Almost nine in ten UK businesses to invest in AI by 2020

While just over a fifth of UK businesses have already invested in Artificial Intelligence (AI), more than eight in every ten executives will do so over the coming years. According to the latest analysis, half of all UK organisations will have sunk over £10 million into digital technology by 2020, as companies look to avoid being left by the wayside amid a period of major innovation. However, concerns regarding a digital skills shortage are hampering efforts to get the most out of AI.

A new study from Deloitte has examined the opinions of 51 executives from the UK’s most influential companies and public sector entities – worth a combined market value of £229 billion – regarding the implementation of AI in their businesses. The findings of Deloitte’s Digital Disruption Index showed that 85% of the leaders responsible for digital technologies intend to invest in AI by the turn of the decade.

The top priority for investment among executives has been cyber-security, following a troubling year that has seen top organisations including the NHS and Deloitte hit by high-profile cyber-attacks. 78% of respondents have already invested in upgraded defences, while a further 13% are investing immediately in that aspect of business. Similar numbers are currently prioritising cloud, although AI is fast becoming the next major frontier for UK executive spending.

25% of executives polled are investing, or will have invested, by the rapidly approaching close of 2017. Over the coming years, a further 38% say they will have put money toward the implementation of AI changes by 2020. Another 16% will look to invest in the technology, but are unsure as to when they will do so. No executives stated that they would never invest in AI, contrasting with robotic process automation, which 9% of the respondents said they had no interest in.The results reflect a study from McKinsey & Company earlier in 2017, which suggested that as many as 60% of all work activities could be automated by 2055. This means that while robotic automation might well be leveraged extensively in manual labouring and manufacturing roles, it will not have the same permeation that AI may well see. Robotics are far less applicable to an office environment, whereas every sector of work features at least a minimal level of back-office administration, something that AI will increasingly be leveraged for.

Investment lags

By 2020, 53% of companies look set to sink over £10 million into digital technologies. With AI seemingly being the next major trend for UK business investment, a sizeable portion of this will likely be devoted to solutions including machine learning and automated data analysis. On top of this 30% of UK organisations will have invested more than £10 million in these technologies this year alone, according to respondents to the Big Four firm’s survey.

However, when compared with corporate IT budgets, this presently represents a rather modest amount of investment.  According to separate Deloitte research, the majority of IT functions have budgets of over £20 million, while a quarter of corporate IT functions spend more than £75 million annually. As a likely consequence, only nine per cent of executives at this stage believe that UK companies are world-leading at exploring and implementing digital technologies and ways of working. Meanwhile, a number of business leaders polled are notably concerned about an emerging digital skills gap. Commitment to large investment in AI and digital remains reserved, as only 20% of respondents to this survey believe that there are enough school leavers and graduates entering the labour market with the appropriate digital skills and experience to support their digital needs in the future. In other words, there is little point in investing in technology that you will be unable to staff adequately.

Paul Thompson, UK Digital Transformation Leader at Deloitte, said that business have not engaged with digital to their fullest capacity, stating,  “Strategies are not coherent, investment levels are modest and the relevant skills are in short supply.  As a result, the UK isn’t living up to its digital potential.”

Rise of AI

While 28% said that AI would have the greatest impact on their business (the top answer to the question) and 77% of leaders expect AI will disrupt their industries, fewer than half expect their workforce to get smaller as they adopt AI. Furthermore, just 8% believe AI will directly replace human activity. The perceived skills shortage, which was exemplified by revelations last month that the majority of UK schools do not offer Computer Science GCSEs, could be exponentially more problematic in this case. This is likely to be exacerbated by a fall in the number of skilled EU migrants residing in the UK following Brexit. When asked what they believed AI would be practically used for, if not completely replacing human labour, over a third believe that AI will be used to augment expertise, with a focus on improving human decision-making. However, the slow progress made by the UK Government in fostering new digital skills among its future workforce seems to have hampered this potential.

Speaking on these particular findings, Paul Thompson concluded, “The UK has the opportunity to be a market-leader in harnessing and exploiting the opportunities digital brings, including increased productivity and driving growth.  But it’s clear that digital skills, at all levels, are in short supply and high demand.  In our view, digital represents both a business and public policy issue which needs educators, policymakers and business to work more closely together, in order to meet the current and future demands of the UK’s economy.”