UAE firms are betting big on AI despite modest ROI, says IBM’s Sarah Durr, as innovation and productivity emerge as key drivers of long-term tech investment.

The development and use of artificial intelligence (AI) has proved itself as one of the most transformative elements of the technology race. According to Statista, the number of AI tool users is expected to increase by 414.7 million to reach 729.11 million by 2030. Yet the monetary impact may not be as impressive as might be expected; in the UAE, less than a quarter (24%) of CEOs say their AI initiatives delivered expected return on investment (ROI), a figure that reflects the global trend of 25% as per the latest IBM CEO Study.

This would suggest a gap between the appetite for embracing AI, the investments being made and ROI being realised at this stage of the hype cycle. To investigate this in more detail, IBM conducted multiple studies to examine how companies are investing in AI for the long term, and the specific tools and strategies being used to drive tangible value.

Investment in AI remains a global priority

What’s promising is that despite statistics showing less than impressive ROI, the global trend for AI investments remains on an upward trajectory. A third of respondents in this IBM study said they were planning to start more than 20 AI pilot projects in 2025 – figures that will no doubt increase as AI cements itself in business operations. From an IT decision maker (ITDM) point of view, 47% globally reported they are already seeing a positive ROI from their AI initiatives. Yet when we dive further into the findings, what’s interesting to see is a clear change in how success is measured for AI. Many companies are placing greater stock in success metrics such as innovation and productivity gains, in part because traditional hard-dollar ROI benefits have yet to show up on the balance sheets. Regardless, it’s clear that companies do recognize the value of defining specific use cases and optimizing AI projects.

Inspire, an IBM Business Partner that delivers IT consulting services to organizations in the UAE and across the region, had legacy HR processes that were time-consuming thanks to their dependency on manual tasks. To remain a competitive employer, the company needed to make such routine processes quicker and more efficient. In building an innovative genAI assistant for Inspire, IBM realized a 15% decrease in costs and a 15% reduction in the time taken by employees to complete the routine tasks.

Adding agentic AI to the progress

The outlook for the Middle East is generally positive as per the recent IBM AI Projects to Profits study. Over the past year, 43% of Middle East organizations have improved key metrics such as revenue growth and operating margin growth by deploying AI initiatives. Respondents said that 64% of AI budgets are now spent on core business functions.

62% of executives consider agentic AI to be important to their organizational future, while an equal proportion i.e. 63% consider it to be market ready.

Meanwhile globally, over two-thirds (69%) of executives surveyed say ‘improved decision-making’ is the number one benefit of agentic AI systems.

 Hurdles to overcome

As per the IBM AI Projects to Profits study, the proportion of surveyed organizations relying on an ad hoc approach to AI has declined from a reported 19% last year to just 6% today, indicating increased confidence and commitment to AI-driven transformation. As the pace of digital transformation accelerates, enterprises can turn to AI agents as the next evolution of intelligent automation. 83% of respondents say they expect AI agents to improve process efficiency and output by 2026, and 71% believe agents will autonomously adapt to changing workflows. Though benefits were cited among those surveyed, concerns with agentic AI adoption are still present among leaders. Those surveyed indicate that concerns around data (49%), trust issues (46%) and skills shortages (42%) remain barriers to adoption for their organizations.

For businesses to reap the benefits of AI in 2025, they will need to ensure AI data is up-to-date, relevant, and error-free, and ensure they choose the right models available to complement their existing systems. There is also a clear responsibility to equip workers with the necessary skills to successfully navigate AI transformation, which will require a conscious effort in reskilling and upskilling. This is valuable not just from a competitive perspective but a societal one too, ensuring that large portions of the workforce are not excluded from participating in and benefiting from the future gains AI will most certainly bring.

The foundations for the future

In 2025, companies across the UAE will be looking to build on the momentum of their AI progress. While organizations reporting an ROI as expected almost align with the global average of just a quarter, the overall recognition of the need to increase budget flexibility for AI innovation indicates a growing understanding that such commitment is a long-term investment in your company’s future. By placing more value on productivity gains and faster software developments than traditional financial savings, companies are demonstrating a forward-looking approach to AI that will pay dividends in the future – a future about which I am very excited.

By Sarah Durr, Head of Channel and Partner Ecosystem, IBM Gulf, Levant and Pakistan

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