The rise of artificial intelligence (AI) continues to reshape industries and governments, with businesses and public sector organizations investing heavily in the technology.
However, recent surveys from Ernst & Young LLP (EY US) reveal a complex landscape where enthusiasm for AI is tempered by significant barriers, particularly in understanding and implementing advanced AI systems like agentic AI, and in navigating budget and cybersecurity constraints in the public sector.
According to the third EY US AI Pulse Survey, conducted this year, businesses are significantly increasing their AI investments.
The survey, which polled 500 senior US decision-makers across diverse industries, found that 21% of organizations currently investing in AI have allocated $10 million or more, up from 16% a year ago.
Looking ahead, 35% of senior leaders anticipate spending at least $10 million on AI in the coming year, reflecting strong confidence in AI’s transformative potential.
Notably, 97% of senior leaders reported positive returns on their AI investments, with those dedicating 5% or more of their budgets to AI seeing higher returns in areas like cybersecurity (78% vs. 49%) and process automation.
Despite this optimism, the survey highlights a critical gap in understanding and adopting agentic AI—systems capable of autonomously managing tasks and entire business processes.
While 73% of respondents believe agentic AI could one day manage entire business units, 57% admit that senior leaders in their industries lack a clear understanding of its benefits.
Only 34% of organizations have begun implementing agentic AI, with early adopters primarily using it for process management (86%).
Whitt Butler, EY Americas Vice Chair of Consulting, emphasized the need for a “deliberate and human-centric approach” to agentic AI, stressing responsible governance and workforce preparation to align AI capabilities with business outcomes.
The disconnect stems from several barriers.
Many organizations struggle with inadequate data infrastructure, with 83% of leaders noting that stronger systems would accelerate AI adoption.
Additionally, only 34% are building comprehensive AI governance frameworks, and just 32% are fully addressing bias in AI models, exposing risks in scaling advanced AI applications.
Talent shortages also pose a challenge, as 83% of leaders prioritize hiring AI-skilled workers, but only 37% are actively upskilling their workforce at scale.
In the public sector, the EY State and Local Government Tech Modernization Survey, conducted this year, reveals a surge in AI adoption but significant obstacles to broader technology upgrades.
Surveying 300 US state and local IT leaders, the study found that AI use has tripled over five years, rising from 13% to 45%, with generative AI adoption growing from 12% to 39%.
Priorities include employee training (49%), comprehensive AI strategies (49%), and building public trust (48%).
However, financial and cybersecurity pressures are impeding progress.
Only 47% of IT leaders prioritize modernization, compared to 56% focusing on cost reduction and 54% on improving cybersecurity.
The survey highlights concerns about sophisticated AI-driven cyberattacks (82%) and the lack of clear AI regulations (78%), which complicate adoption.
Suzanne Vitale, EY Americas Government & Public Sector Leader, underscored the importance of private-sector partnerships, with 89% of leaders recognizing their potential to enhance mission outcomes and 61% fearing obsolescence without such collaborations.
Both surveys underscore a common theme: while AI’s potential is undeniable, its effective implementation requires overcoming significant hurdles.
Businesses must invest in data infrastructure, ethical governance, and talent development to fully harness agentic AI.
Similarly, state and local governments need strategic partnerships and cybersecurity measures to modernize effectively.