Companies cut back on AI spending despite gov’t support

29% of the firms said there was no positive impact from AI on their gross margins last year.

Despite government support for firms tapping into AI solutions, Singaporean enterprises have reduced their AI spending in 2025 to an average of 11.5% of their technology budgets, down from 15.5% in 2024, according to a new study by ServiceNow.

The latest Enterprise AI maturity study by ServiceNow found that organisations in Singapore are struggling to turn AI into business results as they grapple with governance and data security, with 29% saying they saw no positive impact from AI on their gross margins in the past year.

The study also showed that AI is outpacing businesses’ capacity to harness it. Singapore’s average Enterprise AI Maturity Index score this year was at 34, down from 45 last year.

Results of the study showed that 56% of Singaporean enterprises have not made significant progress connecting data and operational silos and only 26% of the company leaders feel they have reached a maturity level to transform their organisations with AI.

Only 44% have made significant progress formalising data governance and compliance in their enterprise, a decline of 6% YoY.

The study, which surveyed 225 Singaporean senior leaders according to ServiceNow, suggests that Singaporean enterprises are struggling to translate their AI investments into value due to gaps in strategic alignment, integration, and governance.

CK Tan, APJ Innovation Officer, Singapore at ServiceNow said, “What we’re seeing in Singapore and across Asia-Pacific is that AI adoption is accelerating, but strategic clarity is lagging. Without a clear shared AI vision across the business, even the most promising AI investments struggle to deliver.”

The study shows that Singaporean enterprise leaders are most likely to cite data security (21%) and an AI governance deficit (15%) as their biggest barriers to getting value from AI.

“Singapore has made bold AI investments, but many organisations are missing the foundational elements such as leadership alignment, strategic upskilling, and enterprise grade security and trust. Without these in place, even the most sophisticated AI tools risk becoming liabilities instead of value drivers,” Tan added.

To help bridge this gap, ServiceNow announced its partnership with Nanyang Polytechnic to co-develop curriculum, certifications, and applied AI research.

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