Digital transformation has become an immensely popular phenomenon in the last decade, with the COVID-19 pandemic accelerating it even further. The term ‘digital transformation’ means businesses are integrating digital technology into several operational areas of their company in order to fundamentally change how it operates and provide added value to its stakeholders.
An interesting fact to note is that some businesses not only had to shift their own operations to remote, but also needed to help their clients and partners digitally transform their working environments as well. It became apparent that not every organisation was ready to completely transform due to lack of procedures, tools, and knowledge. As a result, many businesses, who were better prepared to pivot, gained a competitive advantage over their competitors. Therefore, it has become increasingly evident that every company needs to prioritise developing their digital capabilities in a timely manner.
In 2021, the world entered a “new normal” with the demand for software development booming. Numerous organisations marked the beginning of their digital journeys and are now embracing 100% remote working. Irrespective of geographical boundaries, the remote culture is attracting talent from different parts of the world. The year also witnessed a growing number of mergers and acquisitions of smaller businesses by the big giants within the IT industry, in comparison to other sectors.
How digital transformation is shaping the software industry
The software industry has always been one of the most dynamically developing sectors, however, the growth of the space has been accelerated by the digital shift. In today’s post-pandemic society, planning operations with software quality and customer experience in mind has become a critical aspect for business growth in the digitally transforming world. This is evident through the mounting adoption of technologies including cloud computing, Internet of Things, virtual reality, AI, and machine learning. This adoption of digital technologies has been expedited by three to four years due to the COVID-19 pandemic.
As a result, software development – that previously was associated with expensive costs and legacy technology – became the focal point of businesses’ digitalisation efforts. In order to strengthen their digital strategies, organisations have started relying upon experts for knowledge on data, AI, cloud computing and other software technologies. Accelerated by increased virtual and online operations, the amount of customer data collected continues to grow at a staggering rate and requires software capabilities to be processed and analysed. This continued rapid growth of digital technologies is predicted to take the software industry to the next level in 2022 with revenue expected to exceed $626,451 million in comparison to $578,020 million in 2021, and further projected to reach $824,848 million by 2026.
Technologies that will lead the first half of 2022
The adoption of AI, machine learning, big data, and cloud offerings will not slow down; plus, the rise of intelligent data platforms is expected to grow in 2022. Cloud computing has been paving the way for businesses’ digital transformation and has been an immensely popular technology throughout 2021. And it’s only expected to grow further in 2022 in line with increased virtual shift and greater adoption of cloud offerings. According to Gartner, 85% of organisations will embrace cloud by 2025 and it will be the focal point of the digital experience, taking its global revenue to $474 billion in 2022 from $408 billion in 2021.
While cloud computing has been growing, AI and machine learning are not far behind in driving growth within the sector. 2022 is expected to see AI converging with data and cloud, which demands an advanced management approach. The new year will also witness organisations shifting their focus towards AI-enabled transformation due to its business-focused solutions. The technology has been marking its success in a range of industries including healthcare, environmental and automotive. For instance, AI is already being used to detect diseases such as cancer more accurately and in very early stages, as well as enabling healthcare professionals to better understand patients’ day-to-day needs. This success of AI and machine learning will only continue to rise and drive the overall growth of businesses digital transformation efforts.
Expected challenges that software companies could face
It’s clear that the UK faces a significant digital skills shortage across most sectors, alongside significant challenges in terms of finding the right talent. Partnerships with global technology service providers can help deliver solutions faster for those with limited budgets, through access to skilled engineers that are working remotely. On the other hand, employees in the UK have been presenting new demands in the post-pandemic world. The year 2021 saw several employees ready to resign if not offered greater flexibility by their employers. To handle this challenge of dynamic demands from staff, businesses must consider creating an equal presence in both virtual and in-person spheres. This equivalence can not only retain talent but also provide companies with greater operational balance.
Another challenge that the industry needs to overcome is cybercrime, which is expected to increase in 2022 due to digital growth and employee demands of work-from-home. Ransomware will continue to be a critical tool for many organisations and they will need to continue working on their security solutions and strategies. Although with the appropriate implementation of cybersecurity measures, this challenge can be overcome, but, the concern should not be overlooked.
To conclude, it wouldn’t be an exaggeration to say that advanced trends in technology have transformed how businesses operate and are capable of driving a bigger transformation in 2022. Although the increased digital approach creates some challenges, they all can be overcome with an appropriate implementation of different technologies.
