Asia Pacific sees AI investment surge to USD $45 billion in 2024

New research from IDC and SAS indicates a surge in AI investments across the Asia Pacific region, with 43% of organisations intending to significantly increase their spending on AI by more than 20% in the coming year.

The IDC Data and AI Pulse: Asia Pacific 2024 study, commissioned by SAS, highlights a notable divide between AI Leaders and AI Followers. The study reports that only 18% of businesses in the region are classified as AI Leaders, with Australia showing a lower percentage of just 9%. This suggests that a significant portion of organisations are engaging in AI projects without a clear strategic direction.

Craig Jennings, Vice President at SAS for Australia and New Zealand, commented on the situation: "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."

The research further reveals that AI Leaders tend to focus on business outcomes such as new revenue growth (32%), increased operational efficiency (31%), and higher profits (26%). In contrast, AI Followers prioritize improving customer service (27%), expanding market share (25%), and achieving quicker time-to-market (25%).

Shukri Dabaghi, Senior Vice President for Asia Pacific and EMEA Emerging at SAS, remarked on this contrast: "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."

As businesses aim to leverage AI's transformative potential, Mr. Dabaghi advises: "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."

Chris Marshall, Vice President of Data, Analytics, AI, Sustainability, and Industry Research at IDC Asia/Pacific, added: "The IDC Data and AI Pulse: Asia Pacific 2024 study is an important snapshot of how hundreds of large APAC organisations are approaching adoption and implementation of AI, highlighting the leaders and followers across industries. These insights give us the opportunity to unpack the barriers to successful AI implementation, allowing businesses to make wiser investments into these new and emerging technologies, without being caught-up in the gold rush."

Investment in generative AI is noted to have grown significantly, from 19% in 2023 to a projected 34% in 2024, indicating a more diversified investment approach that includes predictive and interpretive AI.

The findings suggest an expected AI expenditure in the Asia Pacific of USD $45 billion in 2024, with a projected increase to USD $110 billion by 2028, signifying a compound annual growth rate of 24% from 2023 to 2028.

Despite these prospective investments, challenges such as a lack of skilled professionals (35%) and issues related to data governance (30%) and data access due to infrastructure restrictions (41%) continue to hinder Australian organisations.

Mr. Dabaghi also noted, "While consumer access to generative AI tools made AI feel magical, integrating it into an enterprise environment takes a lot of work, the right infrastructure, and often the high expectations placed on these tools are unrealistic. 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."

In terms of industry-specific AI adoption, the study highlights applications in sectors such as banking, insurance, healthcare, and government, with a consistent focus on overcoming a prevalent skills gap.

AI investment trends vary across the region, with China showing significant upcoming advancements. The study emphasises the importance of strategic frameworks for AI investments to ensure meaningful and sustainable outcomes.