Singapore businesses are accelerating their AI investment as they report early gains from the technology, according to new research by SAP. The study found that organisations here are spending an average of S$18.9 million on AI this year and are seeing an average 16 per cent return on AI investment — a figure they expect to rise to 29 per cent within two years.

The findings come from the SAP Value of AI Report, commissioned by SAP and conducted by Oxford Economics. The survey collected responses from 1,600 business leaders, including 200 in Singapore, across eight markets.

AI investment rises but gaps persist

SAP said Singapore firms expect to lift AI spending by 38 per cent over the next two years. Confidence is growing: 67 per cent of respondents are satisfied with current returns, and 63 per cent say AI has helped address challenges such as decision-making and customer engagement.

Real-world examples are emerging. Far East Organization, Singapore’s largest private property developer, has used SAP technologies to automate end-to-end lease management — from contract generation to analytics — enabling more accurate data, reduced manual work and faster insights on portfolio performance. The system now tracks rental trends, occupancy rates and lease durations to support quicker operational decisions.

Ng Yee Pern, Chief Technology Officer at Far East Organization, said the transformation “reduced repetitive manual work and improved the accuracy and speed of our decision-making”, adding that tasks previously taking days now take minutes.

Yet optimism is tempered by concern. Seven in ten Singapore business leaders remain unsure if AI is delivering its full potential. SAP said this reflects growing recognition that early success does not ensure long-term advantage.

A lack of organisational readiness is the key barrier. The report found 76 per cent of companies have not provided comprehensive AI training. At the same time, 68 per cent acknowledge the presence of “shadow AI” — unapproved or unregulated AI tools used internally.

Data readiness poses even greater challenges. Fifty-eight per cent of respondents lack confidence in integrating and sharing data across functions. Difficulties are most acute in legal (80 per cent), finance (73 per cent), human resources (66 per cent), the CEO’s office (64 per cent) and procurement (55 per cent).

Agentic AI emerges as next frontier

While generative AI and automation remain priorities today, Singapore companies are preparing for a shift towards agentic AI, defined as autonomous systems that can plan, act and collaborate to solve business problems.

Only six per cent of businesses are fully ready to deploy AI agents at scale, and local firms expect 8 per cent ROI from such systems in the next two years — slightly below the global average of 10 per cent. Still, 70 per cent believe AI agents hold moderate to high potential to transform operations, and 72 per cent say the technology could enhance value by managing complex workflows across business units.

“Agentic AI represents the next frontier of business transformation,” said Eileen Chua, Managing Director, SAP Singapore. She added that success will depend on strengthening data quality, integration and workforce capability.