Singaporean enterprises are cutting back on their AI budgets, allocating just 11.5% of their technology spending to AI this year, down from 15.5% in 2024, according to a new study by ServiceNow. Despite increased government support for AI adoption, firms are struggling with data security and governance issues, which are impeding the realisation of AI’s full potential.
The study highlights that only 26% of Singaporean enterprise leaders believe their organisations have reached a maturity level capable of transforming with AI. Furthermore, 29% reported no positive impact on gross margins from AI investments over the past year. The primary challenges identified include a lack of leadership alignment, unclear governance frameworks, and an overemphasis on technical upskilling without comprehensive enterprise readiness.
CK Tan, APJ Innovation Officer at ServiceNow, noted, “What we’re seeing in Singapore and across Asia-Pacific is that AI adoption is accelerating, but strategic clarity is lagging. Without a clear shared AI vision across the business, even the most promising AI investments struggle to deliver.”
Cybersecurity and governance gaps are significant barriers, with 21% of enterprise leaders citing data security and 15% pointing to governance deficits as major obstacles. The fragmented approach to AI innovation, with 72% of enterprises deploying AI through multiple task forces, exacerbates these issues, leading to reduced transparency and stalled returns.
Despite confidence in AI talent, with 31% of enterprises expressing assurance in their capabilities, the absence of strategic structures and governance frameworks limits effective AI deployment. ServiceNow is addressing these gaps by partnering with Nanyang Polytechnic to develop AI curriculum and research, aiming to equip students with practical skills for real-world applications.
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