Scotland's public sector ahead of private firms on AI

This report blends surveys and interviews with more than 200 chief executives, non-executive directors, and heads of function ranging from finance and human resources to technology and operations. It covers organisations of all sizes across the private, public and third sectors in Scotland, with the majority, 71%, from the business community.

Public sector organisations are most likely to have created an AI strategy. The report notes 44% of leaders of such organisations say they have an AI strategy. This is well ahead of 38% and 26% respectively in the private and third sectors. 

Livingston James and EY note: “The findings suggest a major contributor to the lack of AI implementation in Scottish organisations could be uncertainty over who should be driving it forward within them. While 46% of those surveyed said their technology function has overall responsibility for AI strategy, other responses were more diffuse.

“Respondents said operations or finance were responsible for AI in 16% and 12% of cases, respectively, but 8% have not assigned the technology to anyone, commenting on a lack of workforce planning and measurement frameworks. Another 6% said there was shared responsibility among senior management, across all business areas, or teams managed their own adoption.”

Livingston James and EY observe that, “perhaps surprisingly”, micro organisations, defined as those with fewer than 10 employees, are most likely to have an AI strategy, with 59% of them in such a position.

This compares with 37% of large organisations, and 33% and 28% of medium-sized and small organisations respectively with an AI strategy in place.

Livingston James and EY note: “Despite the rise in importance of AI, only 50% of tech leaders believe they have the potential to become the CEO of their organisations, which is joint-lowest among senior management with HR. They were also the least likely to be involved in succession planning for their organisations at 17% - half the rate for heads of finance - and only 3% of the CEOs surveyed came from a technology background, compared to 35% for operations and 32% for commercial.”

The report concludes that “technology may have been the major theme of last year…but people continue to dominate CEOs’ agendas in Scotland”.

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It observes that, when those surveyed were asked about what keeps them awake at night, “the challenge of attracting, retaining and developing talent remains one of the most pressing issues, recognising that innovation and growth still rely on human creativity, trust, and engagement”.

Participants highlighted fears of falling behind competitors in spite of investing heavily in new technology, losing high-performing teams to more agile or “purpose-driven” competitors and struggling to “re-skill existing staff for a digital future”, the report notes.

Other worries were around cybersecurity, the ethical use of AI, and growing dependency on digital infrastructure.

Ali Shaw, director at Livingston James, said: “The results from our Investigating the Future CEO report reflect what is happening more widely in society – lots of people are talking about AI but fewer are certain about how they should actually use it in the right way. For CEOs and other senior executives, it could be the defining technology of the years ahead, and it’s imperative that they embrace that opportunity by implementing it in the best way possible within their organisations. 

 “Given that responsibility lies predominantly with other functions – and worryingly in some cases with no one – CEOs will need to ensure that they have the right people around them to make the most of the opportunities AI presents. That could mean involving senior tech executives more in areas like succession planning so that future leadership teams have the right level of technological know-how to prepare for the big changes ahead.”

He added: “Although technology has been the talk of the last year or so, people are still very much at the heart of its adoption, how organisations function, and maintaining a competitive advantage.”

Cara Heaney, people advisory services and managed services leader at EY Scotland, said: “Scottish leaders are clearly energised by the potential of AI, but turning ambition into action now requires a shift from discussion to disciplined execution. Our experience with clients shows that progress accelerates when leaders treat AI as a strategic capability.

 “What’s equally important is building confidence and fluency across the workforce. While the public are using AI enthusiastically in their personal lives, adoption at work still lags. This gap presents both a challenge and an opportunity for CEOs: by investing in skills, communicating the benefits clearly and ensuring trustworthy safeguards are in place, organisations can empower their people to use AI safely and effectively.”

She added: “The most successful organisations will be those that bring technology, people and governance together. If CEOs establish clear ownership, embed responsible AI practices and support their teams through the change, they won’t just keep pace with competitors - they’ll set the standard for what modern leadership looks like in an AI‑enabled economy.”