UK AI investment rises as readiness & skills gaps persist

UK businesses are experiencing strong momentum in artificial intelligence deployment, but technology, skills, and readiness gaps remain significant obstacles, according to new research from Kyndryl.

The latest Kyndryl Readiness Report, based on a survey of 3,700 senior leaders across 21 countries including the UK, provides insight into how organisations are advancing in modernising their operations, scaling AI solutions, and managing emerging risks.

Cyber resilience focus

Cybersecurity remains a central concern for UK organisations, with 83% of UK businesses reporting a cyber-related outage in the past year. As a result, cybersecurity measures and IT infrastructure upgrades have emerged as the two most important risk-mitigation actions, each cited by 43% of UK leaders surveyed.

The report indicates a continued drive among businesses to address vulnerabilities and enhance their resilience amid a challenging threat landscape.

Cloud strategy reassessment

Geopolitical risks are influencing cloud data strategies across the UK, with 80% of leaders expressing concern about the global management and storage of data. This figure is higher than the global average of 75%. In response, 68% of UK organisations have altered their cloud strategies. Changes include investing in data repatriation, reassessing vendor relationships, and moving toward private cloud models to mitigate regulatory and sovereignty issues.

There is evidence of regret or dissatisfaction with initial cloud migration efforts: 94% of UK leaders indicated a desire to change aspects of their existing cloud setup, particularly by increasing focus on security and compliance (44%) and improving integration planning (38%).

AI investment and workforce challenges

UK companies have increased their investment in AI by 33% year-on-year, reflecting the growing importance of the technology in business transformation. However, 62% believe there is now greater pressure to demonstrate return on investment compared to last year, a trend that reflects a global pattern.

AI is expected to drive significant transformation in the workplace: 84% of UK executives predict that AI will completely transform roles and responsibilities within their organisations in the next 12 months. This sentiment is only slightly below the global figure of 87%. Despite optimism, concerns remain about preparedness, with 46% of UK respondents expressing doubt about their organisation's technical skills to capitalise fully on AI opportunities.

"A readiness gap exists as enterprises grapple with the promise of transformative value from AI. While 90% of organizations think they have the tools and processes to scale innovation, more than half are stalled by their tech stack, and less than a third say their employees are truly ready for AI. Closing that gap is the challenge and opportunity ahead," said Martin Schroeter, Chairman and CEO of Kyndryl. 

The report suggests that, while 54% of organisations globally are seeing positive returns from AI investments-an increase of 12 points from 2024-62% of organisations have not yet advanced their AI projects beyond pilot stages. Confidence in current implementation capabilities remains high, with 90% stating they can quickly test and scale new ideas, but foundational technology limitations persist for more than half of respondents.

Balancing legacy infrastructure and new risks

Legacy infrastructure continues to present significant challenges for organisations navigating the move to scalable and adaptable solutions. According to the report, 70% of CEOs globally admit their current cloud setups were achieved "by accident rather than design," highlighting ongoing integration and planning difficulties.

Organisations are also navigating increasingly complex regulatory environments. Approximately three in four senior leaders globally are concerned about the geopolitical risks of global cloud environments, and 65% have adjusted strategies accordingly.

Talent and culture as key factors

The readiness of employees emerges as another major issue. Nearly 9 in 10 senior leaders believe AI will fundamentally change jobs in the next year, yet just 29% of respondents feel their workforce is ready to leverage these technologies effectively. In addition to technical skills, cultural barriers are proving problematic, with nearly half of CEOs reporting that their organisation stifles innovation (48%) and 45% indicating slow decision-making as an impediment to progress.

The report identifies "Pacesetters"-organisations that stand out by emphasising culture, upskilling, and leadership alignment. Compared to others, they are found to be 32 points less likely to view their technology stack as a barrier, 30 points more likely to believe their cloud setup can adapt to new regulations, and 20 points less likely to have suffered a cyber-related outage in the past year.

As AI investment and implementation accelerate, the ability of UK organisations to address technology, talent, and cultural readiness gaps will shape the pace and scale of AI adoption and related digital transformation efforts.