State of Digital Transformation 2025
How digital leaders in Europe plan to harness the power of technology
January, 2025
At the outset of 2025, digital transformation (DX) continues to shape the competitive landscape across industries. Organisations navigate a constantly evolving technological landscape, where agility, innovation and resilience are no longer competitive advantages but essential capabilities for survival.
The convergence of artificial intelligence, cloud computing, machine learning and automation technologies has accelerated the pace of change, enabling businesses to reimagine processes, enhance customer experiences and unlock new revenue streams. This progress, however, comes with heightened challenges, including cybersecurity risks, regulatory complexities, talent shortages and sustainable requirements.
TEKsystems latest report, The State of Digital Transformation, provides a comprehensive analysis of these key trends and highlights from a global perspective and offers valuable insights into the direction of technology investments and the challenges faced by organisations worldwide.
Below, we highlight insights from European leaders about how they intend to use technology to achieve their strategic goals in 2025 and beyond.
Increased Technology Spending
One of the most prominent findings from the report is the overall increase in technology spending. According to the data, 56% of leaders in Europe plan to increase their technology spend in 2025, aligning with inflation rates and addressing the ongoing talent shortages. This surge in investment underscores the critical role that technology plays in driving organisational growth and competitiveness.
Addressing Skills Gaps
Despite increase in spend, organisations in Europe continue to grapple with significant skill gaps. The report identifies three major areas where skills are lacking:
- AI: 37% of organisations report a skills gap in artificial intelligence
- Cyber security: 25% of organisations face challenges finding critical skills in this area.
- Automation: 24% of organisations highlight a shortage of skills in automation technologies.
Organisations Betting Big on AI in 2025
Artificial intelligence (AI) continues to be a cornerstone of digital transformation strategies in Europe. The report highlights that a significant portion of organisations highlight AI as a priority in 2025, with:
- 59% of businesses planning to increase their spend on AI in 2025, aiming to improve productivity and customer service.
- 36% citing AI/ML, 35% citing generative AI, and 33% citing automation to be the most impactful technologies in 2025.
- Implementation Status: Currently, only 10% of organisations have implemented AI technology enterprise-wide, indicating a substantial opportunity for growth and adoption.
The Challenges of Digital Transformation
While the benefits of digital transformation are clear, organisations also face significant challenges. The report identifies the top three challenges in the Europe.
- High/unforeseen costs: Managing the financial aspects of digital transformation can be daunting, with many organisations encountering higher-than-expected costs.
- Creating a culture of continuous learning: Upskilling and reskilling the workforce is essential to keep pace with technological advancements, but fostering a culture of continuous learning is challenging.
- Operating-model transformation complications: Existing business processes are often too rigid to accommodate new digital initiatives, necessitating a comprehensive overhaul of operating models.
These challenges highlight the complexity of digital transformation and the need for strategic planning and execution to overcome barriers.
Focus Areas of Digital Leaders
So, how are digital leaders maintaining momentum to achieve a competitive advantage amidst a complex and ever-changing technological landscape?
- Building strategic alignment: Digital transformation is a core pillar of business strategy for DX leaders, with 85% emphasising its importance.
- Showcasing the right voices in a digital ecosystem: In the planning stages of digital transformation initiatives, 80% of DX leaders ensure the right mix of IT and business stakeholders are involved.
- Future-proofing the workforce: 82% of DX leaders are proactive in reskilling and upskilling their workforce to be productive using digital technologies.
- Mapping out the journey toward digital innovation: 76% of DX leaders define the desired business outcomes before starting any digital initiative.
- Prioritising business transformation efforts: 77% of Digital leaders are more likely to be satisfied with the progress of their organisation’s digital transformation efforts.
The State of DX report provides a compelling snapshot of the digital transformation landscape in 2025 on a global scale. With increased technology spending, a focus on addressing skills gaps, and a strategic emphasis on AI, organisations are well-positioned to navigate the digital future.
However, the challenges are significant, requiring a concerted effort to manage costs, cultivate a learning culture, and transform operating models. As we move forward, the insights from this report will be invaluable in guiding organisations on their digital transformation journeys.