Cisco: Malaysian Firms Lag in AI Readiness Despite Growing Ambitions

A persistent gap between ambition and execution continues to plague Malaysian organizations in artificial intelligence adoption, according to the newly released Cisco AI Readiness Index 2025. Despite widespread enthusiasm for AI deployment, only 16 percent of Malaysian organizations have achieved full AI readiness, a figure that has remained largely unchanged for three consecutive years.

The annual study, which surveyed over 8,000 AI leaders across 30 markets and 26 industries, reveals a critical divide between high-performing Pacesetters and the majority of companies still struggling with foundational challenges. These Pacesetters demonstrate a disciplined, system-level approach that balances strategic planning with robust data infrastructure and security measures.

In Malaysia, the readiness breakdown shows 16 percent categorized as Pacesetters, 37 percent as Chasers, 44 percent as Followers, and 3 percent as Laggards. This distribution highlights a concerning concentration of organizations operating with limited to moderate preparedness levels.

The performance gap between Pacesetters and other companies proves substantial across multiple metrics. Pacesetters demonstrate four times greater likelihood of moving AI pilots into production and 40 percent higher probability of realizing measurable value from AI investments. While only 19 percent of Malaysian companies overall have finalized use cases and moved from pilot to production, 77 percent of Pacesetters have achieved this milestone.

Strategic planning remains a major differentiator. Nearly all Pacesetters maintain defined AI roadmaps compared to just 64 percent of Malaysian organizations overall. Change management capabilities show even starker contrasts, with 91 percent of Pacesetters implementing formal plans versus only 38 percent across Malaysia. Budget allocation patterns reveal similar disparities, as 79 percent of Pacesetters prioritize AI as their top investment compared to 26 percent of Malaysian companies generally.

Infrastructure readiness presents another critical challenge for most organizations. Only 18 percent of Malaysian companies describe their networks as flexible and scalable for AI projects, while 71 percent of Pacesetters report this capability. Investment in data center capacity within the next 12 months stands at 39 percent overall but reaches 77 percent among Pacesetters.

The emergence of AI agents intensifies these readiness pressures. The study shows 90 percent of Malaysian organizations plan to deploy AI agents, with 36 percent expecting agents to work alongside employees within a year. However, infrastructure limitations threaten these ambitions, as 32 percent acknowledge their networks cannot scale for complexity or data volume.

Cisco Malaysia Managing Director Chee Kheong Lee emphasized the link between readiness and value realization. Organizations with strong AI foundations prove four times more likely to advance pilots into production and 40 percent more likely to generate measurable returns.

The study introduces the concept of AI Infrastructure Debt, describing the accumulation of technical compromises, deferred upgrades, and underfunded architecture that erodes AI value over time. Warning signs include rising workloads, with 36 percent expecting increases above 30 percent within three years, while 60 percent struggle with data centralization and only 28 percent possess robust GPU capacity.

Security concerns compound these infrastructure challenges. Just 49 percent of Malaysian organizations demonstrate high awareness of AI-specific threats compared to 87 percent of Pacesetters. Integration of AI into security and identity systems reaches only 36 percent overall versus 62 percent among leading organizations. Capability to control and secure AI agents stands at 46 percent across Malaysia but achieves 75 percent among Pacesetters.

The financial impact of this readiness gap appears significant. Among Pacesetters, 90 percent report gains in profitability, productivity, and innovation, compared to 65 percent overall in Malaysia. Confidence in monetizing use cases reaches 70 percent for Pacesetters versus 36 percent generally. Additionally, 95 percent of Pacesetters maintain clear processes to measure AI impact, nearly three times the overall Malaysian rate.

Despite these challenges, optimism about AI value remains high. Among Malaysian companies, 72 percent report team productivity and efficiency gains, while 67 percent cite customer experience improvements and 63 percent note creation of new processes and capabilities. However, without scalable infrastructure and clear metrics, experts warn these gains may prove fragile.

The research indicates organizations face mounting pressure to demonstrate returns on AI investments, with 82 percent of Malaysian companies feeling increased urgency to deliver tangible ROI within the past six months. This pressure exists alongside infrastructure constraints that could prevent many organizations from capturing AI’s full potential value.