The UK's AI Procurement Challenge: Bridging the Infrastructure Gap

The recent Artificial Intelligence Sector Study 2023, commissioned by the Department for Science, Innovation and Technology (DSIT), reveals a stark reality in the UK's AI landscape: while the sector shows remarkable growth, with AI-related revenues reaching £14.2bn in 2023, a significant divide exists in access to essential AI infrastructure and computing resources.

Check out the full DSIT AI Sector Study 2023 to explore detailed insights into the UK's AI landscape and understand the evolving dynamics of AI procurement.

The Scale of the Challenge

The study's findings about small and medium-sized enterprises paint a concerning picture. While SMEs make up 96% of the AI sector, these businesses face formidable barriers in accessing computational resources. One-fifth of survey respondents cited AI procurement and operation costs as significantly affecting their ability to meet business goals over the past 12 months.

Key challenges facing SMEs include:

• 76% report needing more training data

• 72% require better security measures

• 70% cite increased computing power needs

Infrastructure Concentration

The market shows significant concentration among just a few providers, with AWS, OpenAI, and Microsoft Azure controlling nearly 70% of the infrastructure market. This concentration poses particular challenges for public sector procurement teams trying to ensure fair access and competition.

The cost implications are substantial. The median salary for AI Engineers in the UK stands at £75,000 - approximately double the overall median salary - putting additional pressure on smaller organizations trying to compete for talent while managing infrastructure costs.

Public Sector Opportunities

Public sector procurement teams have a unique opportunity to address these challenges. Through shared infrastructure initiatives, they could facilitate access to high-performance computing resources, particularly benefiting SMEs that cannot afford dedicated infrastructure.

Regional development presents another crucial opportunity. With 75% of AI activity concentrated in London, the South East, and East of England, targeted procurement strategies could help distribute resources more evenly across regions. This could include framework agreements supporting smaller provider competition and SME-specific procurement lots.

Future Landscape

The pace of AI development shows no signs of slowing. Since early 2022, 196 new AI models have been developed – representing almost a quarter of all models developed since 1950. This rapid pace underscores the urgency of addressing infrastructure access challenges through strategic procurement approaches.

For procurement professionals in both public and private sectors, the message is clear: addressing the AI infrastructure gap requires innovative approaches to purchasing and provisioning computing resources. Traditional procurement models may need to evolve to support the growing demands of AI development while ensuring fair access for organizations of all sizes.

As the UK continues to position itself as a global AI leader, the role of procurement in democratizing access to AI infrastructure will be crucial. The challenges identified in the DSIT study present an opportunity for procurement professionals to drive meaningful change in how AI resources are accessed and distributed across the UK's technology landscape.

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