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AI Investment has Risen 48% Since 2021, Driven by Business ‘FOMO’; Daemon Study Finds

Daemon, a UK-based digital transformation consultancy, has released its latest study examining how businesses were navigating the digital transformation landscape. 

In the new Daemon report, ‘Is AI a craze or crucial: What are businesses really doing about AI?‘, the consultancy reveals that AI investment has increased 48 per cent since 2021. Continuing to emphasise digital transformation as a strategic imperative for all businesses, with AI as its latest key tenet, regardless of size or sector.

This finding suggests that AI has upended typical approaches to technology investments, which normally require extensive evidence of the return on investment (ROI) and procurement processes. The appetite for AI and ML appears to be, at least partially, driven by decision-makers fear of missing out (‘FOMO’) to competitors by not adopting new technologies.

Daemon commissioned independent market research agency Vanson Bourne, which surveyed 150 senior business decision-makers from the UK, spanning a range of sectors, including financial services, retail, distribution and transport and energy, oil, gas and utilities.

The research results also show that 99 per cent of organisations are looking to use AI or ML to capitalise on new opportunities. Appetite is particularly strong in the retail, distribution and transport sector, where 97 per cent of organisations report either ‘some’ or ‘significant’ adoption of AI, compared to 91 per cent of organisations in financial services.

Ian Ray, head of data, ML and AI at Daemon, commented: “It’s clear organisations see the potential value of AI and are working quickly to implement this technology to yield an array of benefits. To maximise the business impact of their investments in digital, organisations need to ensure AI is a strategic enabler as part of their broader digital transformation approach.”

Concerns and difficulties remain despite AI appetite

Ninety-eight per cent of all organisations have some vision for the use of AI, and many are already working on using AI to support analytics (60 per cent), automation (51 per cent) and personalisation (40 per cent).

Additionally, organisations are planning to implement AI to support other business capabilities in less than six months including chatbots (32 per cent), and real-time optimisation (40 per cent). Forecasting and smart control systems are the least implemented use cases, although both are likely to be harnessed within the next one to two years.

Concerns around data security and privacy emerged as the top driver of low confidence among organisations, followed by difficulties in finding a trusted vendor to work with (31 per cent), as well as legacy technology holding organisations back (29 per cent) and a perceived low skill level within the business (24 per cent).

However, the data shows that organisations are pressing ahead with implementation to reap the benefits of AI/ML in the next 12 months. This ranges from increasing IT resources/ reducing skills gaps (33 per cent), evolving the customer experience (29 per cent) and moving away from legacy systems (28 per cent).

While organisations can see the potential of AI and ML, many currently do not fully understand what it can do for their organisation. Overall, 97 per cent of organisations agree that when they undertake transformation programmes, they could have a better understanding of what it is they need to solve.

Over the past two years, many organisations (43 per cent) have called for strategic support with the issues they are trying to resolve; up from 19 per cent in 2021. Pressure from customers is cited as the most common trigger for hiring a digital transformation consultancy, increasing by 17 per cent points over the past two years.

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