UK firms are pouring money into AI, but they won’t see a return on investment unless they address these key issues

UK business investment in AI is set to skyrocket over the next two years, according to new research from SAP, but many are failing to properly plan – and it could cost them dearly.

Analysis from the tech giant shows UK businesses are, on average, spending £15.94 million on AI this year. Moreover, they expect to increase their investment in the technology by an average of 40% across the next two years.

The report found a good return on investment (ROI), with the average UK business seeing returns of 17% from AI investments, and ROI forecast to almost double to 32% by 2027.

Many said they were already starting to unlock value from AI, with 36% reporting significant improvement in decision-making, 34% in customer engagement, and 31% in time to value.

Notably, businesses are confident in their long-term prospects with AI. More than three-quarters (78%) of executives believe AI will achieve a positive return within one to three years. More than half (52%) say it delivers returns faster than any other technology.

In recent months, agentic AI has become highly popular, with the average UK business expecting an ROI of 11% from agents within two years, equivalent to £2.7 million.

Fragmented AI programs are causing headaches

While the outlook is upbeat, the report warned that a concerning number of AI programs are fragmented, meaning many aren’t unlocking full value from the technology.

Indeed, 42% of UK enterprises described their investment as piecemeal. A key factor here is that around 37% of projects are department-led, according to SAP, while 15% admitted their programs were ad-hoc.

Only 7% have a strategic, enterprise-wide IT plan, the report found. As a result, 70% of UK businesses said they were unsure whether AI is delivering its full potential.

“UK businesses have the ambition, talent, and data to lead in AI, although too many are still treating it as a ‘technology project’ rather than a holistic business transformation,” said Leila Romane, managing director, SAP UK & Ireland.

“The real opportunity is to use AI to reimagine how companies operate, how people work, and how value is created for customers. When UK organizations take that broader, strategic approach to adopting the technology and embedding it throughout their business, the results will become tangible."

Success hinges on a solid strategy

Ross Kelly

The initial scramble to jump on the generative AI bandwagon may have paid dividends for some enterprises, but those examples are outliers and not the norm.

We’re approaching three years since the arrival of ChatGPT, the big launch that sparked the generative AI race, and yet a concerning number of enterprises still don’t have a clear-cut strategy.

Analysis from Carruthers and Jackson earlier this year found more than a quarter (26%) of enterprises had no formal data strategy. With this in mind, it’s no wonder that many enterprises have grown frustrated at a lack of solid returns.

Research from Appen showed fewer than half of businesses (47.3%) recorded a return on investment with AI in 2024.

While this SAP study paints a positive outlook in terms of ROI, nailing the fundamentals still remains paramount for any IT leader. So what are these?

First and foremost, data quality is a key hurdle for many businesses. In a study from Ataccama, 69% of chief data officers (CDOs) identified data quality as their top challenge.

40% also said they struggle to maintain “consistent” data quality, which has an adverse effect on project outcomes.

Meanwhile, data storage is also another key issue for IT leaders. Analysis from Hitachi Vantara in early 2024 showed data storage capacity requirements were set to surge by around 150% in the coming years, and many enterprises have been woefully unprepared to meet these rising demands.

Accommodating huge AI workloads and storage requirements requires equally huge investment if a “data storage crisis” is to be averted, the company noted.

Make sure to follow ITPro on Google News to keep tabs on all our latest news, analysis, and reviews.

MORE FROM ITPRO

• Will the future of AI be made in Europe? The EU thinks so
• Employee ‘task crafting' could be the key to getting the most out of AI
• Is channel know-how the key to de-risking enterprise AI plans?