Clear AI strategy needed to stay competitive: IFS study

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Firms worth $200-$500 million are the most optimistic about AI, said a study, which serves as a wake-up call for businesses lagging in AI adoption, emphasising the need for a clear AI strategy to stay competitive in the global market.

While the UK and USA are the least optimistic countries, Norway, Sweden and France, in that order, top the Global AI Optimism League Table as the UAE ranks 6 and is almost ahead than anticipated, research from IFS, the leading technology provider of enterprise cloud and industrial AI software, has revealed.

Optimism about artificial intelligence (AI) is a direct indicator of AI strategy maturity within their business, the global study Industrial AI: the new frontier for productivity, innovation and competition, said.

Global businesses face a narrow window of opportunity: the widespread adoption of AI is expected to profoundly impact growth, productivity and competition with repercussions for the balance of power among nations.

Cash isn’t always king

An easy assumption to make with AI is that the more financial resources available, the more optimism there would be about what could be done with AI. However, the research reveals that businesses with revenues of over $500 million ranked only third in terms of optimism due to a clear polarisation in strategy, data readiness, and skills.

Indeed, the polarisation in AI readiness has led to 25% of this group believing AI benefits will materialise within 12 months, while the laggards don’t expect to see benefits for at least three years. Large enterprises showed the widest gaps in time to benefits of any of the company size groups surveyed.

In contrast, the survey revealed mid-sized ($50-$200 million) firms being less optimistic about AI purely because they have fewer resources and skills to deploy to the technology today, and therefore are planning over a longer period of time to drive benefits from a maturing technology.

Christian Pedersen, Chief Product Officer, IFS, commented: “At the surface level, the lack of optimism across some respondents may suggest we are at the edge of a trough of disillusionment, particularly following the all-encompassing hype that AI enjoyed for much of the last 18 months. What we are actually witnessing is enterprises differentiating themselves with AI. Organisations that have established a strong data foundation, invested in skills, and embedded sustainability into their strategy are optimistic because they can see the benefits coming into view quickly. It is vital that leaders see AI as a strategy, not a tool.”

Factors paving the way on the smooth path to AI

Delving into what fuels optimism around AI, the research suggests that companies’ architectural readiness directly correlates with their overall optimism about the technology. Respondents who report being more architecturally ready are more likely to be optimistic about AI. This indicates that companies with a strong cloud-based foundation are further along in their AI journeys and are most likely to believe that the tangible benefits of AI will become a reality sooner.

Pedersen continued: “Our research provides direct evidence that the market is dividing into those who have embraced AI and those who have not." Pederson emphasised that the projected rewards of AI, potentially unlocking $4.4 trillion in annual corporate profits, are pressuring businesses to adapt. However, without a clear strategy, AI initiatives risk stalling.

Emergence of Industrial AI for productivity

Innovative products and services (31%) and data accessibility (30%) are the most common areas senior decision-makers expect AI to make large differences, followed closely by cost reductions (29%). Interestingly, at a country level, the USA (32%) and Germany (31%) were the only nations most likely to believe that AI will lead to consistent business growth.

The survey reveals a positive correlation between skills and AI optimism. The nations most likely to identify as having invested heavily in skills for several years are generally more optimistic about AI overall. France (49%), UAE (53%), Norway (48%), Australia (46%), Sweden (46%) and Japan (45%) are leading the way here.

Sustainability planning also correlates directly with overall AI optimism. The less wide-ranging a country’s sustainability strategy was with regard to AI, the less likely they were to be optimistic about AI in general. UK (5%), Canadian (6%), Danish (6%) and Finnish (4%) respondents were least likely to have an AI strategy for sustainability in place and all feature in the bottom half of the optimism league table.

“The lofty expectations for AI bely a fundamental misunderstanding of how it is supposed to drive value. The real power lies in Industrial AI, where data flows through every part of your business, combining structured, interlinked datasets to uncover insights, optimise every process and marry the digital with the physical world. That’s where the true value lies. If a business doesn’t have a strategy to reach that point, then they need a partner who can guide them on that journey,” concluded Pedersen.