Sovereign AI becomes top priority as most firms now vet vendor origins

The Deloitte AI Institute on Tuesday unveiled its new global study on artificial intelligence, revealing that organisations stand at the untapped edge of AI’s potential despite rising ambition.

The report, titled The State of AI in the Enterprise The Untapped Edge 2026 AI report and circulated locally by Deloitte Cyprus, examines how organisations are engaging with artificial intelligence and the impacts, changes and strategic considerations this technology is introducing.

For the study, Deloitte surveyed 3,235 business and IT leaders across 24 countries during August and September 2025, targeting director to C-suite level executives directly involved in their companies’ AI initiatives.

The research explores AI’s transformational momentum and outlines critical actions for leaders as they advance along their AI journey.

It shows that AI is moving rapidly from experimentation to broader deployment, yet only a minority of organisations are operationalising AI at true enterprise scale or fundamentally redesigning work and business models.

According to the findings, many companies are caught between ambition and activation, with the report identifying the pilot-to-production gap as a central challenge.

While experimentation is accelerating, only 25 per cent of respondents said they have moved 40 per cent or more of their AI pilots into production.

However, 54 per cent expect to reach that level within the next three to six months, suggesting that the pathway to value is both clear and achievable.

The study highlights that organisations must balance running their core business with current technology while investing in the innovation required to remain competitive in the future.

It suggests that communicating a clear AI strategy can help reduce what it describes as pilot fatigue and push deployments beyond the experimental phase.

“Across the enterprise, we’re seeing massive ambition around AI, with organisations starting to pivot from experimentation to integrating AI into the core of the business with a focus on scale and impact,” said Nitin Mittal, Deloitte Global AI leader.

“As organisations look to unlock AI’s full value, leaders should enable enterprise value by consciously weaving AI into the fabric of their business workflows and through the better coupling of people and machine intelligence,” Mittal added.

The report further finds that AI’s business impact is accelerating, with 25 per cent of leaders reporting that AI is having a transformative effect on their organisations, more than double the proportion recorded a year earlier.

Although productivity gains are widespread, only 30 per cent of organisations are redesigning key processes around AI.

At the same time, 37 per cent report using AI at a surface level, with little or no change to underlying business processes.

The findings suggest that long-term success will depend on achieving strategic differentiation and a lasting competitive edge by reimagining what is possible rather than merely optimising existing systems.

The study also highlights the rapid rise of agentic AI, with close to three-quarters of companies planning to deploy agentic AI within two years.

Yet only 21 per cent of those organisations report having a mature governance model for managing such systems.

The report indicates that companies achieving the most success are taking a measured approach, beginning with lower-risk use cases, building governance capabilities and scaling deliberately.

It stresses that in the AI era, governance functions not merely as a set of guardrails but as a catalyst for responsible growth.

Resilience in what the study describes as the age of sovereign AI readiness is also gaining prominence.

Today, 77 per cent of companies factor country of origin into vendor selection decisions, while nearly three in five organisations build their AI technology stacks primarily with local vendors.

The report additionally points to the growing integration of physical AI, particularly in manufacturing, logistics and defence, sectors that are leading adoption globally.

Adoption of physical AI is projected to reach 80 per cent within two years, setting the pace for what Deloitte describes as the next wave of industrial automation.

Overall, the study stated that while ambition around artificial intelligence is strong, unlocking AI at true enterprise scale will require deliberate governance, strategic clarity and a fundamental rethinking of how work and business models are designed.