The rise of artificial intelligence (AI) has impacted countless aspects of business and work, with the digital transformation landscape among those affected most, especially when you consider it through the prism of cloud computing.
While digital transformation is undoubtedly essential to business growth, capitalizing on it means tapping into the latest technological trends — with the integration of AI into cloud transformation one of the biggest opportunities for the enterprise in the current landscape. That's why Forrester VP research director Paul McKay has urged businesses to either defend or increase cloud and AI spending in 2025.
While investing in AI and cloud computing to further fuel digital transformation efforts is an enticing proposition, it's also wise to remember what digital transformation is and isn't. Only then can these investments begin to take shape and work effectively to reap rewards for your business as it vies to take advantage of this emerging technological dynamic.
The role of AI and cloud in true digital transformation
Digital transformation is – quite literally – transformational in that it is not simply an exercise in bolting on new technologies to day-to-day operations. Rather, digital transformation is a process in which teams integrate technology into all areas of the business, which fundamentally changes how they operate – and subsequently delivers value to customers.
Digital transformation, the process by which organizations integrate digital technology into all areas of their business, fundamentally changes how they operate and deliver value to employees and customers. These efforts should be meticulously planned and tethered with key business goals – and not simply "moonshot" innovations that lack any relevant business driver, no matter how attractive any particular project seems in isolation. AI is, as you would imagine, notorious for encouraging this, with Deloitte research showing 70% of organizations moved 30% or fewer generative AI experiments during 2024 into production.
"True digital businesses aren’t just adopting digital technologies; they are reengineering their entire way of operating," wrote director of solutions at Experis Europe, Rahul Kumar, in a blog post.
"This means embedding a digital-first culture, developing data-driven strategies, and creating agile, adaptive organisations that respond rapidly to market shifts, customer needs, and technological advancements. This holistic approach is the only way to fully leverage digital tools for competitive advantage."
Leveraging AI in digital transformation
Increasingly, digital transformation has moved away from migrating processes or operations from the physical to the digital realm. In the new age of digital transformation, enterprises are leveraging AI and related technologies to increase productivity, collaboration, automation, and reduce points of friction in these new digital operations.
Gartner has highlighted the role of AI in business operations this year and beyond, with the notion of agentic AI – autonomous entities that can plan and take action to complete goals set by a user – among the key areas to look out for. The key business benefit is realizing a virtual workforce of agents that can assist employees in their day-to-day tasks, offloading much of the more manual or labor-intensive workload and augmenting how they work.
This is something that Forrester analyst Jayesh Chaurasia and VP research director Sudha Maheshwari have also identified as a key trend. However, there are significant challenges that must first be overcome.
"The next big piece of emerging tech in the world of AI is agentic AI, but enterprises with ambitions to build advanced agentic architectures themselves will meet significant hurdles. The challenge is that these architectures are convoluted, requiring diverse and multiple models, sophisticated retrieval-augmented generation stacks, advanced data architectures, and niche expertise," they said.
It is but one example of how AI-infused digital transformation can lead to business success. Others include how the further integration of technologies like machine learning, natural language processing (NLP), customer-facing chatbots and AI-powered data analytics can reap business benefits. That said, in all cases, businesses must consider how to ensure proper data governance and preserve human oversight in key decision-making.
Tapping into the cloud continuum
The cloud has been a more stable proposition throughout the last decade, unlike AI which has been subject to a massive expansion in capabilities and potential. But as cloud computing improves incrementally – and businesses become more cloud-aligned – so too do the opportunities swell. Its flexibility and scalability are key in its value for digital transformation, particularly if organizations could well do with resources to harness and process the vast amounts of data they now collect.
"Cloud transformation, the shift from traditional on-premises IT infrastructure to cloud-based services, has been a critical enabler of digital transformation. It allows businesses to scale resources according to demand, optimize costs, and improve accessibility and collaboration," according to a study by independent researcher Elizabeth Onabanjo A. "However, the complexity and volume of data involved in cloud operations require advanced solutions to manage and optimize these processes effectively."
That's where AI comes in. Experts agree that the two technologies can combine highly effectively and create significant value for organizations. Benefits include faster innovation, where AI may generate content and the cloud provides the infrastructure to deliver that content, or a much better customer experience, where the cloud-facing infrastructure can easily integrate AI solutions to analyze customer feedback and preferences. However, according to the director, head of cloud transformation and engineering (KSG India), Amit Rathore, in a blog post with KPMG, realizing the full potential of cloud computing and AI means adopting a strategic approach that addresses core business challenges and aligns with defined goals.
"AI and cloud are powerful technologies that can transform businesses in various ways," he said. "However, organisations need to carefully consider their investments in AI and cloud to ensure that they get a positive return on investment. To do so, they need to implement key practices across data management, tracking results, and security, privacy, and ethics. By doing so, they can achieve a higher level of maturity and competitiveness in the digital economy."
In various sectors – from public utilities to education and finance as well as oil and gas and even in retail – organizations can utilize cloud computing and AI to achieve their digital transformation goals.
For example, Unilever has integrated AI into customer supply chains with the creation of a new AI-driven customer connectivity model. Working in real-time, the model integrates forecasts and sales data between Unilever and customers, like Walmart, synchronizing the moment a consumer purchases a product to the source of the material.
Public utilities, like energy and transport, also stand to gain from the new AI-cloud dynamic. South Africa's Prasa railway network is one example of an organization that has combined AI machine vision with vibration-sensing optical fiber to digitize operations and deter thieves – which have become a persistent threat. Finally, companies like Xcel Energy are using a combination of AI and cloud computing to accelerate the push to net zero.
Across various industries, enterprises that are seeking to integrate AI and cloud computing into their digital transformation efforts are reaping the benefits, unlocking this game-changing partnership to wield new tools and streamline processes to achieve core business goals.
