AI adoption faces barriers

Pakistan's growing interest in artificial intelligence is shifting enterprise priorities towards cloud adoption and data modernisation, but businesses must first strengthen their digital foundations before AI can deliver meaningful value.

In an interview with The Express Tribune, SAP Middle East and North Africa Region Senior Vice President Ahmed Al-Faifi said that Pakistan's enterprises were showing increasing interest in AI. But he cautioned that data systems, inconsistent governance and outdated business processes remained the biggest barriers to large-scale adoption.

He added that Pakistani businesses had evolved rapidly over the past year because they previously focused on business continuity and cost management. "Discussions are now increasingly centered on cloud transformation, enterprise data strategies and preparing organisations for AI-driven operations," he said, while pointing out that Pakistan was in the early stages of AI adoption despite growing enthusiasm across industries. He mentioned that the country's biggest challenge was not the lack of ambition but the absence of reliable enterprise data, standardised business processes and professionals, who could understand both technology and business operations.

Al-Faifi noted that only 2% of Pakistani firms introduced a new product or process over a recent three-year period, compared with 28% among peer lower-middle-income economies. He termed the gap an execution challenge rather than a structural weakness, arguing that stronger investment in digital capabilities could significantly improve innovation. He urged organisations to modernise their core enterprise resource planning (ERP) systems before deploying AI. "Companies should first simplify legacy processes, establish clean and governed data, and migrate to modern cloud platforms before layering AI applications on top," he emphasised.

"AI adoption without a strong data and process foundation is like building a highway without a proper base," Al-Faifi said, adding that it may look impressive at first, but it would not carry real business traffic at scale." He said SAP followed the same implementation sequence internally, but argued the approach reflected broader industry-wide practice rather than a company-specific methodology.

"Pakistan's improving macroeconomic environment provides a favourable backdrop for digital investment," he stressed, adding that inflation had eased sharply, the stock market had delivered strong returns and IT and IT-enabled services exports reached a record $3.8 billion during the last fiscal year.

Those developments, combined with a population of more than 240 million, a young workforce and over 150 million broadband connections, positioned the country for long-term digital transformation, he said.

Responding to a question, Al-Faifi identified banking, manufacturing, information technology and the public sector as areas leading enterprise digitisation.

Financial institutions were investing in stronger compliance and risk management systems, while manufacturers increasingly required digital platforms to meet international demands for supply chain transparency and traceability," he said, adding that public sector initiatives to modernise tax administration and customs were also creating new opportunities for technology adoption.

He described Pakistan's technology workforce as one of its strongest competitive advantages. Beyond meeting domestic demand, the country could emerge as a regional source of certified enterprise professionals serving the Middle East and Africa, while developing innovation capabilities in textiles, Islamic finance and supply chain management.

According to Al-Faifi, future demand will increasingly focus on skills related to AI governance, data management and sustainability compliance as global customers impose stricter regulatory and environmental standards on suppliers. Export-oriented industries, particularly textiles, will need those capabilities to remain competitive in international markets.

He further said that Pakistan currently captured only a small share of the estimated $3.8 trillion global digital services market, leaving substantial room to expand exports and attract investment. Consistent implementation of reform initiatives, including internationally aligned data governance standards, will be essential for building investor confidence and positioning Pakistan as a regional hub for AI-enabled enterprise transformation.

While Pakistan remains at an early stage of enterprise AI adoption, Al-Faifi said consistent reforms, stronger data governance and continued investment in digital skills could position the country as a regional hub for enterprise technology over the coming decade.

"SAP's commitment to Pakistan is long term," Al-Faifi said, adding, "We see a market with strong fundamentals, improving momentum and significant digital ambition. If Pakistan continues to execute with discipline, it can become one of the region's most important markets for enterprise transformation."