The North’s AI reckoning

AI has moved well beyond the trial phase for many Northern businesses.

The question now is less about whether companies will use it, and more about how quickly they can turn early adoption into something that moves the dial.

That was the backdrop to a roundtable hosted by RSM in partnership with UKTN which brought together investors, founders and technology leaders to discuss what AI is changing, and what still needs to shift, across the region.

This discussion was hosted following the release of RSM’s latest Technology Industry Outlook report which uncovered what is – and isn’t – working across the technology funding landscape.

No-one around the table questioned the scale of the opportunity. Representing sectors such as finance, manufacturing and healthcare, delegates argued that AI is already helping teams work faster and make better use of data.

But for many organisations, the next step – moving from isolated pilots to wider change – still feels harder to pin down.

Gareth Martin (pictured below), chief executive of AI-powered research and intelligence platform Manuka, said plenty of companies are still using the technology to tweak existing processes rather than rethink how their businesses operate.

“Most organisations have been playing a bit of POC whack-a-mole and trying to find simple use cases to test it out,” he said, adding that embedding AI more deeply into core operations is where real value is likely to emerge.

That hesitancy often stems from how investment decisions are made. Businesses and backers alike want clear proof that projects will deliver returns before committing larger sums.

Ryan Sorby, partner at Palatine Growth Credit, said investors tend to favour projects where the benefits are easy to quantify – even if that keeps the focus on incremental improvements.

“There is an insurtech business that has reduced the underwriting process from a couple of weeks to a few hours, and a fintech business that reviews credit underwriting with a team that is half of the size it used to be,” he said.

Nick Wyatt, deal services partner at RSM, said the pressure to invest is growing regardless. “RSM has committed a billion dollars of spending over the next three years in technology and to accelerate AI.

“This will enhance efficiencies and allow our people to get greater insights to deliver smarter outcomes.” he said.

He said many organisations are taking a layered approach, mixing off-the-shelf tools with tailored systems and internal builds, usually starting with operational improvements before

A helping hand

Attention also turned to longer-standing issues that shape how quickly new technology spreads in the UK.

Colin Smyth, corporate tax partner at RSM, pointed to the country’s track record on research spending.

“The UK’s R&D record historically is pretty poor,” Smyth said. “The reported intensity figure is around 2%. If you look at Japan or the US, it is around 3.5%. South Korea is over 5%.

“If you want to invest in AI, you have got to take it that money away from somewhere else. That is the reality for a lot of businesses.”

“The public sector as a customer should be playing a much better role than it does in supporting startup scale-ups”

Policy support came up repeatedly in the conversation. Darren Griffin, tax director at RSM, questioned whether current incentives give companies enough support to invest over longer timeframes.

“Does there need to be a shift in government policy?” he asked. “From an R&D perspective, the regime provided a greater incentive for companies to invest upfront in R&D, with loss-making companies previously receiving up to a third of their qualifying expenditure back.”

He said that without those kinds of mechanisms, it becomes harder for firms to commit to a longer-term strategy and invest in areas such AI, when dealing with factors such as talent shortages and rapid change.

The pace of technological development itself is another complicating factor. Tom Liptrot (pictured below), founder of AI consultancy Ortom, said many organisations are planning based on capabilities that are already outdated.

“Most companies are thinking six months ago,” he said. “They should be thinking two rounds of scaling ahead. The current technology is almost completely autonomous agents building software that is self-improving. That is where the future is.”

Some speakers argued falling technical barriers could reshape how companies are built in the first place.

Jonny Clark, chief executive of not-for-profit organisation Capital Enterprise, said cheaper and more accessible tools may shift competition toward customer acquisition and distribution.

“All business impact is ultimately downstream of capital and talent,” he said, arguing that infrastructure, skills and funding will play a big role in determining where the benefits land.

Keeping pace

Regional strengths were another thread running through the discussion.

Attendees pointed to lower costs, strong universities and improving infrastructure as advantages for the North. At the same time, several warned the region could end up hosting AI infrastructure rather than leading innovation if investment doesn’t keep pace.

Kirsty Gallagher, managing director of industry body Manchester Digital, said improved connectivity and energy capacity create the conditions for new clusters to form. However, she warned that relying on data centre growth alone will not be enough to drive long-term prosperity.

“The public sector as a customer should be playing a much better role than it does in supporting startup scale-ups and providing some of that infrastructure,” she said.

Questions about scale and what happens after early growth also surfaced.

Several attendees said UK startups are often acquired by overseas buyers once they reach a certain size, with jobs and intellectual property sometimes moving with them. Jonny Clark argued that this reflects differences in late-stage funding between the UK and the US.

Even so, the overall mood of the discussion remained upbeat.

Most delegates agreed that the immediate benefits of AI are already visible in productivity gains, though the bigger effects will depend on whether organisations push beyond pilots and commit to broader deployment.

There was also agreement that technology alone will not determine the outcome. Whether businesses and policymakers are willing to commit capital, and tolerate some risk, may matter just as much as the tools themselves.

Participants:

Read more: Skilled tech migration falls in UK as talent pressure grows