Artificial intelligence (AI) is key to growth for Yorkshire and North East SMEs, but implementation at scale remains the exception – new research has found.

More than half (56%) of regional business leaders surveyed by BGF – the UK and Ireland’s most active growth capital investor – and Beauhurst, view AI as a growth driver. At the same time, six in ten (60%) believe AI is important to their longer-term growth ambitions.

The Unlocking Value from AI report, which draws on independent research from more than 250 SME founders and C-suite leaders, reveals that AI is already playing an important role in the majority (72%) of businesses nationally, while 84% have become more optimistic and trusting of AI in the last 12 months.

Despite the perceived value, the report found that one-fifth (20%) are still in the piloting and prototyping phase, with another 16% still exploring where AI could add value in their business. In fact, 68% of respondents admit that AI is only integrated in some key business functions, or that there is minimal integration.

SME leaders in Yorkshire and the North East cited their biggest challenges around AI adoption, which include security constraints (48%), data quality issues (32%) and employee adoption and change management (28%).

Although regulatory exposure (56%) and impact on talent (36%) are viewed by regional SME leaders as key long-term risks of AI adoption, more than two-thirds of Yorkshire and North East businesses (68%) have a responsible AI policy in place. The results highlighted ownership and governance as a priority, with the majority (60%) already having a senior leader in place to drive AI in their business.

Chris Boyes, partner and head of BGF in Yorkshire, commented: “The debate is largely finished about whether AI matters strategically, but a gap remains between ambition and integration. The barriers are not necessarily technical – AI tools are accessible, the models are capable, and the obstacles to getting started have never been lower. Many businesses are held back by organisational and cultural issues.

“Regional business leaders recognise that the foundations of resilient growth increasingly mean AI and the data that underpins it. But our conversations with portfolio companies are evolving – from evaluating AI as an emerging technology, to harnessing it as a strategic value driver. While confidence in AI has rarely been higher, implementation at scale remains the exception. The focus now is on helping businesses to translate intent into impactful and sustainable delivery.”