Cisco's second AI Readiness Index reveals that despite a drop in readiness, Canadian organizations are understanding the imperative of AI adoption

News Summary:

• Only seven per cent of Canadian organizations fully prepared to adopt and deploy AI, down from nine per cent last year.
• Despite the drop in readiness, urgency to deploy is growing, with 96 per cent reporting an increase over the last year.
• Canadian organizations are scaling investments, 43 per cent say they will be spending as much as 20 to 50 per cent of their IT budgets on AI in the next four to five years, more than double what it is today.

Toronto, ON, Nov 25, 2024 — Cisco, the worldwide leader in networking and security, today released the Canadian results of the 2024 AI Readiness Index, revealing that only seven per cent of organizations in Canada are fully prepared to deploy AI-powered technologies, down from nine per cent a year ago. This decline in readiness year-over-year signals a widening gap between intention and implementation, potentially threatening Canada's ability to compete globally as industries race to harness AI's transformative potential.

The report explores how prepared organizations are to invest in, deploy and use AI, measured across six pillars: strategy, infrastructure, data, governance, talent, and culture.

Acting with Urgency
Canadian organizations feel the urgency to adopt AI, yet infrastructure, talent gaps and data silos remain significant barriers to wide adoption. Nearly all Canadian businesses (96 per cent) report an increased urgency to deploy AI in the past year, primarily driven by CEO and leadership teams. Despite the top-down push and substantial investments - nearly half (45 per cent) of companies are allocating 10 per cent to 30 per cent of their IT budgets to AI - the pace of execution is out of sync with the urgency.

"Eventually there will be only two kinds of companies: those that are AI companies, and those that are irrelevant. AI is making us rethink power requirements, compute needs, high-performance connectivity inside and between data centers, data requirements, security and more," said Jeetu Patel, Chief Product Officer at Cisco. "Regardless of where they are on their AI journey, organizations need to be preparing existing data centers and cloud strategies for changing requirements, and have a plan for how to adopt AI, with agility and resilience, as strategies evolve."

Key Findings for Canada:

• AI Readiness declined across almost all pillars, with infrastructure as the main pain point: The largest decline was in infrastructure readiness, with gaps in compute, data center network performance, and cybersecurity, amongst other areas. Only 15 per cent of organizations have the necessary graphic processing units (GPUs) to meet current and future AI demands and less than a quarter (23 per cent) have the capabilities to protect data in AI models with end–to–end encryption, security audits, continuous monitoring, and instant threat response. GPUs are essential for processing the massive computations AI models require, from training large language models to performing predictive analytics in real time.

• Strategy has largely been set: Despite a decrease this year, strategy remains as the pillar with the highest levels of AI readiness with 16 per cent rated as Pacesetters. However, there is still work to do as about one-third (35 per cent) of Canadian companies fall within the lower two categories. A bright spot for Canada: 92 per cent of organizations have an AI strategy in place or under development, compared to 61 per cent globally.

• Companies are increasing investment and looking long-term: Over the past year, AI has been a priority spending area for organizations in Canada, with 45 per cent allocating 10 to 30 per cent of their IT budgets to AI projects. AI investments have focused on three strategic areas: cybersecurity (36 per cent of companies are at full/advanced deployment), IT infrastructure (32 per cent), and customer experience (30 per cent). Looking forward, 43 per cent say they will be spending as much as 20 to 50 per cent of their IT budgets on AI in the next four to five years, more than double what it is today. Eighty-four per cent of Canadian organizations believe AI's impact will surpass expectations after five years.

• Data remains a barrier: Companies report feeling less ready to manage data effectively for AI initiatives, compared to a year ago as only eight per cent of companies are considered Pacesetters. A significant portion (85 per cent) still have data siloed, making it harder to unlock AI's full potential.
  
• Talent gaps persist: Only half of respondents (54 per cent) feel there is enough talent available with the right skills to address the growing demands of AI overall. Companies highlight this as the top challenge across infrastructure, data, and governance, underscoring the critical need for skilled professionals to drive AI initiatives.

Companies recognize they need to enhance their readiness to leverage AI effectively. Across Canada, 54 per cent rate improving scalability, flexibility, and manageability of their IT infrastructure as a top priority, highlighting an awareness of the gaps that must be addressed to improve overall AI readiness.

"Canadian businesses are all in on strategy and investment, but the roadblocks - talent shortages, infrastructure gaps and siloed data - are putting the brakes on progress. Without foundational improvements in compute power, network optimization, cybersecurity and talent development, the true transformative power of AI will remain out of reach," said Robert Barton, Chief Technology Officer at Cisco Canada.

Cisco AI Readiness Index:
The Cisco AI Readiness Index is conducted by an independent third-party and based on a double-blind survey of 7,985 senior business leaders, with responsibility for AI integration and deployment at organizations across 30 markets with 500 or more employees. The Index assessed respondents' AI readiness across six key pillars: strategy, infrastructure, data, talent, governance and culture.

Companies were examined on 49 different metrics across these six pillars to determine a readiness score for each, as well as an overall readiness score for the respondents' organization. Each indicator was assigned an individual weightage based on its relative importance to achieving readiness for the applicable pillar. Based on their overall score, Cisco has identified four groups at different levels of organizational readiness – Pacesetters (fully prepared), Chasers (moderately prepared), Followers (limited preparedness) and Laggards (unprepared).

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CONTACT: Samantha Campana 
Communications Lead, Cisco Canada 
sacampan@cisco.com