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Monday, 25 April, 2022

AI activity in UK business – Analysis

AI activity in UK business – An assessment of the scale of AI activity in UK business and scenarios for growth in the next twenty years.

The UK government Department for Digital, Culture, Media and Sport (DCMS) commissioned a report by Capital Economics for this comprehensive report. It is designed to get a gauge on current and future use of AI by UK businesses.

The report takes into account various business sizes and sectors and there are may key findings including:

Key finding 1 – AI Adoption

  • Around 15% of all businesses have adopted at least one AI technology, which translates to 432,000 companies.
  • Around 2% of businesses are currently piloting AI and 10% plan to adopt at least one AI technology in the future, equating to 62,000 and 292,000 businesses respectively.
  • As businesses grow, they are more likely to adopt AI; 68% of large companies, 34% of medium sized companies and 15% of small companies have adopted at least one AI technology; the latter make up the majority of the UK business landscape and hence drive the UK average result of a 15% adoption rate.

Thoughts and insights: These are reasonable figures. I anticipate that this will vastly increase in the next few years. Larger companies, often technologically orientated, tend to adopt early on as they have the capacity to adopt change.

Key finding 2 – Routes to AI

  • Approximately 40% of businesses (172,000 firms) that have adopted AI primarily develop it in-house
    and 40% (171,000 firms) purchase ‘off-the-shelf’ solutions; the remaining 20% (88,500 firms) outsourced the development of AI applications to external providers.
  • Medium sized firms were the most likely to develop AI solutions in-house. Around 49% of these firms
    did this compared to 40% of large firms and 34% of small firms.

Thoughts and insights: Most companies are implementing AI in-house. However, there is an array of companies and platforms that are helping assist AI at all levels. Outsourcing will set to increase as more vendors enter the market with low-code/no code tools or packages in next few years.

Key finding 3 – Scope for AI adoption

  • In our central scenario, the adoption rate increases from 15.1% in 2020 to 22.7% in 2025, with an additional 267,000 businesses using AI in their operations.
  • The adoption rate for small firms increases by 7.6 percentage points between 2020 and 2025 compared to 9.7 percentage points in medium sized companies and 11.2 percentage points in large companies.
  • By 2040, the overall adoption rate will reach 34.8%, with 1.3 million businesses using AI in the central scenario.

Thoughts and insights: I would anticipate these figure will be higher if the economy holds. The breadth and scope of AI in any business is simply huge.

In summary
This is a great report and really outlines some core areas of AI adoption in the UK economy. I would think that some of the figure may be higher as more companies understand the value of AI throughout their business as well as newer opportunities. These are exciting times for the future and I am always happy to look at unlocking the various opportunities for any company.

Read the report here

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