APAC firms to boost AI investment by over 20% in 2024

The latest research from IDC, commissioned by SAS, indicates that nearly half of Asia Pacific (APAC) organisations are set to increase their investment in artificial intelligence (AI) by over 20% in the coming year.

The IDC Data and AI Pulse: Asia Pacific 2024 study highlights that while investment in AI is intensifying, only 18% of APAC businesses have achieved the status of AI Leaders, with this figure dropping to just 9% in Australia. This suggests a significant gap between firms that are successfully leveraging AI for long-term change and those that are still in the experimental phase.

Craig Jennings, Vice President of SAS Australia and New Zealand, comments on the situation in Australia, "Around one-third of Australian businesses surveyed are just beginning to evaluate AI and consider how best to invest in this space. Australian organisations can see the potential for growth that AI brings, and return expectations are high. However, it is critical these organisations get the foundations right to ensure AI success, and we must seek to bridge the AI skills-gap that is holding back many organisations from reaping true business value."

APAC AI Leaders have reported focusing their AI initiatives on driving new revenue growth (32%), increasing operational efficiency (31%), and enhancing profits (26%). In contrast, AI Followers are prioritising objectives such as improving customer service (27%), expanding market share (25%), and speeding up time to market (25%).

Shukri Dabaghi, Senior Vice President for Asia Pacific and EMEA Emerging at SAS, highlighted the divide between AI Leaders and Followers. "The disparity in target outcomes between AI Leaders and AI Followers demonstrates a lack of clear strategy and roadmap. Where AI Followers are focused on short-term, productivity-based results, AI Leaders have moved beyond these to more complex functional and industry use cases," he said.

Chris Marshall, Vice President at IDC Asia/Pacific, shared insights on avoiding rushed AI adoption. "As businesses look to capitalise on the transformative potential of AI, it's important for business leaders to learn from the differences between an AI Leader and an AI Follower. Avoiding a 'gold rush' way of thinking ensures long-term transformation is built on trustworthy AI and capabilities in data, processes and skills," Mr. Dabaghi noted.

Generative AI continues to gain traction as a component of overall AI strategies, with its share of AI spending in the region rising from 19% to 34% by 2024. Despite its popularity, organisations have shown a balanced interest in predictive and interpretive AI.

The study forecasts that total AI investment in the Asia Pacific will hit USD $45 billion in 2024, further rising to USD $110 billion by 2028. Australia is among the countries displaying growing interest, with 35% of organisations planning to upsurge their AI investments in 2025.

Organisations remain optimistic about AI's potential returns, with 40% expecting a minimum threefold return on their investments. However, some Australian businesses face challenges, including a shortage of skilled personnel (35%), data governance processes, and navigating heavily regulated industries.

Mr. Dabaghi advises caution, "Understanding these pitfalls provides us the opportunity to learn how we tackle these issues, enabling a higher success rate, and meeting business objectives when it comes to adopting and successfully implementing AI."

The study further examines AI's impact across sectors such as banking, insurance, healthcare, and government. Key applications in banking, insurance, and healthcare demonstrate the diverse opportunities and challenges faced when integrating AI into industry-specific processes.

The APAC AI landscape showcases varying adoption rates, with China, India, and Japan among those leading in investment increases. Although Australia is not at the forefront, its AI spending is on the rise, with notable increases expected over the next year.

Mr. Jennings emphasises the need for strategic frameworks in AI investments, "In order to realise these top business outcomes from AI investments, Australian businesses need to assess how AI Leaders across APAC are building strategic frameworks around their investments. These are lessons that are invaluable, particularly in Australia where AI maturity is still developing."

The IDC Data and AI Pulse: Asia Pacific 2024 study, conducted in June 2024, surveyed 509 executives across various industries and countries in the Asia Pacific region, investigating their AI investment strategies and the challenges they face in achieving effective AI outcomes.