IDC FutureScape

IDC FutureScape: Worldwide Intelligent ERP

2025 Predictions
Mickey North Rizza Kevin Permenter Bo Lykkegaard Daniel-Zoe Jimenez
Zachary Chertok Edyta Kosowska Heather Hershey Ashok Patel
Patrick Reymann

IDC FUTURESCAPE FIGURE

FIGURE 1

IDC FutureScape: Worldwide Intelligent ERP 2025 Top 10 Predictions

Note: Marker number refers only to the order the prediction appears in the document and does not indicate rank or
importance, unless otherwise noted in the Executive Summary.
Source: IDC, 2024

October 2024, IDC #US51078024

EXECUTIVE SUMMARY
Organizations are at a precipice as the weight of the artificial intelligence (AI) digital
world comes forward. Digital transformation, SaaS and cloud-enabled, and enterprise
application modernization have been the pathways for organizations as they embrace
the plethora of technology changes in recent years. These changes are huge
investments, reshaping not only this relatively new digital world but also a much-
needed movement to more automation of business processes. With more business
processes automated, employees can now work smarter and in less time help the
business navigate to better performance.

In the past few years, artificial intelligence has come to the forefront as an aid that has
brought more into the business processes, reducing long workflows into shorter
processes, enabling the employee to quickly gather insights and make more intelligent
business decisions fast. AI and its many flavors have started a new technology
evolution that is even more pronounced and significant to organizations globally. This
AI everywhere evolution, which includes all generative AI (GenAI), has been in the early
stages of organizational acceptance and experimentation during 2024, with many proof
of concepts (POCs) and new products emerging. Fueling this growth is the opportunity
for organizations to improve their technology underpinning with more automation,
improved decision velocity, and an ability to be more agile while scaling quickly to meet
the digital world economy needs. In this IDC FutureScape, the IDC worldwide enterprise
application team has recognized the changes that are and will continue to occur for
organizations as they embrace the innovation of AI, and particularly GenAI.

The 2025 predictions for the worldwide intelligent ERP and enterprise application
technologies overall are as follows:

▪ Prediction 1: By late 2025, 35% of organizations will harness the power of the
digital worker and accelerate employee skills training to drive improved resource
collaboration and greater valued outcomes.
▪ Prediction 2: By 2026, 40% of the G2000 will utilize tools provided by enterprise
app vendors to create their own highly customized GenAI capabilities grounded
in their data to maximize value and boost KPIs.
▪ Prediction 3: By mid-2026, 60% of G2000 will have new KPIs to align AI-infused
processes and employee's workflows, which will drive 45% improvements in
overall operational efficiency and employee productivity.
▪ Prediction 4: By late 2026, 65% of organizations will leverage AI to bring
immediate employee and business value with AI-driven technology assistants,
advisors, and agents enabling improved decisions.

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 ▪ Prediction 5: By 2027, 75% of global businesses will have begun the process of
incrementally decoupling monolithic enterprise apps via the "strangler pattern"
to continue future proofing their organization.
▪ Prediction 6: By mid-2027, 55% of global organizations will use their ERP
systems as a primary hub for ESG-related efforts to more effectively weave and
measure sustainable practices throughout their operations.
▪ Prediction 7: Driven by AI and autonomous agents, in 2027, 40% of G2000 will
utilize their ERP systems as value engines, transforming decision support to
contextual insights.
▪ Prediction 8: By 2028, 70% of organizations worldwide will adopt unified,
electronic invoice exchange and compliance as a service because of new e-
invoicing mandates and technology advancements.
▪ Prediction 9: Leveraging GenAI, by 2028, 45% of G2000 will consolidate lines of
business into fewer functions, optimizing their processes, data, and resources,
building a new resource-savvy enterprise.
▪ Prediction 10: Because of GenAI, by 2029, 80% of today's organizational
workflows will be automated into an optimized digital factory, with 50% of G2000
embracing a new business resource structure.
This IDC study presents the top 10 predictions and key drivers for intelligent
ERP/enterprise applications over the next five years. The AI everywhere digital world is
upon us. Organizations continue to embrace its innovation along with digital
transformation activities that include modernizing their enterprise applications to SaaS
and cloud enabled. Generative AI has left a profound impact as it emerges and is being
applied to existing workflows. Assistants, agents, and advisors have emerged to help
organizations adopt quickly to the new digital coworker collaborative toolsets. This
adoption will help organizations improve their processes and the employee's work and
reshape the organization to become an AI-fueled business with more autonomous
workflows.

"Organizations are at a crossroads with many technology activities including digital

transformation, enterprise application modernization, automation of workflows, AI
experimentation, and enabling more optimized processes to aid the employees in their
flow of work," said Mickey North Rizza, IDC group vice president, Enterprise Software.
"IDC finds the digital coworker will completely transform the organization's use of
enterprise applications and bring in additional focus on more native AI applications.
This shift means the organizations will be reshaped over time in the employee and
technology methods of work, technology architecture, employee skills, KPIs, and finally,
the structure of the organization."

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IDC FUTURESCAPE PREDICTIONS

Summary of External Drivers

▪ AI-driven business models — Moving from AI experimentation to monetization
▪ The drive to automate — Toward a data-driven future
▪ Battling against technical debt — Overcoming hurdles to IT modernization
▪ Regulatory flux — Navigating compliance challenges in a shifting policy
landscape
▪ Responsible and human-centric technology — Ethics in the enterprise
▪ Future proofing against environmental risks — ESG operationalization and
risk management
▪ AI-driven workplace transformation — Building tomorrow's workforce today

Predictions: Impact on Technology Buyers

Prediction 1: By Late 2025, 35% of Organizations Will Harness the
Power of the Digital Worker and Accelerate Employee Skills
Training to Drive Improved Resource Collaboration and Greater
Valued Outcomes
The shift to digital skills orchestration is underway — IDC recently found a 97%
likelihood among companies to signal an intent to concentrate on digital knowledge
management, personalized learning, and integrated employee skilling in the flow of
work over the next 12–18 months (source: IDC's Human Capital Management Survey,
August 2024; n = 512). Over the past 12 months, digital learning and skilling have
already seen rapid and renewed interest from HR and non-HR stakeholders alike as
companies seek out new ways to meet or exceed the changing landscape of CEO-led
objectives and key results (OKRs).

At the center of the storm is a trending inability among workforce leaders to reconcile
business and employee performance management models and timing in a way that
equitably drives the right resources to the right employees at the right times and
locations in support of evolving OKRs. Early movers are already starting to invest in
defined resource management strategies, leading to early trends in associated
improvements in key performance indicators (KPIs) including CSAT, ESAT, and revenue
growth.

As digital resource orchestration continues to drive KPIs in the right direction, IDC
expects to see a significant rise in digital resourcing enablement using tools like

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learning experience management (LXM), digital assistance, digital agents, and
integrated employee workspaces (IEWs).

Associated Drivers
▪ Responsible and human-centric technology — Ethics in the enterprise
▪ AI-driven workplace transformation — Building tomorrow's workforce today
▪ The drive to automate — Toward a data-driven future
IT Impact
▪ HR will partner with IT to structure AI resource orchestration using behavioral
modeling built out of data and insights gathered from the voice of the employee.
▪ IT will need to reskill to support AI over predictive analytics while learning to
interpret what HR and other operational stakeholders ask of them.
▪ IT will be challenged to manage digital spend scrutiny against the data and asset
asks being levied on them by non-IT stakeholders including HR.
Business Impact
▪ AI-personalized resourcing will better align employees to the changing state of
the business, reducing disengagement and attrition risks, and aligning career
growth with both constant and emerging employer needs.
▪ AI knowledge orchestration will help employees better and more responsively
service customer requests with greater accuracy, timeliness, and capacity.
▪ The rise of "access anywhere" models will concentrate more on employee needs
for information and resources in the flow of work, sustaining more independent
employee development within the context of OKRs and challenging rigid
permissions structures.
Guidance
▪ Consider where knowledge resources are located within the organization, the
systems that house them, and what the current state of data-defined access
permissions looks like. Frame a future state around AI-driven orchestration from
any foundational source with permissions structured around the employee
record rather than the conditions of the asset being accessed.
▪ Choose a knowledge and resource management vendor partner that can
consolidate resource access point markers and/or the resources themselves to
consolidate access drives behind one digital assistance provider.
▪ Partner internally with IT to broker the elimination of access silos between HR
and non-HR stakeholders. Rely on IT leaders to design, explain, and justify cross-
functional orchestration design to build internal buy-in to resource management

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 that does not rely on managed permissions by human-centered centers of
excellence (COEs).

Prediction 2: By 2026, 40% of the G2000 Will Utilize Tools Provided

by Enterprise App Vendors to Create Their Own Highly
Customized GenAI Capabilities Grounded in Their Data to
Maximize Value and Boost KPIs
During the current phase of "AI scramble," organizations with cloud-based enterprise
applications are adopting AI-infused functionality as it becomes available during
quarterly or semiannual releases. Across 2,875 respondents in IDC's 2024 SaaS Path
Survey, 40.6% said they are already using GenAI in their applications. And if a vendor
doesn't have GenAI, 25.4% of organizations plan to replace their current applications.
Such AI-infused features constitute quick wins for customers by boosting productivity
across application-centric workflows. However, as organizations move into the
upcoming "AI pivot" phase, the need for more advanced and customized AI capabilities
as well as AI-centric applications will evolve.

IDC finds the enterprise-grade application vendors are supplying AI platform tools to
satisfy some of the need of industry- or organization-specific AI use cases. Especially in
use cases that build mainly on application data, building such functionality using
platform tools of the application vendors is becoming very attractive to many
enterprise-grade application customers. These application-bundled platform tools can
enable customers to leverage authentication, access control, data management, and
language models of the application. This can speed up the development of new
functionality and reduce development complexity.

Associated Drivers
▪ The drive to automate — Toward a data-driven future
▪ Regulatory flux — Navigating compliance challenges in a shifting policy
landscape
▪ Battling against technical debt — Overcoming hurdles to IT modernization
IT Impact
▪ The development teams behind such new, custom-built AI applications will
benefit from faster time to market and simplified application architectures
because certain data and functionality are "inherited" from the business
application.
▪ To leverage such application tools when building new, advanced AI applications,
IT functions must build up skills in the AI platform tools supplied by the
application vendor.

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 ▪ The IT department could face additional licensing costs as the AI application
accesses the data in the enterprise application. There will most likely be licensing
costs related to the application that is using the AI development tool.
Business Impact
▪ The business impact of advanced, custom-built AI applications is likely to be
much higher than embedded AI functions within enterprise applications.
Enterprise applications generally cover horizontal AI use cases that are widely
applicable, while custom-built AI applications can enable new products, services,
or business models and are a potential source of competitive advantage.
▪ Organizations that are looking to apply enterprise application data in new,
custom-built AI applications can — using accompanying platform tools for AI
development — reduce time to market and simplify development compared with
general-purpose AI platforms.
▪ One consequence of using platform tools to extend enterprise applications into
custom-built AI solutions is that the organization commits further to the supplier
of these applications and tools. This strategy is only advisable for the go-to
application platforms of an organization.
Guidance
▪ Choose an enterprise application with a solid AI extension road map. As part of
selecting enterprise applications, the platform tooling of each application is an
important selection criterion. Some of this tooling, especially on the AI front, is
unlikely to be generally available today, but buyers must take into consideration
the AI platform road maps of each application provider.
▪ Carefully assess each advanced AI use case in terms of the best-suited
development environment. The application-centric tools could be the best choice
when the AI application relies strongly on data and/or workflows in the packaged
application. For loosely connected AI applications, developers are more likely to
use more general-purpose AI development tools.
▪ Ensure pristine data quality in your enterprise applications. After all, this will not
only help the enterprise application users and reporting with reliable data but
also provide a robust data foundation for future, adjacent, custom-built AI
applications residing outside the application.

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Prediction 3: By Mid-2026, 60% of G2000 Will Have New KPIs to
Align AI-Infused Processes and Employee's Workflows, Which Will
Drive 45% Improvements in Overall Operational Efficiency and
Employee Productivity
Key performance indicators are essential for measuring the success of initiatives, goals,
and performance overall. KPIs are valuable because they can be used at the individual,
team, and at the organizational level and provide solid evidence that can help inform
future decisions. Typically, organizations use KPIs to look at their productivity,
efficiency, and overall performance across and within functions. The KPI focus enables
the organization to look at the business processes to bring improved outcomes with an
emphasis on adding automation, changing work methods, or looking for additional
avenues to reduce time to decision velocity.

When implementing AI, organizations find if they look first at the current KPI and
capture that metric as a baseline they can set the foundation of watching the change
occur. And then as the change occurs with AI-infused business processes in the
employee's workflows, they capture the change from the new initiatives, the new
success is uncovered. As the AI-infused process or digital workflow is married with the
employee's workflow, the employee will gain decision accuracy and confidence in the
information brought forward by the digital coworker. This then becomes the new
method of working with an improvement in the decision velocity
(productivity/efficiency) from using AI in the employee's flow of work.

As the trust is gained with the AI-infused processes, many "before AI" processes will
become more autonomous — meaning they will become part of the technology fabric
and a standard the employee can now count on to complete, add information to, or
bring more insights into the employee's flow of work. This change means the previous
less automated workflows are now faster, embedded into the next level up workflow
and enable the employee to get to a decision much faster. AI becomes the pathway to
improved KPIs for organizations. By leveraging applications with embedded AI in the
employee's flow of work, organizations gain faster access to AI innovation (2x multiplier
effect). And by activating AI features on an already existing solution, the organization
can shorten the time significantly to AI impact (3x multiplier effect), bringing even more
improvements.

Associated Drivers
▪ AI-driven business models — Moving from AI experimentation to monetization
▪ The drive to automate — Toward a data-driven future
▪ AI-driven workplace transformation — Building tomorrow's workforce today

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IT Impact
▪ AI-infused workflows can quickly change the use of current enterprise
applications, so "turning AI on within the workflow" is essential for the business
to reap the value.
▪ The original KPIs must be measured and set in stone, so the benefits can be
calculated as they occurred and brought forward to the organization.
▪ Make sure the business understands the expected implications of the AI
workflow and can see a difference with the employee in the loop and then
if/when the process becomes autonomous. The KPI value can be quite distinct
from before AI, with collaborative AI (digital worker and employee) and
autonomously.
Business Impact
▪ The employee doesn't always understand the AI-infused process and how it
differentiates from previous processes. Education and training are critical for the
employee.
▪ AI-infused processes can improve KPIs by automating additional aspects to the
business processes, bringing about new methods of working, and opening up
opportunities to rethink the workflows.
▪ AI within the employee's workflows brings one point of KPI improvement. As the
employee gains trust in it, it can then automate more, making some workflows a
natural part of the next level up workflow. This can help the employee move
through transactional and traditional workflows quicker and give them more
time to manage stakeholder, supplier, and customer relationships.
Guidance
▪ Train and educate employees on how the AI-infused process works and their role
as AI becomes part of their new flow of work.
▪ Record the current pre-AI-infused business process KPI before using the AI-
infused process. And then record the AI-infused process KPIs with the employee
in the loop and then record it if/when it becomes autonomous.
▪ Think about the gains and changes. Efficiency and productivity gains will be
significant, but remember, the employee has many other workflows without AI,
not in an enterprise application, and will now have time to complete these
assignments.
▪ Look at workflows that have more manual or multiple applications dependent
upon the employee to manage. Apply AI-infused processes to these processes
for more KPI improvements.

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Prediction 4: By Late 2026, 65% of Organizations Will Leverage AI
to Bring Immediate Employee and Business Value with AI-Driven
Technology Assistants, Advisors, and Agents Enabling
Improved Decisions
Since late 2022, the constant drumbeat heralding the widespread adoption of AI-driven
technology has been echoing steadily at the top of mind of those tuned to the latest
trends in enterprise optimization. The next phase of AI for business is taking the form
of assistants, advisors, and agents that are revolutionizing organizational efficiency
across various industries. These advanced AI technologies merge predictive and
generative AI with traditional machine learning, creating a composite with functionality
poised to streamline operations and enhance decision-making capabilities. These
agents are adept at automating routine tasks and aggregating vast amounts of data for
insightful, actionable analysis fast enough that the actions can capture the momentum
of the data at scale with precision. Beyond this, they can create their own workflow
logic, refine that rule set based on data and performance outcomes, and approximate a
level of "thinking" that produces a convincing approximation of human thinking, the
latter of which is the truly revolutionary element of this new wave of AI.

AI agents leverage complex algorithms to simulate a high level of cognitive function,

akin to rational thought. This capability stems from the systems' ability to analyze
historical data and ongoing interactions, predict outcomes, and generate responses or
actions that are contextually appropriate and strategically sound. The "thinking"
process in these AI systems is a result of deep learning techniques, where neural
networks mimic the neural structure of the human brain, allowing the AI to learn from
patterns and improve over time without explicit programming for each specific task.
This level of automation and decision-making is revolutionary because it significantly
reduces the latency between data acquisition and action, enabling businesses to
respond to market dynamics instantaneously and with a high degree of accuracy. For
instance, an AI-driven agent in a customer service scenario can predict customer issues
based on interaction history, suggest solutions, and even resolve complex cases that
typically would require human intervention. This not only speeds up response times
but also enhances customer satisfaction by providing tailored, intelligent solutions.

The ability of these AI systems to self-refine their algorithms through continuous

learning and adaptation represents a breakthrough in artificial intelligence. As these
systems encounter new data or outcomes, they adjust their operational models,
thereby improving their efficiency and effectiveness over time. This adaptive capability
mimics human learning and decision-making processes, marking a significant
milestone in AI development. The engineering challenges to achieve this include

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ensuring the AI systems are scalable, secure, and able to handle diverse and complex
data sets without compromising operational integrity or performance.

This deep integration of AI into business processes heralds a new era of enterprise
optimization, where the line between human and machine capabilities will become
increasingly blurred, pushing the boundaries of what is possible in business efficiency
and innovation.

Associated Drivers
▪ The drive to automate — Toward a data-driven future
▪ AI-driven business models — Moving from AI experimentation to monetization
▪ AI-driven workplace transformation — Building tomorrow's workforce today
IT Impact
▪ The deployment of AI-driven technology assistants will necessitate more
sophisticated integration platforms that can seamlessly connect disparate
systems and data sources across the organization. This will drive the need for
more robust middleware solutions and APIs to ensure that these AI tools can
access the necessary data to function effectively.
▪ As AI agents rely heavily on large data sets to make predictions and automate
tasks, there will be a substantial increase in the demand for advanced data
analytics infrastructure. IT departments will need to upgrade their data storage,
processing, and analysis capabilities to handle the high volume and velocity of
data generated by AI systems.
▪ With AI agents accessing and generating critical business data, enhancing
cybersecurity measures will be paramount. IT will need to implement more
advanced security protocols and tools to protect against data breaches and
ensure data integrity as AI systems become more deeply embedded in business
processes.
Business Impact
▪ AI-driven assistants and agents will significantly enhance operational efficiency
by automating routine tasks such as scheduling, customer service, and data
entry. This will allow human employees to focus on higher-value tasks that
require creative thinking and problem-solving, thus improving overall
productivity.
▪ The use of AI to manage and improve customer interactions will transform the
customer experience. Businesses will be able to provide more personalized,
responsive service at a scale previously unattainable, leading to higher customer
satisfaction and loyalty with a caveat. (The caveat is that if the customer prefers

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 authentic human interaction, they should have access to that experience as part
of good CX design.)
▪ AI-driven advisors and technology agents enable businesses to reduce the time
to market for new products and services by streamlining the innovation process.
These AI systems can rapidly prototype, test, and refine new ideas based on
continuous feedback loops with market data, customer behavior, and
performance analytics.
Guidance
▪ Perform a thorough audit of your current IT infrastructure and evaluate the skills
of your workforce to identify gaps. This step ensures you are well prepared to
harness AI technologies effectively, determining necessary upgrades and
workforce training or expansion.
▪ Create a detailed plan for implementing AI-driven solutions, beginning with pilot
projects in key departments. Use these initial projects to measure the impact of
AI tools on business processes and workforce productivity, which will inform
adjustments and scalability for broader implementation.
▪ Implement robust data governance and ethics policies to manage the use of AI
responsibly. Ensuring the privacy, security, and ethical application of AI protects
your organization legally and reputationally while fostering trust among
stakeholders that AI tools are used with integrity.

Prediction 5: By 2027, 75% of Global Businesses Will Have Begun

the Process of Incrementally Decoupling Monolithic Enterprise
Apps via the "Strangler Pattern" to Continue Future Proofing
Their Organization
The evolving IT landscape, characterized by rapid technological advancements and an
increasing regulatory burden, is compelling businesses to reconsider their legacy
enterprise applications. As these systems become more cumbersome and less aligned
with modern demands, organizations are turning to the "strangler pattern" to
modernize their infrastructure. This approach — named after a type of parasitic fig tree
that gradually envelops and replaces its host tree — strategically updates legacy
systems by building new functionality around them until the old systems are eventually
decommissioned. The new AI era requires taking this architectural design paradigm to
a whole new level due to intense competitive pressure to integrate advanced AI and
machine learning capabilities across the enterprise that elevate decision-making
processes, automate routine tasks, and optimize operations.
One of the primary drivers behind this shift is the imperative to address technical debt
— outdated or inefficient code and architecture that hampers operational agility and
innovation. Legacy systems often accumulate technical debt due to prolonged use and

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the patchwork of updates that fail to meet current technological standards. By adopting
the strangler pattern, companies can strategically replace these outdated components
with cutting-edge solutions, including AI-enabled technologies. This transformation
actively boosts efficiency and positions organizations to excel in a competitive, data-
driven marketplace.
The evolving dynamic between tech firms and regulatory bodies resembles an
accelerating game of cat and mouse, with businesses persistently adapting to the latest
compliance mandates. This environment demands that organizations be exceedingly
agile, a challenge given the rigidity of monolithic architectures. Organizations that
embrace the gradual decoupling of monoliths in favor of modular, composable, API-
first, and cloud-native technologies that can quickly assimilate new innovation like AI
find themselves better positioned. This strategic shift, enhanced by advanced AI
integration, facilitates smoother, more cost-effective transitions. By adopting such
technologies, organizations can rapidly adjust to new regulations as AI-driven systems
can preemptively identify compliance needs and automate the necessary adjustments
without human intervention. This not only ensures ongoing compliance more efficiently
but also empowers businesses to swiftly adapt to future legislative changes. This
proactive approach positions early adopters as leaders, moving away from outdated
systems and toward the robust, scalable architectures of tomorrow.

Associated Drivers
▪ Battling against technical debt — Overcoming hurdles to IT modernization
▪ The drive to automate — Toward a data-driven future
▪ Regulatory flux — Navigating compliance challenges in a shifting policy
landscape
IT Impact
▪ IT departments can more swiftly integrate new technologies and services into
their operations, enabling quicker adoption of advancements like AI and machine
learning.
▪ Modular systems allow IT to scale solutions more efficiently and tailor services to
specific business needs without disrupting existing operations.
▪ Advanced AI capabilities embedded in modern architectures can automate the
detection and implementation of compliance requirements, reducing the burden
on IT staff and minimizing human error.
Business Impact
▪ Businesses adopting modular, API-first architectures can more readily comply
with evolving regulations, reducing the risk of penalties and enhancing their
reputation for data stewardship.

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 ▪ Organizations that shift from monolithic to composable systems can respond
more dynamically to market changes and consumer demands, improving their
competitive edge and market responsiveness.
▪ By facilitating incremental updates rather than complete overhauls, companies
can manage costs more effectively, allocating resources to innovation rather
than to correcting outdated systems.
Guidance
▪ Evaluate and plan architectural shifts and build for rapid pivots. Start by
assessing your current IT infrastructure to identify areas where monolithic
systems can be gradually replaced with modular, API-first solutions. Develop a
strategic road map for this transition, prioritizing areas that will most directly
enhance agility and compliance capabilities.
▪ Invest in skills and big picture ecosystem partnerships. Ensure your team is
equipped with the skills necessary to manage and maximize the benefits of a
composable, cloud-native architecture. Consider forming strategic partnerships
with technology providers that specialize in advanced AI and modular systems to
leverage their expertise and accelerate your transformation.
▪ Implement continuous compliance monitoring. Utilize AI-driven tools to
continuously monitor regulatory changes and automatically adjust your systems
to remain compliant. This proactive approach not only minimizes the risk of
noncompliance but also embeds a culture of compliance across all technological
implementations and updates.

Prediction 6: By Mid-2027, 55% of Global Organizations Will Use

Their ERP Systems as a Primary Hub for ESG-Related Efforts to
More Effectively Weave and Measure Sustainable Practices
Throughout Their Operations
As environmental, social, and governance (ESG) regulations are passed with increasing
regularity and stringency, and scrutiny from investors, employees, and customers
elevate the topic to an all-time high, organizations have never faced more pressure to
be environmentally and socially responsible. However, while in previous years ESG was
often treated as a standalone topic within many organizations, there is a growing trend
toward taking a less aggressive, explicit targeting approach of sustainability initiatives.
Instead, organizations are increasingly exploring how ESG can be woven throughout
their operations. This ensures ESG-related activities are intrinsically tied to broader
operational success, boosting the long-term financial and environmental sustainability
of the organization and ensuring this more holistic approach to ESG is embedded
throughout its operations.

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While recent years have seen the rise of specialist applications, often focusing on one
aspect of the broader ESG landscape, organizations are struggling to build a broader
picture whether because of visibility, connectivity, or consistency. In addition, many
organizations are reluctant to invest in an array of applications purely focused on
tackling ESG-related elements at a time when they are trying to consolidate their
broader enterprise applications portfolio.

The ERP system is at the heart of most organizations operations, and with many ERP
vendors exploring new ESG-related modules and connections, it is perfectly placed to
take a much bigger role in the ERP space. As a result, organizations will increasingly rely
on their ERP systems to be the primary hubs for their ESG-related activities as they
strive to overcome the challenges of collecting and analyzing data from across their
supply chains. This will not only take the guise of facilitating better tracking all the
relevant data — such as carbon footprint data — but also enable more accurate,
granular, and timely measuring of sustainable practices within the organization. Be it
green accounting to supplier programs, ERP systems will continue to enhance the value
of ESG for organizations. And ERP will play a key role in helping organizations with their
transition to a woven approach to ESG, with practices embedded across operations.

Associated Drivers
▪ Future proofing against environmental risks — ESG operationalization and
risk management
▪ Responsible and human-centric technology — Ethics in the enterprise
▪ Regulatory flux — Navigating compliance challenges in a shifting policy
landscape
IT Impact
▪ The growing emphasis on woven organizationwide ESG activities will require
robust data collection and analysis that spans not only all internal operations but
stretches out to the further reaches of the value chain.
▪ Transparent and widespread collaboration across the value chain is essential to
ensuring that an organization's ERP system had full visibility of activities and
operations from the first supplier through to the end customers, and potentially
into the post-consumer space, too.
▪ Applications across the organization, from the ERP and finance to CRM and HCM,
must be interconnected and integrated into each other and into a single data
truth, in a way that facilitates new levels of openness and increased levels of
granularity to ensure organizations can meet not only their regulatory
obligations but the ethical ones.

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Business Impact
▪ Organizations must embed not just ESG-related goals but a broader sustainable
mindset throughout their operations. Everyone must be aware of these goals
and be fully onboard with these ambitions, embracing a more sustainable
mindset to ensure the organization moves as one to deliver on their ESG-related
goals.
▪ Transitioning to a more open, collaborative, and sustainable approach to
business is key. This will not only facilitate a more frictionless ESG transition with
suppliers but also ensure that individual employees consider the full
ramifications of their decisions, including accounting for the sustainability
impact.
▪ Embracing ESG topics will require a rethink about how different functions
operate, with each needing to adopt a more holistic perspective that
incorporates and accounts for activities across the organization as a whole rather
than a function-first mentality. Providing real-time visualizations and insights
based on ESG data that spans an organization's operations is key to this.
Guidance
▪ Provide your employees with the right tools that enable them to collect and
analyze robust data across all relevant workflows rather than relying on
estimates and best guesses.
▪ Ensure sustainability is not a standalone topic but rather woven into every aspect
of decision-making within the business.
▪ Adopting the right tools and technologies can play a key role in automating ESG-
related data collection and analysis, benefiting not only ESG reporting but help
set and achieve the right ESG goals.

Prediction 7: Driven by AI and Autonomous Agents, in 2027, 40%

of G2000 Will Utilize Their ERP Systems as Value Engines,
Transforming Decision Support to Contextual Insights
As organizations seek to modernize their ERP systems, they are looking for smarter
connected solutions that not only facilitate users to perform tasks but actively help
them. In many cases, this is manifesting in a combination of technologies, such as AI
and autonomous agents, being embedded in the ERP system and other applications
throughout an organization's functions.

While organizations will increasingly rely on these agents to perform, often simple,
tasks within the system, they also want tangible benefits from a user's perspective too.
And with many organizations increasingly transitioning to more data-driven and

©2024 IDC #US51078024 16

informed decision-making, they are also looking to these agents to help deliver this
through providing contextual insights to end users.

This role in not only performing tasks in the system but enabling users to make better,
more informed decisions will be an essential part of a modern organization's
operations. Being able to collate, analyze, and provide data and insights from across
the organization's operations and applications, and potentially external sources too, is
key to helping user maximize their potential both within the application and the
broader business. These intelligent, autonomous agents will also play a crucial role in
helping resolve problems and breakdowns in data and process flows within the
organization by identifying issues, flagging these in an accessible way, and providing
guidance on how users can remedy these problems themselves without the need for
additional support from, for example, IT or other functions.

Associated Drivers
▪ AI-driven business models — Moving from AI experimentation to monetization
▪ The drive to automate — Toward a data-driven future
▪ AI-driven workplace transformation — Building tomorrow's workforce today
IT Impact
▪ While exploring the build versus buy debate may be appealing, organizations
should aim to utilize embedded AI and autonomous agents — potentially with
some essential customizations — to speed up the adoption of these tools.
▪ There will be a need for internal expertise and skills to ensure that these tools
are fit for purpose, and users can maximize their potential benefit.
▪ ERP systems need to be fully modernized and integrated to ensure AI and
autonomous agents can deliver on their potential.
Business Impact
▪ While AI and autonomous tools are often accessible and user-friendly,
organizations should consider which business functions and user groups would
benefit from additional training to help them make the most of these tools and
their full functionality.
▪ Organizations should set relevant and robust KPIs and actively monitor the
efficacy of their new AI and autonomous agents in improving decision-making
and business performance.
▪ With AI and autonomous agents speeding up decision-making and rectifying
time-consuming issues, organizations should identify where employees can be
engaging in more value-adding tasks and explore opportunities to move
employees into more value-adding roles.

©2024 IDC #US51078024 17

Guidance
▪ Ensure the ERP system is ready to incorporate an AI and autonomous agent.
▪ Remember that AI and automation are enablers. Regularly review how AI and
autonomous agents are being used to identify where users could benefit from
additional training, and the tools can be adjusted and upgraded to improve their
usefulness.
▪ AI and autonomous tools can be used to make very important decisions. It is
essential to have robust control mechanisms and transparency in place to help
users better understand the information and guidance they are being provided.

Prediction 8: By 2028, 70% of Organizations Worldwide Will Adopt

Unified, Electronic Invoice Exchange and Compliance as a Service
Because of New e-Invoicing Mandates and
Technology Advancements
The landscape of compliance laws is evolving rapidly worldwide, creating significant
challenges for global businesses. In the United States, state- and city-specific
regulations such as Wayfair are constantly changing, while internationally, initiatives
such as the U.K.'s Making Tax Digital (MTD) and the EU's Standard Audit File for Tax
(SAF-T) are being implemented with variations across countries such as Italy, Norway,
Germany, Belgium, and Hungary. In addition, marketplace facilitator laws are adding
complexity by requiring digital platforms to collect and remit sales tax, a trend expected
to grow as online shopping increases.

The proliferation of tax regulations complicates global sales, prompting organizations

to seek technological solutions to navigate these challenges. The rise of the digital
economy has exacerbated the difficulty of managing sales and use taxes, with each
sales location potentially having unique tax reporting requirements. A notable trend is
the increasing mandate for digital invoicing (e-invoicing) across many nations, which is
becoming a standard practice.

Value-added tax (VAT) protocols are merging compliance and invoice management into
a unified process, with over 160 countries adopting VAT and GST tax protocols. This
means that any company operating globally must engage with these e-invoicing
systems. The future of e-invoicing is set to see greater adoption, standardization, and
automation.

As business transactions become more digital, tax authorities are adopting more
efficient and transparent systems. The future of tax compliance will heavily feature e-
invoicing and other digital innovations, revolutionizing how businesses and individuals
meet government tax regulations and furthering e-invoicing.

©2024 IDC #US51078024 18

Associated Drivers
▪ AI-driven business models — Moving from AI experimentation to monetization
▪ The drive to automate — Toward a data-driven future
▪ Regulatory flux — Navigating compliance challenges in a shifting policy
landscape
IT Impact
▪ IT teams need to ensure that existing systems can integrate with e-invoicing
platforms. This often requires upgrading or modifying current software to
comply with new standards and protocols.
▪ e-Invoicing mandates demand real-time or near-real-time data reporting. IT
teams must ensure that data is accurately captured, stored, and transmitted to
tax authorities without errors.
▪ Ensuring compliance with various regional regulations can be complex. IT teams
must implement robust security measures to protect sensitive financial data and
ensure that the systems meet all regulatory requirements.
Business Impact
▪ Line-of-business users must ensure that all invoices comply with the new
regulations. This means they need to be familiar with the requirements and
ensure that all data is accurate and submitted on time.
▪ Users will need training to understand and effectively use the new e-invoicing
systems. This can initially be time-consuming but ultimately leads to smoother
operations.
▪ e-Invoicing mandates often require real-time or near-real-time reporting to tax
authorities. This means users need to be diligent in their data entry and
management to avoid delays or penalties.
Guidance
▪ Invest in technology advancements to manage the complexities of global tax
regulations, including digital invoicing and compliance with VAT and GST
protocols.
▪ Leverage emerging technologies such as artificial intelligence and machine-to-
machine invoicing to automate manual processes and improve efficiency.
▪ Consider the sustainability benefits of e-invoicing as part of ESG initiatives and
explore the global market expansion opportunities in the e-invoicing sector.

©2024 IDC #US51078024 19

Prediction 9: Leveraging GenAI, by 2028, 45% of G2000 Will
Consolidate Lines of Business into Fewer Functions, Optimizing
Their Processes, Data, and Resources, Building a New Resource-
Savvy Enterprise
By integrating generative AI into business automation, companies can significantly
reduce operational costs, enhance productivity, accelerate innovation, and deliver
superior customer experiences. This AI-driven automation fosters greater flexibility,
responsiveness, and creativity essential for thriving in today's dynamic digital
environment. Business users, particularly in healthcare and life sciences, often depend
on data or IT teams for analysis, leading to delays. Generative AI can mitigate this by
providing user-friendly, no-code dashboards that allow conversational queries,
ensuring users have immediate access to crucial data insights for informed decision-
making.

Generative AI tailored specifically for life science data can be deployed more swiftly,
within weeks, compared with the months required for nonspecific data solutions. This
specificity ensures the delivery of relevant, contextual, and accurate answers from the
outset, fostering user trust and adoption. For optimal functionality, generative AI must
connect to both internal and external data sources and integrate seamlessly with
existing business systems such as Salesforce, Veeva, and Microsoft Teams.

Making contextual data insights readily accessible empowers business users to

routinely make data-driven decisions and builds a data-savvy culture. This capability
allows them to verify data before engaging with patients or customers, identify the root
causes of changes, and determine the best subsequent actions. The result is improved
outcomes and enhanced job performance across the organization.

Associated Drivers
▪ AI-driven business models — Moving from AI experimentation to monetization
▪ The drive to automate — Toward a data-driven future
▪ Regulatory flux — Navigating compliance challenges in a shifting policy
landscape
IT Impact
▪ Implement training programs to enhance data literacy across the organization.
Equip employees with the skills to understand, interpret, and communicate data
effectively.
▪ Ensure that data is easily accessible to employees at all levels. Implement tools
and technologies that facilitate data sharing and exploration.

©2024 IDC #US51078024 20

 ▪ Provide access to self-service analytics tools that enable employees to explore
data, generate insights, and create visualizations independently.
Business Impact
▪ Empowering employees with data can boost engagement and satisfaction, as
they can see the direct impact of their work on business outcomes.
▪ A strong data culture helps businesses stay resilient and adaptable in the face of
technological advancements and market changes.
▪ A data-savvy culture fosters innovation by enabling teams to identify new
opportunities and adapt quickly to changing market dynamics.
Guidance
▪ Integrate generative AI into business automation to reduce operational costs,
boost productivity, drive innovation, and enhance customer experiences.
▪ Implement user-friendly, no-code dashboards for generative AI to enable
business users, especially in healthcare and life sciences, to access data insights
easily and make informed decisions.
▪ Train generative AI with industry-specific data to ensure rapid deployment and
provide relevant, contextual, and accurate answers, fostering user trust and
adoption.
▪ Ensure generative AI can connect to both internal and external data sources and
integrate seamlessly with existing business systems to facilitate routine data-
driven decision-making.

Prediction 10: Because of GenAI, by 2029, 80% of Today's

Organizational Workflows Will Be Automated into an Optimized
Digital Factory, with 50% of G2000 Embracing a New Business
Resource Structure
AI is rapidly becoming embedded in business processes and operations, transforming
how we work. After a long experimental rush, many organizations are leveraging AI to
drive efficiency, competitiveness, and innovation. In fact, according to IDC's 2024 Future
Enterprise Resiliency and Spending Survey, Wave 4, 38% of businesses state that they are
investing significantly in AI/GenAI and 84% believed (42% strongly) that AI/GenAI is the
next strategic corporate workload like ERP or ecommerce was before.

While this AI scramble phase has generated abundant (siloed) innovation, it has also
exacerbated the need to increase focus on driving business value. With AI, traditional
workflows are evolving into highly optimized and automated systems that can
resemble a digital factory. This marks a fundamental shift in how organizations
operate, as AI algorithms can analyze data in real time, adjusting processes and

©2024 IDC #US51078024 21

enabling businesses to not only respond but also capitalize on change with
unprecedented agility.

The promise of an AI-fueled enterprise represents an evolution that goes well beyond
automation. It represents a shift that will require organizations to embrace new
strategies and resource structures. The lines between traditional siloed departments
will blur, reshaping hierarchies and redefining competencies, ultimately fostering
improved collaboration and efficiency.

Associated Drivers
▪ The drive to automate — Toward a data-driven future
▪ AI-driven business models — Moving from AI experimentation to monetization
▪ AI-driven workplace transformation — Building tomorrow's workforce today
IT Impact
▪ IT will have to architect and implement scalable, AI-ready technology
infrastructure capable of supporting the data and analytics processing
requirements of a digital factory.
▪ CIOs must establish cross-functional teams that bring together IT specialists and
business experts to codesign and implement digital factory workflows, ensuring
alignment with strategic goals.
▪ IT will have to implement advanced workflow orchestration systems that can
seamlessly integrate human tasks with AI-infused processes.
Business Impact
▪ Business leaders will need to restructure teams and roles to effectively drive the
necessary levels of automation and support digital factory operations.
▪ Business units must embrace the change and cultivate a culture of continuous
learning and adaptation. The rapidly evolving capabilities of AI will introduce new
opportunities for process transformation.
▪ KPIs and success metrics may have to be redefined to align with the capabilities
and outputs of AI-driven processes, shifting focus from traditional metrics.
Guidance
▪ Perform a comprehensive workflow and process audit across all business units.
Identify key candidates for AI-driven automation and prioritize based on
potential business impact (value) and feasibility.
▪ Establish a cross-team and cross-functional digital factory center of excellence to
drive the strategy, manage the implementation, and ensure effective alignment
between IT capabilities and business goals.

©2024 IDC #US51078024 22

 ▪ Develop a strategic business and technology road map for workforce
transformation, including reskilling, upskilling, and sourcing programs, as well as
change management initiatives to support the hybrid AI-human operational
working model.

ADVICE FOR TECHNOLOGY BUYERS

Organizations deciding on the next round of investments in intelligent ERP and
enterprise application technologies should consider the following recommendations:

▪ Think about your journey toward digital transformation, the modernization of

your applications, and the business processes within your organization. How do
the more modern workflows enhance your automation across the business
processes, functions, and across the organization?
▪ As automation becomes the underpinning of your business processes, how does
this change the way the employee works now, in the next 6–12 months, and
beyond? How does the employee gain more knowledge and improve his/her
decision velocity? What KPIs will improve for the business with this added
technology benefit?
▪ How is AI being used now and how will it evolve to help your processes,
functions, and overall business? AI is a huge disrupter and differentiator for your
business, but you need to quantify and qualify it showcasing the improvements
and benefits while recognizing any down sides.
▪ Plan on removing technical debt once and for all and placing guardrails around
new technology to ensure it doesn't happen over time. Removing technical debt
is critical to simplifying the business, reducing costs, delaying and removing
software audits, and running a more efficient, technology advanced business.
▪ Plan the technology impacts of the future by looking at your organization's
performance now, resources required, costs, markets served, and revenue
overall. As you lay out your technology road map for the future, identify the
vision of where your organization is going. Fill in the gaps as you implement the
technology initiatives, employee skills training, and process improvements
required to run a more autonomous operation overall.

©2024 IDC #US51078024 23

EXTERNAL DRIVERS: DETAIL

AI-Driven Business Models — Moving from AI

Experimentation to Monetization
▪ Description: As the generative artificial intelligence hype settles into a new
digital business reality, it's critical for both tech buyers and vendors to prove that
"AI is real," can be monetized, and is leading to concrete business impact and
revenue streams. While tech buyers' GenAI attention in the initial AI everywhere
stages primarily focused on efficiency and automation-oriented use cases, the
longer-term ambition is to leverage AI (including GenAI) to enable new business
models and open new revenue streams. At the same time, after all the initial
excitement and rush to new launches/announcements, it's time for tech vendors
to capitalize on 2023–2024 AI investments, move customers' POCs to concrete
multiyear deals, and unlock exponential AI monetization. While they implement
this, companies must keep in mind that AI is not without risks, especially when it
comes to ethical AI and data privacy. Enterprises need to carefully consider the
best use cases in order to implement AI effectively and to the benefit of the
organization.
▪ Context: With intelligence becoming a key source of value creation, we are in the
mid of an "intelligence revolution," in which AI and automation-oriented
technology are major accelerators of business change. GenAI especially is a
transformative force. This branch of AI enables machine-driven autonomous
creation of new content, from images to music to even written text, with
remarkable accuracy. Current business applications of GenAI include content
and code generation, as well as personalized recommendations, but it is evolving
quickly.

The Drive to Automate — Toward a Data-Driven Future

▪ Description: Broader automation use cases — which are different from just AI
and generative AI — are now ubiquitous. Automating tasks that require human
judgment and decision-making are becoming a key area of development.
However, thoughtful implementation is crucial. This requires careful data
management, quality, governance, and storage. Data quality and governance will
become paramount as organizations strive to maintain accuracy in automation
tools and comply with increasingly stringent regulations like GDPR and CCPA.
Efficient storage and retrieval of vast data sets are also essential, prompting IT to
explore scalable solutions like object storage or data lakes. As more employees
access data tools and insights, fostering a culture of data sharing will be key.
Breaking down data silos will be crucial for achieving a unified view for

©2024 IDC #US51078024 24

 automation processes. This also means that while data generally becomes more
open and accessible, protecting key information related to health, for example,
becomes central to value and risk. Provided that data is thoughtfully managed
and silos are appropriately broken down, hyperautomation, the combination of
multiple automation tools and technologies, may become more prevalent. This
approach, which aims to automate as many processes as possible within an
organization, can greatly improve efficiency and agility.
▪ Context: Businesses are rethinking how to employ automation to maximize
operational efficiency — from automating assembly in manufacturing to
identifying opportunities for food waste reduction in hospitality to improved CX
in digital banking. And as data is embedded in the core of strategic capability for
every organization, automation has become critical to scaling a digital business.
This is evident in three domains: IT automation, process automation, and value
stream automation — leading to autonomous operations, digital value
engineering, and innovation velocity. From healthcare robotics to real-time data
analytics, the applications are extensive.

Future Proofing Against Environmental Risks — ESG

Operationalization and Risk Management
▪ Description: Although the topic is often politicized, it is undoubtable that risks
are multiplying in the form of extreme weather — droughts, floods, and irregular
weather patterns in general are disrupting supply chains and wreaking economic
havoc all over the world, increasing insurance/reinsurance costs. Accounting for
this risk is increasingly seen as an imperative part of businesses' risk
management strategy. Decreasing environmental footprints is also part of many
businesses' efforts to become responsible enterprises. Frameworks such as
environmental, social, and governance support actions to achieve sustainability
and contribute to a better future. In addition, ESG-related laws that oblige
companies to account for this risk are increasing, including the EU's Corporate
Sustainability Reporting Directive (CSRD) and Sustainable Finance Disclosure
Regulation (SFDR), the SEC's climate disclosure requirement approved, and
Japan's GX Basic Policy. Many companies are now actively operationalizing ESG
with AI-informed carbon accounting software, carbon budgets, and sustainability
requirements into requests for proposals (RFPs) they send to tech suppliers. In
addition, many now have positions such as chief sustainability officer or are
integrating sustainability into the responsibilities of the C-suite. They are also
engaging in initiatives such as energy efficiency in technology. This is often an
ecosystemwide initiative, helping further advance meaningful risk management
and development of best practices around climate/ESG.

©2024 IDC #US51078024 25

 ▪ Context: Businesses are increasingly beholden to climate/ESG. More and more
customers care about whether the companies they deal with behave sustainably
and deliver sustainable products and services. ESG can also be a cost-saving
measure and hedge against risks. Yet, despite much progress, there is still work
to be done, especially in complying with carbon footprint measuring and
achieving high-quality data. As laws and regulations — as well as investment
opportunities — amp up around ESG, the IT industry will increasingly require
green talent and skills and better data modeling of ESG metrics to achieve
maximum benefit.

AI-Driven Workplace Transformation — Building Tomorrow's

Workforce Today
▪ Description: There are many pressures in the labor market, ranging from skills
shortages to long-term demographic shifts. To increase automation and AI
capabilities, digital skills are now in high demand, but the current supply of such
skill sets does not match this demand. Despite talk about automation replacing
jobs, company growth depends more on reskilling to effectively make use of
these investments. Expertise in security, cloud, and IT service management
alongside AI skills are crucial. But enterprises can't live on IT skills alone —
human-centric skills are also important, perhaps even more so than ever.
Without proper socialization, awareness, and cross-organizational support, we
may not see the innovation and productivity that GenAI and AI initiatives
promise, and the overall enterprise IT strategy will be slow to deliver its needed
results. To succeed, enterprises must also be open to organizational change and
models that allow for greater trust and growth in their employees. Leaders must
be accountable for laying the groundwork of communication, collaboration,
creativity, and continuous learning, which will need to be pervasive for engineers
and HR analysts alike. All of this lays the groundwork for long-term demographic
shifts. Declining/aging populations means that the labor market is getting tighter.
Fewer workers logically means that businesses will have fewer personnel. We
have already seen talent shortages impacting businesses' operations. This will
only get more competitive in the future. Business leaders are starting to fight
against this, but success hinges on the ability of the enterprise to adopt better
organizational strategies and models that allow for a more productive,
collaborative, and learning-focused workplace.
▪ Context: The workplace has been shifting for some time, especially due to new
modes of working, and the rise of AI and automation only further facilitates this
shift. In the context of talent shortages, demographic changes, and other issues
such as ESG concerns and ethical AI, it is clear that reskilling, upskilling, and
overall transformation of workplace design are taking center stage. C-suite

©2024 IDC #US51078024 26

 leaders and their teams must collaborate to recalibrate work culture,
augmentation, and space/place planning to enable more secure, dynamic, and
refined organizations of the future.

Regulatory Flux — Navigating Compliance Challenges in a

Shifting Policy Landscape
▪ Description: With frontier technologies like generative AI, geopolitical concerns,
and cyber-risks, the tech legal landscape is rapidly changing. The tech regulatory
landscape is shifting, from privacy/cybersecurity laws such as NIS 2 in the EU to
various policies incentivizing nearshoring of critical technologies such as South
Korea's tax incentives for the "K-Semiconductor Belt." Beyond that, however, are
laws that fundamentally can change the market landscape in technology. The
EU's Digital Services Act (DSA) and Digital Markets Act (DMA) aim to increase
transparency and accountability for online platforms and attempt to prevent
anticompetitive behavior from "gatekeepers," or large online platforms of
significance. In China, a number of firms have withstood major fines and
penalties for anticompetitive practices, breaches of data security, and consumer
privacy rights. Other emerging efforts in jurisdictions like the United States, India,
and Australia mean that tech giants may be seeing themselves caught in stricter
compliance challenges. Regulations, however, are notably inconsistent in their
rollout. While some regulations lag behind technology development — especially
notable in the case of artificial intelligence across many jurisdictions — others
lead, such as tariffs on imports. Regulations also are of course subject to political
change. More than 70 countries worldwide are set to vote in 2024, and polls
predict sweeping change in political agendas. These changes are not only going
to impact society and the economy in the short term but may also have wide-
reaching, long-term effects.
▪ Context: Businesses must navigate an increasing number of regulatory rules.
Even if it is not always the primary focus, tech is often a crucial part of these
regulations. Most of these rules are intended to hedge against risks, but some
are entrenched in geopolitical divides, so those firms that stay ahead of the
game and build resiliency will be best equipped to comply with these regulations.
Moreover, regulations and policies are not always simply restraints — they are
also often springboards for investment, with many regulations proposing tax
subsidies and other kinds of incentives.

©2024 IDC #US51078024 27

Responsible and Human-Centric Technology — Ethics in
the Enterprise
▪ Description: Enterprises are increasingly conscious of the broader societal
impacts of their business models and of certain technologies, especially
emerging technologies. Most topical at the moment is AI. AI may provide lower-
cost, higher-value solutions, but it has significant ethical (and incipient legal)
implications that companies will increasingly need to adapt to. There are
significant questions over issues like copyright, trust, safety, and misinformation
distribution. Beyond that, organizations must grapple with issues like privacy and
consent around data, reproduction of biases and toxicity, generation of harmful
content, insufficient security against third-party manipulation, and accountability
and transparency of processes. As a result, countries around the world are keen
to regulate AI, from the EU to Brazil to China. Aside from AI, new emerging
technologies like quantum also have ethical challenges, and new branches such
as quantum ethics are being developed. With quantum ethics, in light of the
power of quantum computing, questions remain about how to ensure equity,
transparency, and appropriate usage given its power to crack encryption.
Roboethics grapples with the ethical questions that the use of robotics pose,
especially those used in healthcare, military applications, and others. And
beyond emerging technologies, supply chain ethics are also being questioned, as
many raw materials such as critical minerals are mined under circumstances that
may implicate human rights questions, and jurisdictions from Canada to the EU
to Japan have created laws requiring more stringent oversight of suppliers.
Businesses are also still grappling with inclusivity and corporate responsibility.
Having a diverse workforce can often be a benefit for businesses to ensure a
greater amount of skill sets, and promoting corporate responsibility can be a way
to attract and retain talent. And though these issues are often politicized, neglect
of ethics in the business isn't just a moral quandary either — it is increasingly
viewed as a significant business risk that can mean less trust, less control, and
less ability to advance technologies in an optimal way.
▪ Context: AI is bringing the "S" (social) and "G" (governance) in ESG to the
forefront of conversation in a way that is distinct from conversations around "E,"
the environment. Businesses are increasingly discussing AI ethics due to rising
public and regulatory scrutiny, concerns about privacy and bias, and high-profile
AI missteps. Adhering to ethical standards enhances reputation, builds consumer
trust, and ensures sustainable, responsible innovation. This shift underscores the
importance of developing and using AI technologies ethically and transparently.

©2024 IDC #US51078024 28

Battling Against Technical Debt — Overcoming Hurdles to
IT Modernization
▪ Description: As technology becomes increasingly central to business operations,
the role of IT leadership is evolving into business leadership, highlighting the
critical importance of managing technical debt. This debt, exacerbated by the
rapid advancements and growing complexity of IT systems, not only inflates
maintenance costs but also poses significant challenges to operational efficiency,
profitability, and market adaptability. Accumulated technical debt manifests in
software bugs, security vulnerabilities, and system inefficiencies, leading to
increased operational costs, data breaches, and a loss of customer trust. For
developers, working with outdated systems diminishes morale and productivity,
while businesses face hurdles in adapting to new technologies or market
demands swiftly. Specifically, in the realm of AI, "data debt" — stemming from
poor data quality, inadequate architecture, and insufficient documentation —
complicates maintenance, reduces system flexibility, and hampers accurate
decision-making. These issues, along with the struggle to maintain legacy
systems and navigate technical heterogeneity, slow down development
processes, delaying the launch of new features or products. There is a cascading
effect that arises with technical debt (e.g., cloud laggards will become AI
laggards).
▪ Context: In recent years, technical debt is a growing concern due to accelerated
digital transformation, increased reliance on complex software systems, and the
urgent need for rapid innovation. The pressure to deliver software quickly often
leads to compromises in code quality, resulting in a backlog of maintenance
issues. Businesses face mounting pressure to address outdated code and quick
fixes to maintain system reliability, security, and scalability amid evolving
technological demands. As systems become more complex, the cost and effort to
address these issues escalate, impacting operational efficiency and innovation.

LEARN MORE

Related Research
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▪ Digital Evolves: What's Next in Enterprise Application Technology? (IDC
#US51078324, September 2024)
▪ GenAI's Impact on Enterprise Software (IDC #US52547624, September 2024)

©2024 IDC #US51078024 29

 ▪ Critical External Drivers Shaping Global IT and Business Planning, 2025 (IDC
#US52438224, August 2024)
▪ Legacy Technology: Impeding Business' Ability to Compete Effectively in the Digital
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▪ Capitalizing on the Future of Enterprise Application Technology: The Digital World and
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▪ Leveraging the Benefits of GenAI in Enterprise Applications (IDC #US51078823, May
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▪ Why Generative AI? The Critical Importance of Generative AI in the Application
Modernization Journey (IDC #US51937024, March 2024)

©2024 IDC #US51078024 30

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