Companies adopted AI. Now they are discovering the harder part is getting employees on board
A KPMG and Microsoft Israel survey finds that lack of employee skills has replaced management hesitation as the biggest barrier to AI adoption, while companies report productivity gains but struggle to translate them into financial returns.
Most Israeli companies have already been convinced of the importance of artificial intelligence, but the next challenge is no longer winning over management, it is getting employees ready to use the technology effectively.
That is the main conclusion of a survey conducted by KPMG and Microsoft Israel among 42 leading organizations across multiple sectors, including technology companies, startups, high-tech firms and the public sector. The survey, conducted in June for the second consecutive year, examined AI adoption rates, its impact on work processes, costs and business performance.
According to the survey, the biggest obstacle facing organizations today is a lack of employee knowledge and skills, cited by 40% of respondents. This marks a shift from last year, when one of the main barriers was management’s lack of readiness to adopt the technology. Other challenges include concerns over cybersecurity, privacy and regulation, cited by 36% of respondents, and difficulties integrating AI tools into existing systems, cited by 19%.
The findings suggest that the challenge has moved from convincing organizations to adopt AI to implementing it across the workforce in a structured, secure and measurable way.
The economic impact remains mixed. While 48% of respondents said AI adoption has already generated cost savings, 31% reported higher costs, mainly due to licensing fees, employee training and implementation efforts. Another 21% said AI has not yet affected costs.
The gap reflects the difference between the operational benefits organizations are already seeing and the longer-term financial returns that depend on broader adoption, integration into business processes and effective management of the technology.
For many organizations, AI is already translating into measurable time savings. Seventy-four percent of respondents said the average employee saves at least three hours of work per week thanks to AI tools, with the average reported saving reaching 4.1 hours per employee per week.
At the same time, adoption is still far from universal. Fifty-seven percent of organizations said that more than half of employees in computer-based roles use AI tools at least once a week.
The survey indicates that many companies are still in the transition phase between providing access to AI tools and embedding them into everyday workflows. Thirty-six percent of respondents said their organizations provide employees with training, tutorials and dedicated AI tools, while 24% reported incentives or targets designed to encourage adoption.
However, only 12% said their organization has a clear AI strategy with active management involvement in driving adoption. Seventeen percent said their companies provide only general support without a formal implementation plan.
The areas where organizations see the greatest value from AI are also changing. Forty percent of respondents cited automation and streamlining of work processes as the leading source of value, while 38% pointed to software development, coding and product development.
Content creation, marketing and sales accounted for 12% of responses, while data analysis and decision-making support accounted for 10%. The findings represent a shift from last year’s survey, when data analysis and software development were the dominant AI use cases. The latest results suggest AI is increasingly becoming a broader operational tool embedded across organizations.
The impact is already being felt in several business areas. Sixty-seven percent of respondents rated AI’s impact on organizational decision-making as high, while 55% said it has had a significant impact on productivity and 52% on work quality.
However, the impact on broader business outcomes remains more limited. Only 38% of respondents rated AI’s effect on revenue and profitability as high, suggesting that many companies are still searching for ways to translate efficiency gains into measurable financial results.
The survey’s findings indicate that AI is no longer viewed simply as a tool for improving individual tasks, but as a technology that is changing the way organizations operate, how decisions are made and which skills employees need to develop.
As adoption expands, companies will need to invest not only in technology, but also in employee training, governance, security and redesigning workflows around collaboration between humans and AI systems.
Ido Ron, Head of AI at KPMG Israel, said: “Everyone already understands that there is a need to be in the AI race, but not all organizations know how to run it correctly. What we see on the ground is that the organizations that succeed are those where business management is deeply involved in the process, leading it and not just approving it from above.”
“When management sets goals, creates incentives and manages adoption in a measurable way, it reaches employees faster and helps close the skills gap,” he added. “The survey shows that technology is already creating real value, in time savings, productivity and workforce planning, but to turn this value into broad business success, AI needs to become embedded in the core areas of the organization.”
Adi Kristal, Enterprise Commercial Lead, VP Sales, at Microsoft Israel, said: “We are at a turning point. The question is no longer whether to use AI, but how to build an organization in which every employee works alongside AI as part of their team.”
“The leading organizations are not measuring success only by hours saved or processes streamlined, they are changing the way decisions are made, ideas are generated and business value is created,” she said.
