Canadian firms struggle to turn AI spending into returns

Many Canadian organisations are failing to turn AI investment into measurable returns, according to BDO's Productivity Paradox 2026 report, based on a survey of 520 Canadian business leaders conducted by Angus Reid.

The report found that 45% of organisations are experimenting with AI without achieving a meaningful return on investment, while only 18% have embedded AI into workflows and operations.

It also pointed to a more cautious investment climate. Nearly a third, or 29%, of respondents said they were delaying major investments as they dealt with rising costs, revenue volatility, workforce pressures, regulatory complexity and other business risks.

BDO said the issue is not simply how much organisations are spending on technology, but how difficult it is to change the way they work. Gains in individual tasks, the report found, do not automatically translate into stronger productivity across the business.

AI gap

The study described a widening divide between companies testing digital tools and those making broader operational changes. Legacy structures, including layered approvals, fragmented ownership, siloed functions and slow decision-making, are limiting the benefits of new systems.

That assessment comes as businesses face a tougher operating backdrop. In the broader release on the findings, BDO highlighted counter-tariffs as another source of uncertainty for Canadian companies already grappling with volatile revenues and cost pressures.

Rather than treating AI adoption as an end in itself, the report urged leaders to focus on redesigning operating models and setting measurable business outcomes. Some organisations, it said, are holding back on larger transformation programmes until returns are clearer or market conditions stabilise.

At the same time, BDO noted that the current period of uncertainty could be used to simplify processes, improve decision-making and build organisations that can adapt more quickly when conditions change.

Manufacturing and distribution, financial services, real estate and construction, and private equity were identified as sectors where productivity pressures are playing out in different ways. Despite those differences, each faces the same need to move beyond isolated technology projects, the report found.

Leadership focus

Jeff Chapman, Managing Partner, Advisory, BDO Canada, said technology spending alone would not be enough to lift output.

"Canadian businesses recognize the need to improve productivity and are investing in the technologies that can help them do it. Investing in technology alone, however, will not deliver the gains Canada needs," Chapman said.

He said the central issue was whether management teams were willing to reshape their organisations.

"The bigger challenge is turning that investment into meaningful change. In an increasingly competitive and uncertain environment, leaders need to make deliberate choices about how their businesses operate, invest, and adapt," Chapman said.

The report set out several actions for companies seeking productivity improvements. These include identifying workflows with the most friction, redesigning processes from first principles, reallocating resources to higher-value work, improving access to data and operational intelligence, and increasing adaptability across the organisation.

That emphasis reflects a broader shift in how productivity is being discussed in boardrooms. The findings suggest that awareness is no longer the main barrier, as most organisations already understand the risk of standing still.

Instead, the challenge is speed of execution. Leaders must turn that understanding into practical organisational change quickly enough to gain an advantage, particularly as AI adoption rises and economic conditions remain unsettled.

The survey suggests many companies are still at an early stage in that process. Only a relatively small share have moved from experimentation to fully integrating AI into day-to-day operations, even as cost pressures make efficiency gains more urgent.

Chapman said the issue ultimately rests with management rather than software selection.

"Canada's productivity challenge is ultimately a leadership challenge. There is no single technology investment that will solve it. The organizations that move ahead will be those whose leaders are prepared to rethink how work gets done, build greater adaptability into their businesses and make difficult decisions in the face of uncertainty," Chapman said.