7 Digital Transformation Predictions for 2024
As we enter 2024, many wonder what will come next for digital transformation. Headlines certainly suggest 2023 was the year of AI – in particular, the emergence of generative artificial intelligence led by programs like ChatGPT. That said, numerous other shifts occurred over the past year and 2024 looks to be the same way. While certain advancements may get more attention, the reality is several prominent factors will shape 2024’s biggest digital transformation trends. Looking ahead to the next year, we predict seven developments will have an unusually large impact on digital transformation. These include Agile product development, sustainability, the evolving workforce, spatial computing, cybersecurity, and yes–of course–AI.
Hardware will embrace Agile product development
Agile is a fickle achievement. Many organizations claim they are Agile right now, when in fact they are only agile (confusing, right?). For those curious, we have a full whitepaper on understanding the fundamentals of Agile product design, but basically it comes down to working in continuous, iterative development cycles vs. stages of approval. Agile encourages daily communication, continuous feedback, and rapid inter-departmental work toward an agreed upon, measurable goal.
As a result, the companies that are truly embracing Agile product development when creating physical products tend to see more repeatable work rates, reduced levels of risk, and improved time to value. No small wonder then, that when asked where their organization stood on using Agile product development for physical products, 28% respondents that self-identified as leaders in PTC's recent DX survey answered that Agile was implemented and fully utilized, compared to only 17% of self-identified laggards. These lagging companies were instead more likely to say they did not use Agile product development on physical products (25% vs. 19%).
Our research also shows sizeable investment in Agile by all respondents (though of course leaders tended to be farther along). As the benefits of Agile product development become more apparent in physical product development, we expect the differences between leading and lagging manufacturers to grow more pronounced and the implementation of Agile principles to continue, if not escalate. Agile has already revolutionized software, and in 2024 it will make strides towards winning over hardware too.
Software and hardware will become increasingly inseparable
Software pioneer Marc Andreessen once said that software will eat the world, and while this was figurative – it is no exaggeration. Software is increasingly present in areas where it didn’t used to exist, including hardware. Smart connected products are now the norm, leading to new customer expectations, as well as new standards and regulatory compliance for manufacturers. To better ensure synergy, hardware and software are often developed side-by-side, or at the very least with heightened communication between teams.
In the coming year, we will see this collaboration expand and software continues to enter new spaces it didn’t before occupy. This union will place greater pressure on application lifecycle management (ALM), or the control of development, maintenance, and regulation compliance. ALM lays a needed foundation for collaboration between software teams and hardware teams, ensuring better communication and fewer mishaps. While ALM is not inherently Agile, its principles and methodologies often overlap Agile product development, which will compound its adoption in the hardware space as well.
PTC believes in the integral importance of ALM for the digitally transformed organization, which is a large part of the reason behind our purchase of leading ALM technology Codebeamer in 2022. Software has eaten the world and smart connected products need an infrastructure to ensure optimum efficiency and compliance.
AI usage will spread, but with complications
AI had an enormous year in 2023 and it shows no signs of slowing down in 2024. That said, we don’t expect the headlines to be all positive. AI ethics researcher Sasha Luccioni recently appeared in a TED Talk (video below) to take a practical look at where generative AI stands now. The results were mixed: No, AI is not imminently set to replace the human workforce and yes, it can be truly, very helpful – but there are drawbacks.
Legal battles are already beginning as a result of generative AI. Authors, artists, and other creators are pushing back hard on the assumption that their life’s work can be taken and manipulated without consent or compensation. Given the number of legal battles already unfolding, it is difficult to see the current usage of generative AI continuing without some restriction or regulation.
In addition, as more users flock to generative AI tools, biases and inconsistencies have emerged. Tools like ChatGPT do not understand the difference between truth and fiction, nor do they possess any innate morality. As such, users searching for information on certain topics can receive false or outdated information, and users searching for quick visuals on certain jobs or personality types frequently receive stereotypes as a result.
That said, the benefits of AI will continue to compel its adoption. Many companies have already leveraged its potential to improve product creation, efficiency, and ease the workload of certain employees. Its uses, however, go beyond to additional benefits in the manufacturing space. PTC is already using generative design, an AI tool that helps engineers explore new possibilities for material usage, design structures, and help automatically deliver effective, efficient CAD solutions.
AI is also utilized in Vuforia Step Check, an augmented reality tool that automatically reads and registers pass or fail states, informing the user if they have performed a task correctly, or alerting them that further action is needed. ThingWorx also uses AI in the form of machine learning, a practice that automates the building of complex data analytics models, allowing users to fully see and understand how their hardware is functioning, and where improvements should be made. AI, for all its hype, is just a tool – but it is arguably the most incredibly versatile and powerful tool humanity has ever created. 2024 will be a shaping year, guiding how AI should and shouldn’t be used going forward.
Implementing sustainable practices will grow in importance
The impacts of climate change unfortunately loomed large in 2023, with notable storms, droughts, and wildfires causing destruction and the loss of habitat, human lives, or both. As the climate crisis mounts and more people demand action, governments (and shareholders) are listening. In the US, the largest anti-climate change bill was signed into law, and in October the EU began using its Carbon Border Adjustment Mechanism tool to better measure and tax any carbon-intensive products that are entering the EU.
The message is clear: If organizations continue to ignore or downplay their environmental footprint, regulations will hold them accountable – and cost them a pretty penny in the process. Thinking about it more positively, however, is the other reality that growing awareness around climate change is creating real opportunity and pressure to make things better. This improvement has been shown to drive increased performance, as data shows organizations that are meeting their sustainable development goals tend to out-perform their competition. Of course, in order to improve sustainable efforts across a business, a decision maker must first understand what each and every existing process looks like. One of the goals of digital transformation is transparency. Thanks to software solutions like PLM tools or augmented reality, it is easier than ever for a user to see the impact of certain operational processes. Data from these tools can expose flaws we may have missed, true, but also shows pathways to improvement.
Being sustainable is often looked at purely in terms of the environment, and while we don’t disagree with that focus, there are more profit-oriented ways to view sustainability efforts. For instance, global brewer the Carlsberg Group improved its sustainability as part of a larger initiative to increase overall equipment efficiency. By connecting its systems and having stronger visibility into its processes, the Carlsberg Group was able to reduce waste, cutting costs and improving its carbon footprint.
Sustainability will become even less of a choice in 2024, and the organizations that are proactive in making sustainability a focus of their digital transformation will likely see an enormous advantage over those that must be dragged kicking and screaming toward a more sustainable future.
The evolving workforce will challenge old thinking
Generation Z employees are now firmly cemented into the workplace and will make up the entirety of completely new hires going forward. While they will be a minority in the overall workforce for some time, the reality is clear: New talent is coming, and as digital natives, their expectations and ideas may seem very different from traditional workflows. Every generation is shaped by the world they grew up in, and Generation Z has a stronger emphasis on climate change, social responsibility, flexibility, and digital workflows.
One clear area where Gen Z and other digital natives may challenge old thinking is Agile product development. Recent data from PTC shows that self-identified lagging companies often cite internal reluctance as a barrier to Agile product development. Laggards were 72% likely to say this was their biggest pain point, which is almost double the sentiment felt by leaders (40%).
While age is not directly linked to tradition, it is expected and realistic to think manufacturers with a lot of industry experience may be less inclined to risk productivity and profitability on newer methods of product development, especially those they feel are untested. Nevertheless, Agile is a great example of a digital-first workflow – one where the greatest benefits are arguably felt in hybrid, flexible work environments.
The expectations of Generation Z employees reflect the need for businesses to make changes to traditional workflows, some of which have been static for nearly a century. This is the first generation grown entirely after the mass adoption of the internet, when digital transformation really kicked into full swing. Generation Alpha and other future generations will only bring more of this digital-first preference to the workplace.
The spatial transformation will accelerate
Spatial computing has taken many forms over the past several years. The reveal of the Oculus Rift in 2015 placed a large emphasis on virtual reality, with devices like Google Glass and Microsoft HoloLens ensuring augmented reality also emerged into enterprise work environments. These technologies have always been related and communicate one message: Digital is going spatial. It may not happen quickly, but this transition is already roughly eight years into its lifespan.
Adding spatial context allows users to interact with data and content more easily and efficiently. It also brings a new level of maintenance optimization, and remote collaboration in general, by not just letting a remote user see or hear the space, but rather experience it as if they were physically present. PTC data shows that 62% of respondents are either already evaluating these kinds of solutions, or plan to do so in the short-term.
The spatial revolution has been building for years, creating a foundation of technology that will be used to propel a new level of digital experience. The release of Apple’s Vision Pro (revealed in the video below) sometime in 2024 represents the next significant step in this transformation. To date, the movement into spatial has been slow and gradual, but acceleration is possible as more users, business and personal, experiment with this technology.
At PTC, we’ve been experimenting and developing spatial computing solutions for some time. Programs like Vuforia Spatial Toolbox, and concepts like our industrial metaverse, point to continued efforts in this space – and we’re sure we’ll have more exciting development to announce in the future.
Cybersecurity will remain in the focus of digital development
Throughout all of this evolution, the need for cybersecurity remains a constant. Cybercrime is growing more sophisticated, in part thanks to the advent of AI. Luckily, AI will also be used to better test and refine data protection initiatives. The change goes deeper than this, however, and reflects part of a larger shift: secure by design. As cyberattacks have grown more numerous and more aggressive, IT developers are responding, creating new solutions with security as a top priority throughout the design and implementation process. The result is a strengthening infrastructure that will make accidental data breaches harder and even prevent some malicious activity.
With secure by design becoming standard, organizations can move toward cyber resilience. Defined by the National Institute of Standards and Technology, cyber resilience is “the ability to anticipate, withstand, recover from, and adapt to adverse conditions, stresses, attacks, or compromises on systems that use or are enabled by cyber resources.” Those curious to understand more about cyber resilience and what separates it from cybersecurity can watch Microsoft’s Mark Simos speak about it here:
As organizations better integrate and automate their infrastructures, they will gain a level of visibility not previously possible. Cyber resilience is yet another benefit of fully realized digital transformation initiatives, and one that businesses will prioritize in 2024 and beyond.
Final thoughts
2024 will not be unique in terms of digital transformation trends. Nothing exists in a vacuum and many of these innovations and developments are directly correlated with each other. AI, for instance, will touch many areas of workplace evolution and play a key role in improving existing workflows or unlocking entirely new ways to do business. The same can be said of spatial computing, Agile, and the growing emphasis on sustainability. While there will likely be surprises in 2024, one thing is certain: Digital will continue to transform physical.