Annual Report
State of Digital Transformation 2026
Enhancing Digital Strategy
State of Digital Transformation
Digital Transformation Trends in 2026: How Leaders Use AI, Cloud and Automation To Stay Competitive
As we step into 2026, digital transformation (DX) strategy continues to be top of mind for industry leaders. Organizations today operate in a technological environment defined by relentless change. Agility, innovation and resilience have shifted from being sources of competitive advantage to fundamental requirements enabling organizations to adapt, respond to disruption and seize new opportunities in a dynamic market.
The rapid convergence of AI, cloud computing, machine learning and automation is reshaping the business landscape in real time. These technologies empower organizations to streamline operations, elevate customer experiences and generate new sources of value. Yet, this momentum intensifies the challenge with new and deepened complexities, including cybersecurity threats, regulatory demands, talent shortages and the imperative for sustainable growth.
For C-suite leaders, technology investment decisions shape not just operational effectiveness but also the future state of the enterprise. The choices made today determine an organization’s ability to grow, adapt and remain relevant in a fiercely competitive global market. This report delivers a comprehensive analysis of digital transformation in 2026, spotlighting the most important trends, investment priorities and practical insights to inform strategic decision-making. By contrasting the approaches of digital leaders and laggards, we identify best practices and chart the optimal course for transformation.
Ultimately, digital transformation is about more than adopting new technologies; it’s about creating lasting value and securing long-term growth. As you explore this report, consider how these trends and insights can help your organization achieve its strategic ambitions and thrive amid ongoing disruption.
Prioritize Business Transformation Efforts
Digital leaders are more likely to be satisfied with the progress of the organization’s digital transformation efforts (73% of DX leaders versus 34% of DX laggards).
Our research examines the characteristics of digital leaders to help companies make informed decisions, adapt strategies and accelerate business transformation.
Navigating the Digital Divide
Leaders vs. Laggards
Spending plans for 2026 reveal an intentional process to advancing growth and resilience as organizations fine-tune their digital transformation strategies. However, digital leaders and laggards pursue distinctly different approaches on this journey, highlighting important contrasts in priorities and execution.
Not only are digital leaders more decisive in boosting their investments in digital innovation, but they are also twice as confident as laggards that these investments will generate strong returns. This heightened confidence is rooted in a holistic, enterprise-wide strategy that distinguishes leaders from their peers. Digital leaders are 2.5 times more likely to embed digital transformation initiatives as a core pillar of their business strategy.
Macroeconomic pressures—particularly inflation and shortages of specialized expertise—continue to shape strategic decision-making. Our research explores how organizations are navigating these challenges, balancing ambitious transformation objectives with disciplined financial and operational planning to position themselves for sustained success.
of digital leaders expect to increase spending in 2026
(compared with 55% of digital laggards).
Industry Insight
Confidence in Digital ROI Falls Short
Healthcare leaders show the lowest confidence in digital ROI—only 29% feel very or extremely confident, compared to 37% across all industries. The data underscores the importance of aligning healthcare’s digital investments with tangible business outcomes.
Evolving Expectations for Transformation ROI
Spending plans for digital transformation in 2026 emphasize disciplined investment and clear ROI expectations. Notably, organizations are now less optimistic about rapid returns; while 42% of organizations anticipated ROI within six months in 2025, only 27% expect the same in 2026.
Five percent more of organizations will commit over $10 million to transformation efforts.
Fig. 2.1DX Investments (Per Initiative)
Fig. 2.2Technology Spend Projections
Fig. 2.3ROI Expectations
Digital leaders are 2.5 times more confident that investments will meet ROI expectations.
Fig. 2.4Confidence That DX Investments Will Meet the Expected ROI
Efficiency and Productivity as Top Transformation Priorities
Survey findings show a clear pivot in digital transformation goals: Enhancing employee productivity has surpassed improving customer experience as the top priority. This shift reflects a recognition that empowered, efficient teams are the foundation for delivering better outcomes across the business. AI is a major catalyst behind this change, enabling organizations to automate routine tasks, provide real-time insights and augment decision-making—freeing employees to focus on higher-value work.
Operational efficiency has also risen in importance, signaling a move toward strategies that combine workforce enablement with cost optimization. Together, these trends highlight a more inward-focused approach to transformation, where technology amplifies human potential before creating value for customers.
But even as organizations focus on productivity and efficiency, they must keep the customer at the center of every decision. Digital transformation succeeds when employee enablement ultimately translates into better experiences and outcomes for the customers they serve.
Fig. 2.5Top DX Goals
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202620252024Top DX Goals
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39%35%30%Enhance employee performance/productivity
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36%30%31%Reduce operational inefficiency
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32%33%35%Improve customer experience and engagement
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31%35%34%Replace or upgrade legacy IT systems
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30%27%29%Transform existing business processes
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28%26%25%Increase/achieve innovation
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23%25%25%Bolster cybersecurity
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20%21%24%Gain competitive advantage
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16%19%17%Introduce new products or services
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15%15%18%Improve employee experience
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14%17%16%Introduce new business models / revenue streams
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13%16%17%Increase speed to market of existing products or services
Industry Insight
Focus on Operational Efficiency
In healthcare (58%), energy (52%) and retail (49%), CIOs are prioritizing efficiency—shifting digital programs to streamline operations creates quick wins, freeing capacity, funding innovation and accelerating measurable ROI beyond productivity gains.
Industry Insight
Unlocking Operating Agility
With one-third of financial services firms struggling with rigid processes, they can seize the moment: Redesign operating models to accelerate transformation, reduce complexity, and create a foundation for scalable digital innovation and ROI.
Confronting Complexity in the Digital Journey
Digital transformation brings a unique set of challenges that organizations must tackle with intention and strategy. As businesses work to harness emerging technologies and unlock the full value of enterprise-wide change, they encounter hurdles across increasingly complex technical landscapes and evolving business environments. The complexity of current environments is the top challenge and increasingly difficult to navigate, affecting 38% of organizations, up from 33% in 2025.
Top Digital Transformation Challenges
Budget overruns continue to challenge organizations, with unexpected or escalating costs from digital transformation impacting 30% of businesses. Creating a culture of continuous learning and upskilling or reskilling the workforce follow next at 26%, underscoring how critical talent development is for sustaining change. Close behind, security concerns and compliance constraints sit at 25% and highlight the tension between innovation and risk management in highly regulated environments. Operating-model transformation complications, also at 25%, reveal how rigid legacy processes can slow progress and encumber the implementation and scaling of new technologies.
Together, these hurdles show that transformation isn’t just about technology—it’s about people, governance and the ability to adapt core business models.
Fig. 2.6Top DX Challenges
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202620252024Top Challenges
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38%33%32%Complexity of current environment / siloed mindset and behaviors
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30%29%26%High or unforeseen costs associated with digital transformation
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26%27%25%Creation of a culture of continuous learning / upskilling or reskilling of workforce
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25%23%23%Security concerns and compliance constraints
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25%22%22%Operating-model transformation complications (Current business processes are too rigid.)
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24%22%27%Gaps in technical talent
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23%24%20%Alignment of digital transformation with business objectives/KPIs
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23%23%24%Economic uncertainty affecting budgets
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22%21%24%Change management and implementation complications
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20%23%21%Too many competing tech priorities
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15%21%22%Lack of internal alignment (digital vs. traditional business)
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15%19%20%Lack of strategy around digital initiatives
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8%11%13%Lack of senior-level support
The Digital Business Transformation Framework:
People, Processes and Technology
Digital transformation means more than adopting new tools; it means organizations create a foundation where people, processes and technology work in harmony to drive lasting change. While technology often takes center stage, true transformation starts with empowering individuals and rethinking how work gets done. A strong framework that balances these three pillars ensures organizations can adapt quickly, innovate effectively and deliver value at scale.
Achieving this balance isn’t easy. Many organizations still struggle to align these three pillars, often investing in technology while overlooking the cultural and operational shifts needed to make it work. People remain the catalyst for change, processes provide the structure, and technology acts as the enabler. But success depends on integrating all three to drive collaboration, agility and measurable outcomes. A well-designed framework ensures that transformation is more than a series of disconnected initiatives—a cohesive strategy that scales across the enterprise.
in 10 organizations face skills gaps in areas like AI, machine learning and cybersecurity.
People: Building a Modern Workforce for the Future
Breaking Down Data Silos and Improving Access
Skills gaps in critical areas like AI, machine learning and cybersecurity now affect nearly 9 in 10 organizations, impacting not just IT but every function across the enterprise. Digital tools like AI, low-code/no-code platforms and advanced analytics have become embedded in daily workflows, and all employees must be equipped with the right skills to drive productivity and innovation.
As a result, half of organizations are prioritizing workforce development to ensure digital transformation initiatives deliver meaningful results. Addressing these widespread skills gaps requires innovative, organization-wide talent strategies—enabling companies to acquire and cultivate the expertise needed to modernize their workforce and fully realize the benefits of digital transformation.
Fig. 3.1Actions for People
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202620252024Top Actions For People
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49%45%43%Train employees with digital skills across the organization
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41%42%38%Offer training and development programs focused on new behaviors/mindsets
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38%38%40%Drive adoption of new tools and technologies
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38%38%39%Establish new ways of working/collaborating with internal and external partners
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37%40%40%Focus on retaining, engaging and developing existing employees versus recruiting new employees
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35%40%35%Identify skills required to deliver digital products and/or services in the organization’s portfolio
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35%36%37%Quantify the gap between current and needed skills to deliver digital products/services
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24%20%24%Set 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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4Software development/engineering
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5Automation
Fig. 3.4 Time to Find Critical Talent
Percentage that Takes More than 6 months to Find Critical Talent
Process: Taking an Iterative Approach to Business Transformation
Key Gap in Change Management
The strategic deployment of digital technologies to streamline and scale business processes remains central to successful transformation initiatives. Organizations are increasingly focused on making information more accessible—nearly half are prioritizing digital tools that break down data silos and enable seamless access across the enterprise. This enhanced accessibility supports better decision-making, accelerates time to market and elevates the customer experience.
Alongside these efforts, 46% of organizations are actively updating standard operating procedures to integrate new digital technologies, ensuring that processes evolve in step with innovation. However, only about a quarter are prioritizing change management strategies as part of their transformation agenda. This limited emphasis on change management raises concerns as it may leave organizations vulnerable to employee resistance, misalignment and engagement challenges that can undermine digital initiatives.
To maximize the impact of transformation, organizations should elevate change management as a strategic priority. Comprehensive plans, including senior leadership buy-in, clear communication, targeted training and stakeholder engagement, are essential for aligning teams with transformation goals and fostering a culture of adaptability and continuous improvement.
Fig. 3.5 Actions for Process
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202620252024Actions For Process
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47%48%45%Implementing digital tools to make information more accessible across the organization
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46%46%43%Modifying standard operating procedures to include new digital technologies
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44%42%41%Implementing digital tools to facilitate analysis of complex information
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37%37%36%Implementing digital self-serve technology for employees’ and business partners’ use
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34%32%37%Creating a network of cross-functional teams with end-to-end accountability
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29%31%33%Implementing mechanisms to improve digital governance capabilities
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28%31%34%Adapting business processes to enable rapid prototyping and testing with customers
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27%30%29%Implementing a change management strategy
Fig. 3.6 Remote Workforce Expectations
Technology: Transformation Enabled by the Cloud With AI-Driven Innovation
In 2026, technology adoption continues to be a strategic driver of digital transformation, with organizations leveraging digital platforms to enhance agility, scalability and innovation. The latest data shows that cloud-native platforms and infrastructure as a service (IaaS) remain foundational, with 42% of organizations reporting enterprise-wide adoption of each. These technologies are not only widely implemented but also actively upgraded and refined by 17% to 18% of organizations, underscoring their central role in supporting seamless operations, hybrid work models and rapid development cycles.
Software as a service (SaaS) and mobile internet technologies show strong adoption, integrated by 42% and 39% of organizations, respectively, across multiple business units. This broad uptake reflects a commitment to flexibility and accessibility, enabling organizations to respond quickly to changing market demands.
With 17% of organizations currently running pilots and 37% reporting adoption at scale, generative AI (Gen AI) stands out as the most actively piloted technology in 2026. This signals a shift from experimentation to operationalization as organizations seek to harness Gen AI for content creation, customer engagement and automation of complex tasks. Notably, only 7% report no plans for Gen AI, highlighting its rapid move toward mainstream adoption. Other technologies, such as big data analytics (33% enterprise-wide adoption), automation technologies (31%) and general AI (32%) are gaining traction, supporting advanced analytics, process automation and data-driven decision-making.
While interest in emerging technologies is growing, adoption remains measured—particularly for augmented/virtual reality and blockchain, where 34% to 41% of organizations report no plans for implementation. This caution likely reflects that these technologies tend to have highly specialized, industry-specific use cases. Not every organization finds immediate value in adopting them because their relevance and impact can vary significantly depending on sector needs and business models. For many, the decision to invest is driven by targeted opportunities rather than broad applicability, resulting in a more selective approach to innovation.
As digital transformation accelerates, organizations prioritize technologies that deliver short-term productivity gains and long-term scalability. The convergence of cloud computing, AI and automation is reshaping the enterprise landscape, positioning organizations to innovate rapidly and adapt to evolving market conditions.
Fig. 3.8 Most Impactful Technologies Over the Next 1 to 2 Years
AI: Accelerating Adoption and Impact in 2026
AI Investment Outlook for 2026
AI has become a cornerstone of digital transformation, moving rapidly from pilot projects to enterprise-wide deployment. In 2026, 71% of organizations plan to increase spending on AI technologies, reflecting a strong commitment to harnessing AI’s potential for innovation and operational efficiency.
Leaders vs. Laggards: AI Investment Plans
The gap between digital leaders and laggards is narrowing but remains significant. Seventy-six percent of digital leaders intend to boost AI investments, compared with 61% of digital laggards—a notable rise from just 48% of laggards in 2025. This demonstrates growing recognition across the industry of AI’s strategic importance.
of digital leaders plan to increase AI spending in 2026
(compared with 61% of digital laggards).
Fig. 4.1 State of Artificial Intelligence
When every workflow has an AI counterpart, transformation stops being a program and becomes the operating system of the enterprise.
—Global Financial Services CIO
AI Adoption at Scale
Enterprise-wide implementation of AI technologies has doubled year over year, with 24% of organizations reporting full-scale adoption in 2026, up from 12% in 2025. Among digital leaders, this figure has jumped to 38%, while only 9% of laggards have reached this level of maturity. This disparity highlights the competitive advantage gained by organizations that move quickly to operationalize AI.
Top AI Use Case: Improving Employee Productivity
Improving employee productivity is now the leading use case for AI, cited by 57% of organizations, up from 46% last year. AI-driven solutions are increasingly used to automate routine tasks, enhance decision-making and deliver real-time insights, freeing employees to focus on higher-value work and driving greater efficiency across the enterprise.
Fig. 4.2 Primary Use Cases of AI Technologies
Barriers to AI Implementation: Trust, Ethics and Legality
Despite this momentum, organizations face persistent challenges. Half of respondents cite concerns around trust, ethics and legal considerations as top barriers to AI implementation. Addressing these issues requires robust governance frameworks, transparent data strategies and ongoing stakeholder engagement.
As AI adoption accelerates, organizations must balance ambitious investment with thoughtful execution, ensuring that technology deployment is aligned with business goals, workforce capabilities and ethical standards. Those that succeed will be well-positioned to unlock new value, drive innovation and sustain long-term growth in an increasingly digital marketplace.
Fig. 4.3 Top Challenges Implementing AI
Fig. 4.4 2026 Spending Plans for AI Technologies
Conclusion: Accelerating Value Through Digital Transformation
2026 Outlook: Cloud, AI and Automation Reshape Value Creation
In 2026, digital transformation is firmly established as a strategic priority for organizations seeking to thrive amid constant change. The convergence of cloud, AI and automation is reshaping business models, driving greater agility and enabling new sources of value.
What Separates Leaders From Laggards
While digital leaders and laggards continue to diverge in their approaches, the most successful organizations align people, processes and technology to achieve lasting impact. As transformation goals evolve, the focus shifts toward empowering employees, optimizing operations and building resilience for the future. Overcoming challenges such as skills gaps and implementing change management will be critical to unlocking the full potential of digital transformation.
Next Steps: Benchmark Progress and Act on Opportunities
As you consider the insights in this report, use them to inform strategic decisions, benchmark your organization’s progress and identify actionable opportunities to drive digital transformation and long-term growth.
TEKsystems’ Tips for Focused Digital Transformation
Digital business transformation isn’t just about technology; it’s also about people, processes, and a mindset shift toward innovation and adaptation.