The waters that distinguish physical and digital infrastructure these days are becoming murky for governments investing in the bones of their boundaries.
Survey results show that transportation, power, water, communications, public facilities and the built environment are losing their distinct separateness. The convergence of all of these individual systems is reshaping the whole of infrastructure planning.
Business management consulting firm Deloitte surveyed government institutions in 21 countries recently and found a definite trend in this reshaping.
Anant Dinamani, Mahesh Kelkar, Thomas Schlaak and Tiffany Fishman found from the survey that “infrastructure is becoming a system of systems.”
Their Deloitte Center for Government Insights report found that the distinction between physical and digital infrastructure is quickly disappearing.
The individual infrastructure systems are a challenge to sustain anymore because they are all so interconnected and dependent on one another.
“Physical assets depend on digital platforms, sensors, connectivity, data and operational technologies to function,” the team wrote.
They found that at the same time digital infrastructure depends on reliable power, communications networks and other physical infrastructure to operate.
“As these interdependencies deepen, decisions made within one infrastructure system affect capacity, performance, and risk across others,” they wrote.
The shift in connection is being recognized by governments. Survey respondents stressed the need to better understand these dependencies.
Respondents see the critical need to address the overlaps across infrastructure assets, sectors and geographic locations, noted the Deloitte team.
The 2026 Future of Infrastructure survey involved 985 infrastructure executives from government, private sector and not-for-profits in 21 countries.
The goal was to understand how leaders approach infrastructure investment, delivery, resilience, financing and AI, according to the Deloitte report on the findings. The report identifies shifts shaping the future of infrastructure, according to the team of analysts.
“They show how infrastructure is evolving from individual assets to interconnected systems and what this means for governments and infrastructure leaders.”
Ripple Effect Tied to Interconnectivity
Adobe Stock photo
The Deloitte team found that this interconnectivity requires of governments greater visibility into how decisions for one system affect outcomes across others.
“That visibility enables more coordinated planning, investment and operations across organizational and sector boundaries,” they wrote.
Ultimately, it requires governments to plan, govern and operate infrastructure as an interconnected system instead of a pool of independent assets.
“The digital-energy nexus is one of the clearest examples in the survey of this emerging system-of-systems model,” said the writers.
As AI, connected assets and digital services demand power and connectivity, modern energy systems depend on digital controls, analytics and real-time data.
Survey results show similar interdependencies are emerging across infrastructure systems. As a result, they are reshaping how governments manage data, technology, assets, institutions and partners as part of a single interconnected ecosystem.
Deloitte's team found that digital capabilities embedded in physical assets are accelerating infrastructure convergence.
Respondents expect digital technologies to fundamentally reshape how infrastructure is built, operated and experienced.
These capabilities are being embedded by design, although their role differs across infrastructure domains, said the writing team. The survey found:
• 69 percent of respondents expect demand for smart, connected and resilient urban infrastructure to significantly impact infrastructure. European respondents foresee the highest at 75 percent.
• 66 percent expect greater integration of digital technologies in social and entertainment venues. Latin American respondents, at 82 percent and Asia-Pacific respondents at 80 percent reported the strongest expectations.
• 59 percent anticipate adoption of advanced technologies in infrastructure and transportation operations will have significant impact on infrastructure. North American respondents reported the highest level of anticipated adoption, at 67 percent
“Infrastructure systems are not becoming digital in identical ways,” wrote the team. “But their performance now depends on a shared digital foundation, including data, connectivity, controls and analytics.”
The writers noted that at the same time that shared digital foundation also is changing how infrastructure is managed.
Scheduled inspections and reactive maintenance have given way to real-time intelligence. This data in turn enables infrastructure operators to monitor conditions, optimize performance and respond more quickly to changing circumstances.
This shift is being enabled through capabilities such as command-and-control systems and digital twins.
“The survey suggests that organizations have moved beyond foundational use cases toward broader operational intelligence capabilities,” the writers said.
The goal now, they said, is not simply to monitor individual assets, but to improve the coordination and management of infrastructure systems.
As a result, real-time monitoring, performance optimization, energy forecasting and operational coordination are becoming central operational priorities.
The Deloitte survey found:
• Predictive maintenance remains the most widely implemented AI use case today, at 61 percent. Its projected decline over the next three years likely reflects the maturity of these applications as organizations shift their focus to newer AI use cases, rather than a decline in interest.
• Real-time asset monitoring and performance optimization currently ranks third, at 46 percent. Looking three years ahead, real-time asset monitoring is expected to become the leading operational AI use case, at 45 percent.
• Other AI use cases expected to grow over the next three years are those that rely on real-time intelligence and deeper operational insights, including energy demand forecasting, 44 percent; traffic management and mobility optimization, 38 percent; AI-enabled workforce optimization, 38 percent and grid management, 35 percent.
The goal is to create infrastructure systems that continuously sense, analyze and respond to changing conditions, according to the writers' findings.
“This shifts the focus from monitoring individual assets to understanding how conditions across connected systems affect service delivery,” they said.
Industry trends show infrastructure dependencies are widespread. As Deloitte noted, power disruptions can affect communications and transportation.
And transportation systems rely on cloud platforms and digital controls. Water utilities depend on sensors and operational technologies.
Digital infrastructure needs reliable power generation, connectivity and energy storage.
“Together, these interdependencies are reshaping infrastructure planning and decision-making,” said the writers. “The survey indicates that respondents recognize cross-system interdependencies as a defining characteristic of modern infrastructure planning.”
Survey analysis found that respondents recognized a strong need to better understand these dependencies. They also want to better process the interconnectivity of infrastructure assets across sectors and geographic locations.
In fact, 45 percent of Deloitte survey respondents identified this point as a “defining characteristic of modern infrastructure planning.”
The analysts noted that response was highest among APAC (49 percent) and Latin American (47 percent) participants, although no region fell below 42 percent.
“However, these dependencies go beyond technical integration,” said the team. “Connected infrastructure creates value by bringing together data” from across systems.
This sweeping data gathering gives leaders a broad view of how decisions in one domain affect others.
“A disruption or policy decision in one domain can reshape demand, capacity, risk and service quality across several others,” the writers said.
But these dependencies also cross institutional boundaries, they found in analyzing the survey results.
Public infrastructure relies on private-sector capabilities and capital, while private infrastructure depends on utilities, permitting, transport, water and other public resources.
And as infrastructure systems become more interconnected, failures that begin in one system can cascade into others.
This, in turn, can force infrastructure leaders to shift from asset-level planning to system-level planning to compensate.
The survey identified the relationship emerging between digital infrastructure and energy systems as one of the clearest examples of interdependence.
Digital services, connected devices and advanced infrastructure technologies are driving significant increases in electricity demand, the Deloitte staffers found.
At the same time, expanding energy systems rely more heavily on digital technologies to manage generation, storage, forecasting and grid operations.
“The relationship is reciprocal,” said the team of writers. “Each system depends on the other.”
The survey also found:
• 69 percent of the respondents expect demand for smart, connected and resilient infrastructure, including the proliferation of connected devices and Internet of Things will have a significant impact on infrastructure.
• 64 percent expect that exponential growth in electrification and AI solutions will fuel rapid growth in energy demand. Latin American respondents, at 79 percent, believe it is the defining interdependence of this era.
Simultaneous Growth in Connected Resources
Adobe Stock photo
Viewed together, these demand-and supply-side trends highlight the growing interdependence between digital infrastructure and energy systems.
The survey points to simultaneous growth in connected infrastructure, AI-related demand, connectivity, alternative energy sources and storage, said Deloitte.
“Meeting this demand will require coordinated growth in connectivity, energy capacity and energy storage,” wrote the staffers. “The challenge is to expand capacity while ensuring supporting infrastructure grows at the same pace as demand.”
The biggest demand at present is on expanding and strengthening foundational connectivity infrastructure, the survey found.
High-speed, reliable and universal connectivity through multiple technologies was pinpointed by 68 percent of respondents.
Those technologies include, fiber-based wired broadband, low earth orbit satellites and 5G.
“A corresponding demand can be seen in foundational energy infrastructure, with a specific focus on alternative sources of energy” at 64 percent.
And 64 percent of survey respondents see significant growth in energy storage solutions. APAC respondents expressed the strongest expectations.
“Interdependence delivers better outcomes when leaders understand how systems interact, coordinate decisions and align investments,” said the writers. “The same need for coordinated planning extends across transportation, water, communications, public services and the built environment.”
