AI Readiness Stagnates in Singapore Amid Rapid Market Changes and Expected Impact

• Companies in Singapore are confronting the reality of their AI readiness, with just 13% fully prepared to capture AI’s potential—a figure unchanged from last year.
• Organisations are heavily investing in AI, with 37% of businesses directing 10–30% of their IT budgets to AI deployment, yet the returns have yet to match expectations.
• An increasing urgency sees 58% of businesses acknowledging they have up to one year to refine their AI strategies or face possible adverse outcomes.

Singapore, November 13, 2024 — Cisco, a global leader in networking and security, has today shared insights from its Cisco 2024 AI Readiness Index. The findings reveal that only 13% of organisations in Singapore are entirely equipped to implement and harness AI-driven technologies, showing no improvement from the same percentage recorded a year prior. This static progress underscores the difficulties businesses face in adopting, deploying, and fully capitalising on AI. With the swift pace of market evolution and the projected substantial impact of AI on business operations, this readiness gap becomes increasingly significant.

The index is drawn from a double-blind survey involving 3,660 senior business leaders from organisations employing over 500 staff across 14 APJC markets. These leaders bear responsibility for AI integration and deployment within their organisations. The AI Readiness Index evaluates six core pillars: strategy, infrastructure, data, governance, talent, and culture.

Acting with Urgency

AI has evolved into a central element of business strategy, and companies are increasingly aware of the need to adopt and deploy AI solutions. In Singapore, 98% of organisations report heightened urgency in deploying AI over the past year, driven primarily by CEOs and senior leadership teams. Furthermore, companies are committing substantial resources to AI, with 37% indicating that 10 to 30% of their IT budgets are dedicated to AI deployments.

Despite these significant investments in AI within critical areas such as cybersecurity, IT infrastructure, data analytics, and data management, many businesses find that returns on these investments fall short of their expectations.

Tay Bee Kheng, President, ASEAN, Cisco, remarked, “As businesses advance in their AI journeys, it’s essential they take a comprehensive approach to implementation, aligning AI ambitions with readiness. The AI Readiness Index for this year shows that, to fully realise AI’s potential, companies require a modern digital infrastructure capable of handling increasing power demands and network latency from expanding AI workloads. This must be underpinned by the appropriate visibility to achieve their business objectives.”

Key Findings:

AI Readiness Declining Across Several Pillars: Infrastructure stands out as a major pain point, with one of the largest decreases in readiness seen in areas like compute power, data centre network performance, and cybersecurity. Only 22% of organisations have the GPUs required to meet both current and future AI demands, and a mere 25% possess the capabilities to safeguard data in AI models using comprehensive encryption, security audits, continuous monitoring, and rapid threat responses.

Investments Falling Short of Expectations: In the past year, AI has been a top priority for investment among Singapore’s organisations, with 37% of IT budgets directed towards AI projects. Investment has been concentrated in three strategic areas: cybersecurity (where 48% of companies report full or advanced deployment), IT infrastructure (38%), and data management (33%). The primary objectives behind these investments are enhancing efficiency across systems, processes, and operations; driving innovation and competitiveness; and growing revenue and market share.

However, despite increased spending, nearly half of those surveyed indicated they have yet to see the gains they anticipated, whether in terms of augmenting, assisting, or automating existing processes or operations.

Intensifying Pressure to Succeed: Pressure from senior leadership to implement AI is mounting. Middle management (39%) and boards of directors (35%), who are closely behind the CEO and senior leadership teams in championing AI deployment, make up almost half (47%) of the companies. With time pressing, businesses in Singapore are accelerating efforts and ramping up investments to overcome barriers and embrace AI-powered transformation. Notably, 18% of companies plan to allocate over 40% of their IT budgets to AI in the next four to five years—a significant rise from the 4% of companies currently dedicating a similar proportion of their budgets to AI.

Businesses recognise the need to enhance their AI readiness. Across Singapore, over half (51%) list the improvement of IT infrastructure scalability, flexibility, and manageability as their top priority, acknowledging gaps that must be addressed to achieve broader AI readiness.

Addressing Skills and Talent Gaps

While each pillar presents unique challenges, a recurring theme has emerged—a shortage of skilled talent. This talent gap is the leading challenge across infrastructure, data, and governance, underscoring the critical need for proficient professionals to lead AI initiatives.

Anupam Trehan, VP, People and Communities APJC at Cisco, said, “As the pace of AI adoption accelerates, talent will be a defining factor for businesses. There is already a shortage of skilled professionals across multiple AI areas. Companies will need to invest in developing their existing workforce to meet the increasing demand. At the same time, it is essential for all stakeholders—private and public sectors, educational institutions, and government—to collaborate in developing local talent so that the entire ecosystem can harness the immense potential that AI offers.”