Fueling the AI transformation

In recent years, we have navigated unprecedented disruption in the economy and society at large: A global pandemic, rapidly changing supply chains, shifting employee needs, unexpected geopolitical conflicts, and the general recognition that none of us can continue to do business as usual. When it comes to managing these challenges, artificial intelligence (AI) can play a unique and powerful role.

In the current fifth edition of our annual State of AI in the Enterprise report, Germany contributes a disproportionally high number of organizations associated with the strongest AI outcomes (Transformers), ranking 3rd out of the 13 countries surveyed. However, this position seems to be volatile for two fundamental reasons. Firstly, most of the German Transformers are barely fulfilling these criteria. This means their place is not secure in the high-paced domain of AI and they can easily fall back behind global competition. 

Secondly, our survey results show that many German companies seem to have skipped building the foundations for sustainably leveraging AI, which can be seen in the above-average criticality of challenges reported by German respondents.

The AI market continues to advance rapidly, and 94% of leaders across industries consistently reported how important this technology is to their future. However, German companies are at the bottom with only 87% considering AI solutions as important in the next five years.

There are risks lurking that German organizations will fail to harness more potential of AI, compared with international competitors who see AI technology as a key to success over the next years and do invest accordingly. As organizations attempt to scale up their AI projects, German respondents reported challenges as more complex than their global counterparts. Top AI scaling challenges for German organizations with more than 50% of respondents including:

• Managing AI-related risks

• Executive commitment

• Identifying the best use cases

Four actions: Scaling outcomes and value from AI

1. Invest in culture and leadership
German organizations are falling far short of global findings when it comes to the importance of cultural initiatives. In Germany in particular, many risks arise from the failure to address cultural challenges, and leaders should do more to drive the cultural change, establish new ways of working, ensure the ethical use of AI, and to drive greater business results with AI.

2. Transform operations
An organization’s ability to build and implement AI ethically and at scale depends largely on how well the organization has tailored operations to accommodate the unique demands of new technologies. Workflows and roles should be re-evaluated to manage risk and achieve new value. German companies have more room for improvement when it comes to implementing best practices.

3. Orchestrate Tech and Talent
On the flip side of the culture and leadership coin, companies must develop their AI strategies in a tight talent market, with growing off-the-shelf platforms, tools and accelerators that can jump-start a company’s transformation. Organizations should align their approaches to AI based on the skill sets they have available, where Germany’s position is unique in obtaining AI skills by hiring new university graduates.

4. Select use cases that accelerate value                                                       
AI is fueling transformations across all industries, and many leaders have begun to unlock the use cases that drive the most value within their given context. The important takeaway is to orchestrate a strategy of both near-term and long-term differentiated applications of AI.

To obtain a global view of how AI is transforming organizations, Deloitte surveyed 2,620 global business leaders between April and May 2022. Thirteen countries were represented: Australia (100 respondents), Brazil (115 respondents), Canada (175 respondents), China (200 respondents), France (130 respondents), Germany (150 respondents), India (200 respondents), Israel (75 respondents), Japan (100 respondents), Singapore (100 respondents), South Africa (75 respondents), the United Kingdom (200 respondents), and the United States (1,000 respondents). All participating companies have adopted AI technologies and are AI users.

The elephant in the room is the question whether the high share of 42% Transformers in Germany vs. 27% globally, ranking Germany 3rd of 13, is also indicative of a high sustainable AI maturity in German companies. Download the fifth edition of the State of AI in the Enterprise report here for a deeper analysis.