Table of contents
Foreword
At a macro-level there are many challenges facing society, whether geopolitical, technological or sustainability related. A more deliberate, mindful, and comprehensive approach to managing innovation is needed to generate maximum value and be truly sustainable. Many organisations have or are now making the shift to purpose-driven innovation by leveraging AI.
And there are a number of UK government funding programmes that are engineered with these concerns and approaches in mind. This mindful type of AI innovation concretely translates into modern technology to help us make better decisions, optimise the resources to which we have access, protect the environment, and improve lives.
Not unlike the advent of the internet, the potential of AI to drive innovation is seemingly limitless, and the reality is that there is potential for short-sighted as well and malign goals. What will come out of the “AI revolution” ultimately depends on us, by the guardrails we impose on progress, based on the values we stand for.
Exploring the full potential of AI is an opportunity for us to consider what fundamentally makes us human. A glance into a blurry mirror providing a small, partial reflection into the truth of our essence. Let us look forward to this opportunity, and in return, learn more about ourselves, as well as finding innovative solutions to the issues we face.
In this report, we cover several reasons why leveraging AI innovation may be relevant for businesses, as well as outline the key considerations organisations should include in their decision-making process. We then outline innovation funding opportunities, both R&D Tax reliefs and Grants, that are currently available in the UK.
Artificial intelligence – a mix of fear and wonder
The pace of business keeps accelerating. Around the world, the confluence of cloud-based offerings has led to cheap and easy access to data, storage, and computing power. Never has it been easier for start-ups and entrepreneurs to build novel technology solutions to help people and businesses. In an environment that is constantly evolving, companies are considering Artificial Intelligence as a potential accelerator of productivity, as a source of innovation and as a competitive differentiator.
For most of us, AI is a concept linked with a mix of fear and wonder. The fear has a lot to do with the traditional depiction of AI in science fiction novels and movies, as well as with our ego perceiving a potential threat. In reality, AI is a lot less esoteric and much more mathematical. It is based on code, advanced mathematics (algorithms) and datasets, which we ultimately control; and yet, AI may be the single biggest opportunity for mankind to improve the world we live in. This is where wonder factors in for many of us.
The ability for a computing machine to process massive amounts of data to learn, identify trends, build models, and generate content, intelligence or predictions can be applied to the endless challenges we face. Optimising the coordination and routing of healthcare supplies during a pandemic, modelling an infected living organism’s reaction to a new drug, predicting the best time to buy or sell stocks (or cryptocurrencies) are just a few examples of what has already been accomplished, and there is still much more left to explore, just on the horizon.
The UK is making significant strides in AI development and safety. Recently, the country established the AI Safety Institute, a research centre dedicated to evaluating the safety of emerging AI, including self-driving cars and social media algorithms. The AI Safety Summit 2023 held at Bletchley Park resulted in a global declaration promoting ethical and responsible AI development. The UK government’s AI White Paper outlines its vision, principles, and strategies for AI, emphasising safety, transparency, fairness, accountability, and contestability. Initiatives like the £46 million Turing AI Fellowships aim to attract and retain top AI talent, fostering world-leading researchers and accelerating mid-career professionals. The UK adopts a flexible regulatory approach, avoiding heavy- handed legislation, and encourages innovation through investments in AI
R&D, sandbox creation, and collaboration with organisations and individuals. Additionally, the UK is a global hub for AI safety testing, forming international partnerships and investing in a supercomputer network to enhance AI super compute capacity and prioritise the AI Safety Institute’s research and analysis.
Where do we start to explore and leverage AI to innovate, to be more productive, to develop new sources of income, and to build a competitive advantage? And how can we best leverage the government funding available effectively to de-risk and accelerate the payback on our investments?
- https://www.gov.uk/government/organisations/office-for-artificial-intelligence https://www.gov.uk/government/news/prime-minister-launches-new-ai-safety-institute https://www.gov.uk/government/publications/ai-safety-summit-2023-the-bletchley-declaration https://www.gov.uk/government/news/uk-unveils-world-leading-approach-to-innovation-in-first-artificial- intelligence-white-paper-to-turbocharge-growth
- https://www.gov.uk/government/publications/turing-artificial-intelligence-fellowships
Why is AI relevant in UK businesses?
The UK is navigating a dynamic business landscape characterised by challenges including economic uncertainties, changing market dynamics, and the need for enhanced efficiency and innovation. In response to these challenges, AI is emerging as a pivotal tool for UK businesses to stay competitive and foster growth. Amidst ongoing global economic shifts, AI offers a promising avenue for organisations to optimise operations, streamline decision-making processes, and bolster their resilience in the face of uncertainties. By harnessing the power of AI, UK businesses can unlock new opportunities, drive productivity gains, and enhance their overall competitiveness on the global stage.
In the past, traditional business strategies relied heavily on historical data and market trends for decision-making. However, in today’s fast-paced and interconnected business environment, AI provides a transformative approach to data analysis. Businesses can leverage AI algorithms to gain deeper insights into consumer behaviour, predict market trends, and personalise customer experiences. Moreover, AI-driven automation can significantly improve operational efficiency, allowing companies to allocate resources more strategically and focus on value-added activities. The integration of AI technologies into business processes aligns with the UK’s commitment to technological innovation, positioning the country as a hub for innovative solutions and fostering a culture of continuous improvement in the business sector.
The UK’s commitment to advancing AI is highlighted by its investment in research and development, as well as initiatives to nurture a skilled workforce in the field. With a range of AI startups, research institutions, and industry collaborations, the UK is well-positioned to harness the full potential of AI across different sectors.
As businesses across the country adopt AI technologies, the collaborative efforts between academia, government, and industry create an environment for innovation. The collaboration of expertise, technological infrastructure, and a supportive ecosystem makes AI not just a relevant but a transformative force for UK businesses seeking sustainable growth and competitive advantage in the global market.
Applied with care, AI also has the potential to further automate low-value activities that cannot be automated by usual means, for example, by learning to process various types of information provided in various format (voice, text, images, videos, etc.) and generating complex decisions based on a large number of variable factors. Combined with the current labour shortage in many sectors, affordable AI-based solutions could be just the solution many organisations are looking for in order to grow and scale their operations.
Unfortunately, despite huge advances in recent years in AI-related R&D, there are also several challenges to overcome for widespread AI adoption in UK businesses. Some of those challenges include the fact that most AI-based solutions, including those developed in-house, are often quite expensive to acquire/develop, making the ROI uninteresting for some use cases, and the fact many organisations simply do not have all the resources required (data, infrastructure, expertise, funding, etc.) to successfully implement AI solutions.
Key considerations for AI innovation
Due to the broad applicability of AI solutions, from travel, to agriculture, and all the way to quantum computing, a wide range of companies have a keen interest in exploring or developing AI-based solutions. As such, a truly diverse range of early adopter companies decided to move forward with AI projects and ended up spending substantial amounts of resources only to realise they were not ready.
To learn from their experience and avoid a similar fate, it is critical to objectively evaluate your organisation’s readiness level prior to engaging significant amounts of time and resources into any AI project.
Funding organisations have come to the same realisation, and demonstrating you have a solid plan and organisation around key elements of your company’s readiness will be crucial to obtain government funding. In our grants practice, we often connect with clients who are just beginning to consider such projects, and work with external vendors who are helping them get ready to reach their objectives. Based on our experience, and programme requirements, these are the most crucial factors to consider prior to launching your AI innovation project to maximise your chances of success.
Data strategy
A substantial portion of innovative projects involving AI require the use of massive amounts of data to train the AI-based modules and machine learning algorithms. The quality of the data being collected, its relevance, accuracy and accessibility are crucial factors many underestimate coming into such projects. To avoid data becoming a limiting element of their AI project, organisations should ensure they have a clear data strategy.
An effective data strategy will allow your organisation to optimise how you acquire, store, manage and utilise your data. As outlined by SAS Institute, industry leaders in the sector, the five components of a strong data strategy are:
- Identify: define your data, formats, labels, naming conventions, etc.
- Store: ensure sufficient processing and storage for data warehousing, as well as for data exchanged between systems
- Provision: plan to ensure data can be shared and used, and setting rules and guidelines to do so
- Integrate: integrate data across multiple systems, applications, and processes to ensure consistency and accuracy
- Govern: plan the ongoing management, communication, and application of information policies, rules, and standards
IT infrastructure & cybersecurity
A considerable number of organisations still use legacy “On Premise” applications, servers, storage systems, and have a weak cyber security strategy, if there is one. Combined with an ambition to innovate using AI-based solutions, this situation could create a recipe for disaster and potentially lead to legal exposure for those businesses. Therefore, to improve their chances of realising the full benefits of the investment in AI, organisations must ensure that their current IT infrastructure, both from a software and hardware perspective, enables them to fully leverage AI and realise all its potential benefits securely. It is important to consider the legal ramifications specific to your business around the use of data that may or may not be yours. Usage or storage of client or supplier information, storage of credit card information, or usage of personal information belonging to customers or employees all have legal implications for most businesses.
Intellectual property (IP) strategy
On top of ensuring they have the data quality needed and the right IT infrastructure in place, organisations should also ensure they have an effective Intellectual Property (IP) strategy in place. An IP strategy will enable your organisation to detect potential new IP, clear it, document it, and then protect it – both to avoid potential liabilities and to maximise the value of the Intellectual Property your project may create. Building a solid portfolio of patents can have a significant impact on your business valuation and on your ability to secure funding.
Expertise and collaboration
Very few companies that embark on an AI innovation journey will have all the required expertise internally. Finding the right employees to work on the project, then finding the right external partners to support your internal team and complement their expertise is key to a successful project. What may seem like a complicated maze to navigate becomes simple by working with the right supplier who has the right experience.
Collaboration on innovation projects has proven so effective that many government grant programmes now require projects to be collaborative in nature if they wish to receive funding. Collaboration can mean directly involving a researcher, a university research center, a client, or a supplier in the project to complement your team’s experience and expertise. In our experience, taking the time you need to identify partners with the right experience, whom you find it easy to work with and who clearly understand their role in your project can avoid many headaches down the road.
Funding
Funding an AI project can represent a significant investment for any organisation. Whether your project is modest and builds on existing technology, or you are developing everything from the ground up and investing millions, the reality is most projects end up costing more than anticipated. As such, it is important to secure the right amounts of funding and build in a 10-20% contingency. One of the requirements to receive government funding is to demonstrate you have access to the required funds (debt, equity, cash, etc.) before the start of the project. Planning your funding strategy well ahead of time can also have a significant impact on reducing your investment payback period, by allowing you to fully take advantage of non-repayable contributions and zero-interest loans before your expenses begin.
The impact of the UK’s R&D tax credits scheme on AI
In the ever-evolving landscape of AI innovation plays a pivotal role in shaping the future. The AI industry confronts challenges, including the need to enhance computational capabilities, ensure ethical use of AI, address bias and fairness concerns, and adapt to evolving technological landscapes. The UK’s R&D Tax Credit scheme stands as a support system, fostering innovation and helping companies in navigating these challenges with financial incentives.
Throughout our collaborative efforts within the AI sector, we have identified several avenues for engaging in qualifying R&D activities that make entities eligible for tax credit benefits. Here are some notable examples:
- AI in Healthcare: Innovations in applying AI to healthcare, including diagnostic tools, personalised medicine, and predictive analytics. Research and development initiatives focused on improving the accuracy and reliability of AI- assisted medical interventions.
- Cybersecurity AI Solutions: Developing AI-powered cybersecurity solutions to detect and mitigate cyber threats. This includes advancements in anomaly detection, threat intelligence, and adaptive cybersecurity measures.
- Quantum Computing and AI Integration: Integration of quantum computing with AI to explore quantum algorithms for tasks like optimisation and pattern recognition, aiming to unlock new computational capabilities.
- Autonomous Systems: Research and development activities aimed at improving the capabilities and safety of autonomous systems, such as self-driving vehicles, drones, or robotics. Innovations to enhance navigation, decision-making, and real-time adaptability of autonomous entities.
- AI in Environmental Monitoring: Leveraging AI technologies to monitor and analyse environmental data, including air and water quality, biodiversity, and climate change indicators. Research focuses on developing AI-driven solutions for more accurate and timely environmental assessments.
- Human-AI Collaboration for Creativity: Investigating ways to enhance human creativity through collaborative interactions with AI systems. Exploring AI tools that help and amplify creative processes across various domains, fostering a synergistic partnership between humans and intelligent systems.
- AI-driven Personalised Education: Developing AI-based educational tools that adapt to individual learning styles and preferences. Research initiatives aim to create intelligent systems capable of personalised content delivery, real-time feedback, and adaptive learning experiences for students at all levels.
The UK’s R&D Tax Credit scheme serves as a catalyst for progress in the AI sector, providing financial incentives to organisations committed to pushing the boundaries of innovation and addressing the complex challenges inherent in the field.
UK grant funding opportunities for AI innovation
BridgeAI: Bridging the gap in artificial intelligence
Artificial Intelligence (AI) holds enormous potential for businesses, enhancing productivity and competitiveness. However, adopting AI technology can be challenging. That’s where Innovate UK BridgeAI comes in. It launched in spring 2023 and has a £100m budget and that it focuses on AI adoption in 4 key sectors.
Its mission is to help businesses in high growth potential sectors such as agriculture and food processing, construction, creative and transport, logistics and warehousing industries, to harness the power of AI and unlock their full potential.
The programme offers funding and support to help innovators assess and implement trusted AI solutions, connect with AI experts, and elevate their AI leadership skills.
Innovate UK Investor Partnerships:
AI falls within the ‘Next Generation digital technologies’ theme prioritises in this scheme that matches grant funding to private investment (often venture capital). Projects up to £2m are covered by the scheme.
Compute
This £500m investment in AI over two years was announced in the Autumn Statement, 2023. This looks likely to be the successor to BridgeAI. This is part of an expansion of the AI Research Resource – providing the UK’s world leading scientists and AI researchers with access to cutting-edge computing power that is necessary to process complicated, lengthy tasks.
This investment will help researchers make the extraordinary discoveries, such as better understanding climate change, discovering new drugs, and maximising the use of AI to improve lives.
This will also provide our AI start-ups and other small medium enterprises (SMEs) with access to this resource driving productivity and innovation and helping make the UK the best place in the world to create an AI start-up.
