No less than 85% of senior executives plan to invest in Artificial Intelligence (AI) and the Internet of Things (IoT) by 2020, according to a new survey of UK digital leaders conducted by Deloitte. The findings come from the first edition of a new regular report from Deloitte, the Digital Disruption Index (DDI). The DDI will track investment in digital technologies and create a detailed picture of their impact on the largest and most influential businesses and public sector bodies. The first edition includes responses from 51 organisations with a combined market value of £229 billion.
Over half of survey respondents expect that, by 2020, they will invest more than £10 million in digital technologies and ways of working such as AI, the cloud, robotics, blockchain, analytics, the IoT and virtual and augmented reality. 73% say they will invest in robotics, 63% in augmented and virtual reality, 62% in ‘wearables’, 54% in biometrics (such as voice and finger recognition) and 43% in blockchain. The full listing includes cyber security and drones*.
This year alone, 30% of UK organisations will invest more than £10 million in these technologies. When compared with corporate IT budgets, though, this represents a rather modest amount of fiscal support.
According to separate Deloitte research, the majority of IT functions harbour budgets of over £20 million, while a quarter of corporate IT functions spend more than £75 million annually.**
As a likely consequence, at this stage only 9% of executives believe that UK companies are world-leading at exploring and implementing digital technologies and ways of working.
Paul Thompson, UK digital transformation leader at Deloitte, explained to Risk UK: “The first edition of the DDI shows that few UK businesses are successfully exploiting digital technologies and ways of working. Strategies are not coherent, investment levels are pretty 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
Of all the digital technologies surveyed, executives believe AI will have the biggest impact on their organisations in the future. Investment in AI at this stage remains modest, with only 22% having already invested in it. Of those that have invested, only a third expect to spend more than £1 million in 2017. This suggests that organisations are currently testing with pilots, rather than rolling out large-scale deployments.
77% of leaders expect AI to disrupt their industries. Just under half expect their workforce to become smaller as they adopt AI, but only 8% believe AI will directly replace human activity. Over a third of respondents feel that AI will be used to augment expertise, with a distinct focus on improving human decision-making.
Thompson added: “AI will have a profound impact on the future of work. Our view is that human and machine intelligence complement each other, and that AI should not simply be seen as a substitute. Humans working with AI will achieve better outcomes than AI alone. UK businesses must make sure the balance is right.”
Digital skills gap
Only 20% of leaders believe there are enough school leavers and graduates entering the labour market with the appropriate digital skills and experience.
Three-quarters of executives face challenges when it comes to recruiting the right digital skills. Leaders say data scientists and analysts are the most important roles for a successful digital strategy, but these are also the most difficult digital roles to retain and recruit.
Over half of leaders say their organisation’s learning and development curriculum doesn’t support their digital strategy. 45% state that their organisation doesn’t provide them and other leaders with the resources needed (such as training and coaching through a variety of multimedia channels) to develop their own digital skills.
In conclusion, Thompson asserted: “The UK has the opportunity to be a market-leader in harnessing and exploiting the opportunities digital brings, including increased productivity and driving growth. However, it’s clear that, at all levels, digital skills are in short supply and high demand. In our view, digital represents both a business and public policy issue which needs educators, policymakers and businesses alike to work more closely together in order to meet the current and future demands of the UK’s economy.”
*The full list of technologies includes cyber security, cloud, analytics, the IoT, robotic process automation (ie ‘robotics’), ‘wearables’, 3D printing, augmented and virtual reality, AI, biometrics, commercial UAVs (ie drones), autonomous vehicles and blockchain
**Deloitte CIO Survey (November 2016)
***Funding to the tune of £84 million for AI and robotics research as well as smart energy innovation was recently announced by the Department for Business, Energy and Industrial Strategy