Annual Report
State of Digital Transformation 2025
Leveraging Momentum
State of Digital Transformation
How Digital Leaders Achieve Competitive Advantage
As 2025 begins, digital transformation (DX) continues to shape the competitive landscape across industries. Organizations 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.
For C-suite leaders, the stakes have never been higher. Decisions about technology investments are not just about staying current—they define the trajectory of the organization’s growth, efficiency and relevance in an increasingly competitive global market. This report provides a comprehensive analysis of the state of digital transformation in 2025, highlighting key trends, investment priorities and actionable insights to guide strategic decisions. We compare differences between digital leaders and digital laggards to highlight best practices and the optimal path forward on the digital transformation journey.
Digital business transformation is not just about technology—it is about creating value and securing long-term growth. As you read this report, consider how the digital transformation trends outlined can help your organization achieve its strategic goals and thrive in an ever-evolving market.
Prioritize Business Transformation Efforts
Our research examines the characteristics of digital leaders to help companies make informed decisions, adapt strategies and accelerate business transformation.
Navigating Economic Uncertainty
Digital Leaders Transform and Thrive
Spending plans for 2025 reflect a deliberate and systematic approach to driving growth and resilience as organizations refine their digital transformation strategies. But digital leaders and digital laggards take very different paths along the way.
Compared with digital laggards, digital leaders double down on their investments in digital innovation, with twice the confidence that their initiatives will deliver strong return on investment (ROI). In contrast, digital laggards are five times more likely to cut budgets.
Macroeconomic factors such as inflation and ongoing talent shortages continue to influence strategic decision-making. Our research examines how organizations manage these dynamics, balancing ambitious transformation goals with pragmatic financial and operational planning to position themselves for long-term success.
75% of digital leaders expect to increase spending in 2025
(compared with 47% of digital laggards).
Key Takeaway
ROI-DRIVEN SPENDING
Organizations need an honest assessment of their ROI timeframes. Clearly defining the business outcomes they wish to achieve and articulating the value stream will help guide decisions about which IT costs to align to CapEx and OpEx spending.
Systematic Approach to Spending
Digital transformation investment plans for 2025 reflect a systematic approach to spending where the ROI and specific business outcomes must be clearly defined to budget for transformation initiatives.
Organizations anticipate inflationary pressures and talent shortages to impact spending, but confidence is high that digital transformation investments will meet the expected return on investments. Level setting of expectations, however, may need to be determined as the C-suite is twice as likely to expect a return in six months or less, compared with line-level managers who may have more insight into the practicality of implementations.
Digital leaders are two times more likely to spend $10 million or more per digital initiative in 2025.
Fig. 2.1DX Investments (Per Initiative)
Fig. 2.2Technology Spend Projections
Fig. 2.3ROI Expectations
Digital leaders are two times more confident that investments will meet ROI expectations.
Fig. 2.4Confidence That DX Investments Will Meet the Expected ROI
Shifting Priorities in Digital Transformation Goals
Improving customer experience has been a core tenant of digital transformation trends in the last several years and remains a priority, but it’s been supplanted from the top spot among digital transformation goals.
For 2025, organizations will focus on upgrading legacy IT systems and enhancing employee productivity. While percentage differences are negligible, they’re a good indicator of how organizations may shift focus to addressing technical debt and implementing tools—particularly artificial intelligence—that improve productivity as they seek competitive advantage and return to profitability. AI technologies grab the headlines, but the drag of technical debt remains a burden organizations must address.
Although digital transformation can greatly enhance employee productivity by optimizing workflows and automating tasks, it is crucial for organizations to remain attentive to the effects of new digital tools and processes on employee experience.
Since our initial study in 2020, enhancing employee experience has consistently ranked low among digital transformation priorities. It will be intriguing to see how this aligns with the growing emphasis on employee productivity.
Fig. 2.5Top DX Goals
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202520242023Top DX Goals
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35%34%35%Replace or upgrade legacy IT systems
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35%30%*Enhance employee performance/productivity
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33%35%40%Improve customer experience and engagement
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30%31%38%Reduce operational inefficiency
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27%29%38%Transform existing business processes
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26%25%31%Increase/achieve innovation
-
25%25%29%Bolster cybersecurity
-
21%24%*Gain competitive advantage
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19%17%21%Introduce new products or services
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17%16%23%Introduce new business models/revenue streams
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16%17%22%Increase speed to market of existing products or services
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15%18%24%Improve employee experience
Key Takeaway
TECHNOLOGY ENHANCED PRODUCTIVITY
Leading organizations use generative AI (Gen AI) tools to automate tasks, streamline workflows and enable employees to focus on higher-value work.
Key Takeaway
OVERCOMING DIGITAL ROADBLOCKS
Organizations face significant challenges in driving digital transformation as rising costs and complex business environments hinder progress and scalability.
Navigating the Complexities of Digital Transformation
Digital transformation efforts present significant challenges that organizations must strategically navigate. As companies strive to leverage new technologies and realize the value of enterprise transformation, they face numerous obstacles within increasingly complex technical and business environments. The complexity of current environments and siloed mindsets remain the top challenges, affecting 33% of organizations, up slightly from 32% in 2024.
High or unforeseen costs associated with digital business transformation have risen as a concern, impacting 29% of organizations, in comparison with 26% last year. Additionally, creating a culture of continuous learning and upskilling or reskilling the workforce has become more pressing, with 27% of organizations identifying it as a challenge, up from 25%.
Aligning digital transformation with business objectives and KPIs has also grown in importance, now affecting 24% of organizations, up from 20% in 2024. Lingering economic uncertainty impacts budgets, with 23% of organizations citing it as a challenge, slightly down from 24% last year.
Despite these challenges, senior-level support for digital transformation has become more favorable, with only 11% of organizations citing a lack of support, down from 13% in 2024 and 21% in 2023. This growing support underscores the increasing importance of investing in digital transformation to achieve competitive advantage.
Fig. 2.6Top DX Challenges
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202520242023Top Challenges
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33%32%31%Complexity of current environment / siloed mindset and behaviors
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29%26%22%High or unforeseen costs associated with digital transformation
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27%25%25%Creating a culture of continuous learning / Upskilling or reskilling workforce
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24%20%21%Aligning digital transformation with business objectives/KPIs
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23%24%18%Economic uncertainty affecting budgets
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23%23%22%Security concerns and compliance constraints
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23%21%20%Too many competing tech priorities
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22%27%22%Gaps in technical talent
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22%22%21%Operating-model transformation complications (current business process are too rigid)
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21%24%25%Change management and implementation complications
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21%22%19%Lack of internal alignment (digital vs traditional business)
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19%20%17%Lack of strategy around digital initiatives
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11%13%21%Lack of senior-level support
The Digital Business Transformation Framework:
People, Process and Technology
According to Gartner, global IT spending will reach $5.7 trillion in 2025. As organizations build platforms to future-proof the enterprise, spending will be allocated to data center systems, devices, software, IT services and communication services. Technology frequently gets the headlines, and it’s a critical component of any digital transformation, but sustainable transformation requires change at the individual level and organizational level.
Nine out of 10 organizations report a lack of talent necessary to drive successful digital transformation projects. The areas with the biggest skills gap include AI, machine learning, cybersecurity and data analytics. In a fast-paced environment where competitive advantage can be won and lost quickly, organizations must have access to the talent they need. But for half of companies, it takes more than six months to find mission-critical talent.
organizations face significant skills gaps in areas like AI machine learning and cybersecurity.
People: Building a Modern Workforce for the Future
Technology skills gaps are not exclusive to the IT department; they transcend the entire organization. Use of artificial intelligence, low-code/no-code development platforms, and data visualization tools means every employee must be equipped with the right skills to be productive in a digital organization. That’s why nearly half of organizations are focused on training employees with the digital skills they need to fully leverage the platforms and technologies that will enable success on their digital transformation journey.
To bridge skills gaps, companies need innovative and comprehensive talent strategies. This approach enables them to acquire and develop crucial skills to modernize their workforce.
Fig. 3.1Actions for People
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202520242023Top Actions For People
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45%43%43%Train employees with digital skills across the organization.
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42%38%38%Offer training and development programs focused on new behaviors / mindsets
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40%40%41%Focus on retaining, engaging and developing existing employees versus recruiting new employees
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40%35%36%Identify skills required to deliver digital products and/or services in the organization’s portfolio
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38%40%40%Drive adoption of new tools and technologies
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38%39%39%Establish new ways of working / collaborating with internal and external partners
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36%37%37%Quantify the gap between current and needed skills to deliver digital products / services
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20%24%26%Setting hiring goals based on specific skill needs
Fig. 3.2Talent Reimagined
Fig. 3.3 Biggest Skills Gap
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RankIn which areas does your organization have the biggest skills gap?
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1Artificial intelligence / Machine learning
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2Cybersecurity
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3Data analytics/data science
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4Automation
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5Big data
Percentage that Takes More than 6 months to Find Critical Talent
Process: Taking an Iterative Approach to Business Transformation
The strategic use of technology to innovate and scale business processes is a core tenant of digital transformation initiatives. Organizations must take an iterative approach, involving strategic planning, continuous design, prototyping, feedback loops and refinement. This approach ensures business outcomes are fully optimized to realize their value potential.
Half of organizations are focused on using digital tools to make information more accessible, breaking down data silos across business functions. Access to data will improve decision-making, increase time to market of products and services and ultimately enhance the customer experience. Only 30% of organizations indicate that a change management strategy is a key part of their digital transformation efforts. That’s concerning because it suggests a significant gap in addressing human and organizational aspects of transformation. Without a robust change management strategy, organizations are likely to face resistance from employees, misalignment of goals and a lack of engagement, all of which can hinder the success of digital initiatives.
Organizations should consider prioritizing change management by developing comprehensive plans that include buy-in from senior leadership, clear communication, training programs and stakeholder engagement. This approach can help ensure that all parts of the organization are aligned with the transformation goals, reducing resistance and fostering a culture of adaptability and continuous improvement.
Fig. 3.5 Actions for Process
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202520242023Actions For Process
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48%45%49%Implementing digital tools to make information more accessible across the organization
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46%43%50%Modifying standard operating procedures to include new digital technologies
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42%41%46%Implementing digital tools to facilitate analysis of complex information
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37%36%40%Implementing digital self-serve technology for employees’ and business partners’ use
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32%37%41%Creating a network of cross-functional teams with end-to-end accountability
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31%34%38%Adapting business processes to enable rapid prototyping and testing with customers
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31%33%36%Implementing mechanisms to improve digital governance capabilities
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30%29%*Implementing a change management strategy
Fig. 3.6 Remote Workforce Expectations
Technology: Transformation Enabled by the Cloud With AI-Driven Innovation
As digital transformation accelerates in 2025, organizations increasingly will use technology as a key competitive advantage. Cloud computing serves as the foundation of these transformation efforts, with cloud-native platforms and infrastructure as a service (IaaS) remaining essential for agility, scalability and innovation. Cloud-native platforms (72%) and IaaS (71%) lead in adoption, underscoring their vital role in enabling seamless operations and fostering innovation. These technologies provide flexibility and scalability for businesses to adapt to shifting market demands, support hybrid work models and accelerate development cycles. Their widespread adoption reflects their ability to serve as a foundation for other transformative technologies, such as AI, automation and analytics.
Gen AI tools are the most likely to be piloted in 2025, with 27% of organizations experimenting with them. This enthusiasm stems from their potential to revolutionize content creation, enhance customer experiences and automate complex tasks. The fact that 1 in 5 organizations have already scaled Gen AI to multiple units or across the enterprise signals its transformative impact. However, organizations must identify and define specific business outcomes for AI to get the expected ROI. These tools rapidly reshape workflows and offer personalization solutions, advanced data analysis and real-time decision-making.
As digital transformation advances, organizations will prioritize technologies that provide both immediate productivity improvements and long-term scalability. Cloud-native platforms, IaaS and Gen AI tools are central to these initiatives, allowing businesses to innovate quickly and adapt to changing market conditions. By the end of 2025, the convergence of cloud computing, artificial intelligence and automation will create a more agile, efficient and innovative enterprise landscape.
Fig. 3.8 Most Impactful Technologies Over the Next 1 to 2 Years
AI-Powered Transformation
Artificial intelligence is an essential driver of digital transformation, empowering organizations to innovate, enhance efficiency and assert their competitiveness in the market. As businesses confront the challenges of evolving market demands, AI—especially generative AI—emerges as a valuable tool for achieving strategic objectives.
of digital leaders plan to increase AI spending in 2025.
(compared with 48% of digital laggards)
Gen AI will be the next game changer as part of the digital transformation changes we are embarking on. We’re laser-focused on defining use cases for how AI and automation can bridge the gap between business and IT users.
—Global Manufacturing Company
Eight out of 10 organizations intend to leverage Gen AI in 2025, accentuating its pivotal role in digital transformation strategies. This widespread adoption reflects a belief of AI’s capacity to unlock new value and optimize operations. Furthermore, compared with their peers, digital leaders are almost 30% more likely to increase their AI investments in 2025, signaling a decisive determination to harness AI’s transformative potential.
Improving employee productivity is a primary focus for organizations, directly aligned with the top goals of digital transformation. AI-driven solutions are being actively implemented to automate repetitive tasks, enhance decision-making and deliver real-time insights. This approach not only liberates employees to focus on higher-value initiatives but also significantly boosts efficiency and job satisfaction while driving innovation. Organizations can ultimately balance AI’s strengths with irreplaceable human capabilities like critical thinking and creativity.
As businesses intensify their investments in AI, decision-makers must establish robust infrastructure, data strategies and governance frameworks. By strategically embracing AI technologies, organizations can accelerate their digital transformation journeys and achieve concrete gains in productivity, agility and long-term growth.
Fig. 4.2 Primary Use Cases of AI Technologies
Fig. 4.3 Top Challenges Implementing AI
Fig. 4.4 2025 Spending Plans for AI Technologies
Fig. 4.5 Organizations’ Approached to Gen AI
Conclusion
Mastering the Momentum
Digital transformation remains essential for businesses to succeed in a fast-changing market. Cloud computing, generative AI and automation technologies help improve efficiency, encourage innovation and focus on customer needs. Digital leaders take the initiative by using these tools strategically and connecting them to clear business goals to achieve measurable ROI.
Organizations face challenges in this process. Talent shortages, outdated technology and the change management struggles highlight why investing in people, processes and technology is crucial for ongoing transformation efforts. Companies must also balance short-term gains, like increased productivity, with long-term goals, such as building resilience and agility.
As you consider the insights in this report, understand that taking a systematic, outcome-focused approach to digital transformation can help your organization grow and succeed in an increasingly complex and interconnected world.
TEKsystems Global Services’ Tips to Digital Transformation Success
Digital business transformation isn’t just about technology; it’s also about people, processes and a mindset shift toward innovation and adaptation.
About the Research
TEKsystems Global Services conducted an online survey from November to December 2024 with 855 technology and business decision-makers. Respondents included members of the C-suite, company executives, vice presidents, directors and managers who have final decision-making authority and/or influence on their organization’s digital transformation efforts. The sample includes a balance of decision-makers in enterprise IT and line-of-business functions in the United States, Australia, Canada, China, India, Singapore, Belgium, France, Germany, Ireland, Netherlands and the United Kingdom across a broad spectrum of industries.
Digital transformation is the strategic use of technology to innovate business processes, foster a forward-thinking culture and elevate customer experiences, all in response to shifting market demands.
Our analysis distinguishes between digital leaders and digital laggards to identify potential opportunities and gaps. Digital leaders are organizations with well-established digital transformation plans, where digital processes and mindsets are deeply embedded. In contrast, digital laggards have tentative plans and limited digital transformation initiatives and investments. This report can guide your organization through its digital evolution by leveraging these insights.