and move your agenda forward.

Leaders must be able to address three important questions in their strategy:

• How much should I invest to keep the lights on and maintain business as usual?
• How much should I invest to fend off disruption from new players?
• How much should I invest to gain a competitive advantage in my industry?

Gaining clarity on these questions helps organizations create an executable digital strategy with the best chance of success.

3. New technology brings new cybersecurity concerns

It’s no surprise that cybersecurity remains the most popular digital initiative among enterprises. Our research report shows that 59% of surveyed organizations will invest to improve their cybersecurity posture this year — nearly double the results of our 2022 research.

There are many reasons to prioritize cybersecurity, including the simplest one: your customers care. Data security is part of the customer experience, which we’ll discuss more in a minute.

Cyberattacks have increased in both frequency and intensity worldwide, confirming the need for a stronger cybersecurity posture. Gartner predicts that by 2025, 45% of organizations worldwide will have experienced attacks on their software supply chains, a 3x increase from 2021.

Understanding your cyber attack surface gives clear, measurable guidance on where to start a modernization journey based on the impact of remediation efforts to lessen the size of the attack surface.

Finally, cybersecurity initiatives often serve as the first part of larger, more strategic digital transformation projects. For example, an assessment might reveal that legacy apps are a security risk, causing organizations to modernize their tech stack.

In 2024, we will continue to see enterprises get more sophisticated around security, integrating it into every aspect of their digital initiatives and throughout the product development lifecycle.

4. Data takes centerstage

Two years ago, I argued that if enabling web, mobile, and connected device channels was the first leg of digital transformation, dealing with the resulting data would be the second. Today, we are seeing this come to fruition.

Boosting data and analytics capabilities ranks among the top initiatives that organizations will focus on this year. 50% of organizations surveyed in our research plan to make data experience a priority.

While data has long been a part of the conversation, it is now undoubtedly front and center. This shift in focus is guided by companies that want to leverage data to better understand their customers, as well as by customers who expect companies to handle their data properly as they are presented with personalized experiences.

To provide an effective customer experience externally, organizations must have a cohesive data experience internally. This requires a consistent process for gathering, disseminating, and interpreting data.

Data blindspots in your business stem from more than just legacy tech — they increasingly also stem from analog business operations. Unifying data access is as much about enabling end-to-end digital operations as it is about enabling a modern enterprise architecture and software stack.

5. Developer experience is the customer experience

If you really want to measure the success of your digital transformation, measure the satisfaction of your knowledge workers. Building a culture of innovation and improving the customer experience stems from a successful developer experience and, by extension, the experience of your product and platform teams.

The landscape to attract talented developers is more competitive than ever, underscoring the importance of a solid developer experience. Securing the right talent is the top challenge cited by surveyed decision-makers as a threat to their organization.

Successful development teams not only breed successful digital projects and improve the customer experience, but they also provide a useful lens to evaluate digital transformation trends. If the latest product development tool or process doesn’t simplify the lives of your developers, chances are it won’t last for long.

For example, an “agile” methodology that leads to more meetings for developers and reduces the time for deep work won’t be sustainable. On the other hand, an AI pair programmer that turns natural language prompts into code is likely to create several evangelists.

I’m happy to see “developer experience” getting much more press lately, as it is key for any enterprise that wants to separate hype from substance and unearth the digital initiatives with true potential for disruption.