How Artificial Intelligence is transforming Brazilian businesses and public services
* By Jamile Sabatini Marques
The digitalization of Brazilian businesses is an ongoing reality. The latest study by the Brazilian Association of Software Companies (ABES), developed in partnership with the International Data Corporation (IDC), titled Digital Transformation in Brazil – Perspectives 2025, reveals that 95.2% of the companies surveyed already use or plan to use artificial intelligence (AI) in the next 12 months. This is a clear sign that technology is no longer just an operational support tool and has become a central part of corporate strategy.
Conducted between January and April 2025, the survey interviewed 106 executives from large companies in the agribusiness, healthcare, finance, and education sectors. Most companies already allocate 5% to 6% of their revenue to information technology (IT) investments, and 75% of them state they intend to increase this percentage in the coming years. AI appears to be a key player in this transformation, focused primarily on improving customer experience, data security, and the strategic use of information for business decisions.
Furthermore, the study also highlights that a significant portion of these organizations are reducing investments in physical devices such as PCs and tablets, prioritizing cloud solutions and virtualized environments, which offer scalability, flexibility, and greater processing power—essential elements in the era of generative AI. This movement points to a shift in mindset: more than modernizing infrastructure, we are preparing for a dynamic future driven by data and automation.
But the consolidation of this transformation faces significant obstacles. ABES's research also reveals challenges that require coordinated action: the shortage of skilled labor and the lack of clear regulatory guidelines limit the pace of technological adoption in Brazil. For the transformation to be sustainable and accessible, it is necessary to invest in professional training and infrastructure, fostering an environment that favors both companies and the public sector—and, above all, ensuring that innovation reaches the country's diverse territories and regional particularities.
Advances in the private sector are part of a broader innovation movement. They shape the infrastructure, culture, and expectations that pressure—and enable—changes in the public sector as well, especially in cities.
It is within this context that the debate on building connected cities is expanding. The adoption of emerging technologies by the private sector helps to consolidate the technical and cultural foundation necessary for governments to also advance the digital transformation of public services. Virtualized environments, artificial intelligence applied to the analysis of large volumes of data, cybersecurity, system interoperability, and cloud infrastructure are now basic requirements for creating more efficient, sustainable, and intelligent cities.
However, this transition will only be broadly viable if institutional mechanisms are strengthened to allow the effective transposition of these technologies from the corporate environment to the public sphere, with attention to the operational, regulatory and social specificities involved.
For technology to truly promote smarter cities, it must be accompanied by new models of digital governance. Digitization is an essential step, but it is by using data strategically that we can evolve toward more transparent, integrated, and civic-friendly public policies. Interoperability between platforms, the ethical use of algorithms, and coordination between different spheres of government are cornerstones of this transformation. More than connectivity, it's about building data-driven public management—collaborative, responsive, and inclusive.
Truly smart cities are born from the combination of technological innovation and the active engagement of those who live there. Digital transformation must expand the channels through which the population can collaborate, monitor, propose, and co-create urban solutions. Participatory digital platforms, active listening systems, open data, and explainable algorithms are tools that transform citizens from passive users into active agents of urban development. More than operational efficiency, it is necessary to ensure that digital transformation generates engagement and continuous learning with society.
When companies invest in AI to gain efficiency and predictability, they develop solutions that can—and should—be adapted to urban demands: mobility systems that respond in real time to traffic, platforms that integrate public health data, algorithms that anticipate energy or security demands. By leading this agenda, the private sector strengthens its own competitiveness and drives the construction of a digital ecosystem that benefits all of society.
For this transformation to generate lasting social value, ABES believes that innovation must be at the service of society. It was with this vision in mind that it created the Smart Cities Business Vertical, with the mission of fostering business opportunities for its members and supporting the digital transformation of Brazilian municipalities. The initiative works to foster dialogue between different sectors and drive collaborative solutions aimed at improving urban services and improving public management.
Thus, corporate digitalization is a key component in the evolution of Brazilian cities. As companies advance in artificial intelligence, they contribute to a robust technical foundation capable of powering public platforms, creating more responsive cities, and placing citizens at the center of decision-making. Brazil is already showing signs of digital maturity. The next step is to ensure that this transformation reaches all territories—physical and digital.
This leap requires a coordinated national strategy, uniting government, the private sector, universities, and civil society around a common vision: that technological innovation can only be fully realized when it promotes inclusion, efficiency, and collective well-being. In this scenario, artificial intelligence is establishing itself as a benchmark for developing solutions that make cities smarter, more connected, and more people-oriented.
*Jamile Sabatini Marques is Director of Innovation and Development and Director of the Think Tank – Center for Innovation Intelligence, Public Policies and Innovation of the Brazilian Association of Software Companies – ABES
Notice: The opinion presented in this article is the responsibility of its author and not of ABES - Brazilian Association of Software Companies
Article originally published on the Connected Smart Cities website: https://portal.connectedsmartcities.com.br/2025/07/21/transformacao-digital-nas-empresas-impulsiona-agenda-de-inovacao-e-reforca-base-para-cidades-mais-inteligentes/
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