The Cisco 2024 AI Readiness Index reveals that only 18% of organisations in South Africa are fully prepared to deploy and leverage AI-powered technologies. This underscores the challenges companies face in adopting, deploying and fully leveraging AI. Given the rapid market evolution and significant impact AI is anticipated to have on business operations, this readiness gap is especially critical.

“AI is reshaping the future of business on a global scale and South African business must adapt to keep pace with the global market. While AI has amplified the sophistication of threats, it also presents an unparalleled opportunity to leap forward with advanced capabilities. Businesses must address gaps in infrastructure, skills and governance to protect their assets and fully harness AI’s transformative power,” says Smangele Nkosi, General Manager at Cisco South Africa.

The index is based on a double-blind survey of 7 984 senior business leaders from organisations with 500 or more employees across 30 markets. These leaders are responsible for AI integration and deployment within their organisations. The AI readiness index is measured across six pillars:

1. Strategy
2. Infrastructure
3. Data
4. Governance
5. Talent
6. Culture

Acting with urgency

AI has become a cornerstone for business strategy and there is an increasing urgency among companies to adopt and deploy AI technologies. In South Africa, nearly all (99%) report an increased urgency to deploy AI in the past year, primarily driven by the CEO and leadership team. Additionally, companies are committing significant resources to AI with over 50% indicating that between 10-30% of their IT budget is allocated to AI deployments.

Despite significant AI investments in strategic areas like cybersecurity, IT infrastructure and data analytics and management, many companies report that returns on these investments are not meeting their expectations.

Key findings of the survey

• AI readiness declined across all pillars with infrastructure identified as a pain point: The largest decline was in infrastructure readiness with gaps in compute, data centre network performance and cybersecurity, among other areas. Only 20% of organisations have the necessary graphics processing units to meet current and future AI demands and nearly half (48%) have the capabilities to protect data in AI models with end-to-end encryption, security audits, continuous monitoring and instant threat response.
• Companies are investing but gains fall short of expectations: Over the past year, AI has been a priority spend for organisations in South Africa with 54% allocating 10-30% of their IT budgets to AI projects. AI investments have focused on three strategic areas: cybersecurity (55% of companies are at full/advanced deployment), IT infrastructure (50%) and data analysis (52%). The top three outcomes they aim to achieve include:
  1. Improving the efficiency of systems, processes, operations and profitability.
  2. Ability to innovate and remain competitive.
  3. Create a better experience for customers and partners.

However, over 45% of respondents report that the gains from their AI investments have not met expectations in augmenting, assisting or automating current processes and operations.

Despite increased investments, more than 45% of respondents said they have either seen no gains or the gains have fallen short of their expectations in augmenting, assisting or automating current processes or operation.

“Organisations must move beyond incremental improvements and adopt a holistic approach to readiness. By addressing infrastructure and talent gaps, South African businesses can create a foundation that not only supports AI integration but also ensures sustainable value creation,” adds Nkosi.

Relentless pressure to succeed

There is mounting urgency from top leadership to implement AI technologies. More than half (57%) of companies report that the CEO and the leadership team are driving the pressure, followed by the board of directors (45%) and the investors and shareholders (41%). As the clock ticks, businesses in the region are accelerating efforts and increasing investments to overcome barriers and embrace AI-driven transformation. Notably, half of organisations plan to allocate more than 40% of their IT budget to AI investments in the next four to five years – a significant increase from 10% of companies who said they are allocating a similar portion of their IT budget to AI currently.

Companies recognise they need to enhance their readiness to leverage AI effectively. Across South Africa, 48% rated improving scalability, flexibility and manageability of their IT infrastructure as their top priorities, highlighting an awareness of the gaps that must be addressed to improve overall AI-readiness.

“AI adoption is no longer a question of 'if' but 'how effectively'. The push from leadership is a positive signal but it needs to be matched by targeted investments in scalable systems and strategies to convert ambition into measurable outcomes,” says Nkosi.

Addressing skills and talent gaps

Despite unique challenges within each pillar, a common theme is lack of skilled talent. Companies highlighted this as the top challenge across infrastructure, data and governance, underscoring the critical need for skilled professionals to drive AI initiatives.