NATO's digital capability development is guided by the NATO Defence Planning Process (NDPP). Barriers include fragmented funding, varying national priorities, SQEP shortages, and limited private sector engagement. Addressing these requires clear strategic priorities, transparency, and collaboration across Allies. Strengthening enablers and overcoming barriers is vital to ensure NATO's readiness and long-term strategic advantage.

Effective Digital Capability Development

Enabling NATO Digital Capabilities Series: Paper 2

Rebecca Lucas, Judith Huismans, Nicolas Jouan, Ondrej Palicka, Erik Silfversten

ResearchPublished May 14, 2025

Cover: Effective Digital Capability Development
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This is the second in a series of three papers exploring the evolving role of digital capabilities in the North Atlantic Treaty Organization (NATO). This paper seeks to explore how NATO currently resources digital capability development, explore barriers and enablers for digital capability development, and better understand the implications of underinvestment in digital capabilities.

The papers were sponsored by Microsoft as part of a broader package of work to explore how NATO and its members can progress the development of digital capabilities, how the development of such capabilities can be more effectively enabled, and how these capabilities can enhance NATO's resilience and interoperability. The full series of papers is intended to drive preparatory discussions on the importance and future of NATO's digital capabilities ahead of the June 2025 summit in The Hague.

Key Takeaways

  • Given the breadth, diversity, and cross-cutting nature of digital capabilities, it can be a challenge to isolate funding designated specifically for digital initiatives.
  • Recognised challenges with NATO capability development impact digital capabilities as much as any other: these include unsuitable or overly bureaucratic processes, varying priorities across the alliance, limited risk appetite on the part of NATO procurement agencies, and poor collaboration between Allies.
  • The unique nature of digital capabilities also raises a number of factors that particularly impact digital capability development, including the establishment of clear strategic priorities; the availability of suitably qualified and experienced personnel; and a heightened need for continuous and effective engagement with the private sector.

Recommendations

  • The continuing relevance of barriers to digital capability development requires NATO to understand the risks of insufficient or inefficient investment in digital capabilities — including creating obstacles in executing NATO's core missions and jeopardising the long-term strategic advantage that NATO gains from advanced digital capabilities.
  • Increased coherence of definitions of digital capability would better allow investment in this area to be tracked and understood, both within NATO as an organisation and across its members.
  • NATO should continue to develop a more coordinated digital transformation approach leveraging spiral development to stay ahead of rapidly evolving threats, deploy updates more quickly, and work more closely with industry and innovation partners.

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Lucas, Rebecca, Judith Huismans, Nicolas Jouan, Ondrej Palicka, and Erik Silfversten, Effective Digital Capability Development: Enabling NATO Digital Capabilities Series: Paper 2. Santa Monica, CA: RAND Corporation, 2025. https://www.rand.org/pubs/research_reports/RRA3831-2.html.
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This work was sponsored by Microsoft and conducted by the Defence, Security, and Justice Program within RAND Europe.

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