Recent UK AI headlines are dominated by the massive £2.5 billion government boost to establish the UK as a global AI leader. Yet the news has been received with mixed reviews and some hand wringing. Is it a moonshot for UK companies? Will AI investments really drive UK productivity as promised? What will be the trade offs?
Basic economics teaches us that investment increases productivity. A company’s investment in a new machine accelerates manufacturing, streamlining and automating processes. A new train route built by the government facilitates logistics, getting goods to market faster. Likewise, new technologies contribute to the productivity of individual workers which collectively raises output. However, just like with the new machines or the train, the new technology needs to be deployed correctly.
It’s never a big bang
Massive technology innovation doesn’t happen overnight, at least not in the business world. The Industrial Revolution spanned 150 years: the shift from an agrarian to industrial economy in Britain took from about 1750 to 1900. Tool adoption in the Stone Age took millions of years.
Yes, information technology adoption has happened faster, and accelerated with each new tool. It took approximately 75 years for the telephone to reach 50 million users, 12 years for mobile phones, four years for Facebook, two years for Twitter and only two months for Gen AI.
Early adoption often starts as a “shadow”
While personal adoption beats records set by previous technologies, enterprise transformation doesn’t happen at the same pace. In fact, technology often comes in first by the back door because enterprise adoption, sanctioned by IT, is slower. Shadow IT, be it mobile phone use in the naughts or AI queries today, continues to plague enterprise IT. In a recent global survey commissioned by Snowflake, The Radical ROI of Gen AI and Agents, 57% or respondents reported using unsanctioned AI tools.
Those rogue users have cast a wide shadow. 72% of respondents in procurement say genAI is helping them do their jobs, whereas just 30% of IT respondents believe procurement teams are actually using Gen AI. Of HR professionals, 66% say their organisation is using Gen AI in areas like resume screening, employee training, and more. However, just 34% of IT respondents report Gen AI is being used to aid HR. IT has been left in the dark as many functions embrace new AI tools to make their jobs easier. This disconnect between frontline experimentation and IT visibility highlights a familiar pattern in enterprise technology adoption: innovation rarely waits for governance to catch up.
There is a silver lining, even in the UK
Despite talk of an “AI bubble” and perhaps a result of individual enthusiasm for the technology, optimism among leaders remains strong in the UK. In a recent YouGov survey of 500 executives across the UK, commissioned by Snowflake, 57% of respondents expect their AI investment to increase over the next 12–24 months. Another 27% expect investment to stay the same. And, only 1% expect to decrease spending. Most of the remainder doesn’t know…yet.
That investment follows early success as 23% of survey respondents reported that AI is delivering clear, measurable productivity gains. Another 20% report that AI is showing early signs of productivity improvement, but the full impacts aren’t being measured yet. For another 22% of respondents, AI remains largely experimental. That’s not surprising as these are still very early days.
What does this ultimately mean for the business? Over half of the respondents (51%) expect to see the business impact of AI in less than two years. For business leaders surveyed, these gains will manifest themselves at both their top and bottom line. Yet cost reduction is the clear goal. Nearly half (44%) say that cost reduction matters most as the key measure of success.
Of note, 39% will measure success in their ability to improve customer experience – potentially reducing customer attrition and increasing customer lifetime value. Taken together, the findings suggest that while AI maturity may still be uneven across organisations, confidence in its long-term business value is already translating into sustained investment and clear expectations for success.
The stars must align for success
To achieve that success, UK companies must overcome persistent challenges. The most critical is alignment between business objectives and AI initiatives. We often hear “There is no AI strategy without a data strategy.” However, there is nothing without a business strategy. In the current survey, only 24% of organisations say AI initiatives are identified and prioritised using a rigorous framework aligned to business objectives. Another 56% report some business alignment, either inconsistently or informally; and 10% report a lack of alignment with the business. Without business objectives, AI initiatives lack a clear mission.
It’s that business alignment, not necessarily the technology itself, that holds back AI value creation, at best. At worst, overexuberance and lack of prioritisation fuel budget overruns, perception of failure, and resistance to change. Such overruns jeopardises future initiatives and creates even greater resistance to AI. As a result, some companies choose a more cautious approach. As the Chief Data Officer of a large European automotive manufacturer observed, “AI can save us money with efficiency gains. But is it worth the cost? Our goal as a data team is to understand it first, and only roll it out to business users where it makes the most sense.”
The lesson is clear. AI isn’t a moonshot, but does require a clear mission. It’s not about being “AI First” but rather about defining business objectives and choosing the right path to get there. Prioritisation based on alignment with business strategy and available resources increases the likelihood of success.
