Australia among the AI elite: embrace AI or fall behind, new study warns

Research from cloud software company IFS has found that optimism about artificial intelligence (AI) is a direct indicator of AI strategy maturity within businesses. The study found firms between $200 and $500 million the most optimistic about AI, while the UK and USA were the least optimistic countries. As Australia is fourth, the research implies that Australia is further ahead than anticipated.

The global study ‘Industrial AI: the new frontier for productivity, innovation and competition’ involved 1700 senior decision-makers from manufacturing, telecommunications, aerospace and defence, services, construction and engineering, and energy and resources companies.

IFS describes what it calls the Global AI Optimism League Table by Country, ranking countries in order of AI optimism:

1. Norway
2. Sweden
3. France
4. Australia
5. Japan
6. UAE
7. Canada
8. Denmark
9. Finland
10. Germany
11. UK
12. USA

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.

The report ranked optimism in relation to company revenue as follows:

1. $300–$500 million
2. $200–$300 million
3. Over $500 million
4. $100–$200 million
5. $50–$100 million

In contrast, the survey revealed mid-sized ($50–$200m) 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.

“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,” said Christian Pedersen, Chief Product Officer, IFS. “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.

“We see direct evidence from our research that the market is splitting into those who have embraced AI and those who have not,” Pedersen said. “There is an element of ‘following the herd’ fuelling the board’s desire for AI programs. McKinsey has found that AI could be the key to unlocking an additional $4.4 trillion in corporate profits per year, which is building pressure to adopt it. But without a clear direction and strategy, AI programs stall, making the end result seem further away than it needs to be.”

Emergence of industrial AI for productivity, innovation and sustainability

Innovative products and services (31%) and data accessibility (30%) are the most common areas where 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 in this area, according to the report.

The report also found that 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,” Pedersen concluded. “The real power lies in industrial AI, where data flows through every part of the business, combining structured, interlinked datasets to uncover insights, optimise every process and marry the digital with the physical world.”

Image credit: iStock.com/Shutthipong Chandaeng