The latest findings from Ayming’s International Innovation Barometer 2025 reveal a shifting focus in the strategies of companies, driven by both technological advancements and external cost pressures. Most companies are facing “extreme cost pressures” and have been forced to find ways of maintaining their research and development (R&D) activity, according to Hervé Amar, President of Ayming Group.

Nonetheless, innovation budgets are resilient and have increased between 6,4% and 6,6% since June 2023. Moreover, one-third of businesses plan an 8% hike (or more) in their 2025 budgets, with 73% expecting increases and only 3% of companies planning decreases. “Most businesses have realised that they need to keep spending because it positively impacts the bottom line,” underscores Njy Rios, Partner at Ayming UK. To create the barometer, Ayming surveyed this June, 1,227 R&D and innovation directors, chief financial officers, chief executive officers, and chief technology officers sourced from 17 countries in Europe, Asia and North America.

Cost reduction trumps R&D as top priority

Cost reduction has become the top priority for many businesses, jumping several places compared to last year, driven by rising raw materials and energy costs. The second concern for companies is enhancing operational efficiency, with the drive for innovation placing third. “The last few years have seen drastic rises in the cost of doing business so it’s no surprise this has worked its way up the list,” highlights Claire, manager of finance and innovation performance at Ayming France.

“Some expenses related to raw materials or energy have increased fourfold, with serious consequences on the financial stability of the companies,” continues Untereiner. However, she adds that businesses “must be cautious with cost cutting” as it can bring a lot of risk. According to the survey, technology dominates innovation priorities: 32% of companies now list “implementing new tools and technology” as their key innovation goal. In comparison, the push to integrate artificial intelligence (AI) has surged to 29%, placing it second in priority alongside enhancing existing products.

AI takes the stage

AI has been everywhere in recent years. The report finds that 86% of companies now have dedicated budgets for AI-related R&D, with 75% actively integrating AI into their innovation processes. This shift is seen across multiple industries, with AI being used to analyse data, conduct predictive analytics, and even streamline administrative tasks.

“AI truly transforms R&D teams by automating routine tasks, enabling data-driven research, and facilitating more rapid prototyping and experimentation. This allows researchers to focus on higher-value activities such as creative problem-solving and strategic planning,” underscores Hrynkiewicz-Sudnik, consulting director, Ayming Poland.

However, AI adoption is challenging. Public AI platforms, while accessible, present risks concerning intellectual property and privacy. Therefore, the report suggests implementing safeguards to protect sensitive data. Nonetheless, 84% of the interviewed executives had a positive perspective on AI, compared to 3% with a negative perspective. According to the report, the top uses of AI are analysing data, using predictive analytics, generating ideas, and automating administrative tasks.

Innovation grants fund R&D efforts

Volatility in R&D tax credit schemes, especially in key markets like the US, UK, and France, has led to a growing reliance on innovation grants. Currently, 37% of businesses are using grants as a primary funding source, surpassing tax credits (31%). Grants not only offer financial support but also bring a level of prestige that can attract further investment, according to the study (with some companies only seeking grants to gather attention from larger firms). However, navigating the complex grants landscape remains a challenge. Companies struggle to identify the right opportunities and meet eligibility criteria, particularly smaller firms with fewer resources​.

“I do think tax credits will be used less in years to come, especially if volatility continues. Not only is it hard for firms to keep on top of changes, but new tax rules can cause real challenges for businesses when funding is diluted after it’s been factored into plans,” notes Laurie Pilo, global head of innovation grants at Ayming.