Poor data quality hinders AI success for many firms

A new report indicates that poor data quality and inadequate infrastructure are major barriers to successful AI projects for a third of companies.

Research conducted by Endava highlights the significance of core modernisation as organisations aim to integrate AI-driven solutions. John Cotterell, Endava's CEO, stated, "Our research shows that businesses are actively looking to invest in AI. However, addressing existing systems through internal modernisation, new technology investments or partner network diversification is a critical first step in doing so."

The findings of the report, titled "The Next Wave of Digital Transformation in the Era of the AI-Powered Digital Shift", illustrate several trends and challenges in AI adoption. According to the report, 48% of organisations self-identify as "digital businesses," yet only 38% of CEOs are investing in AI initiatives aimed at gaining a competitive edge. Furthermore, the cost of maintaining outdated systems is cited as a reason for overspending by 49% of firms, which highlights a common financial hurdle.

An important insight from the report is that 70% of companies believe that generative AI is currently disrupting their business or will do so within 18 months. AI solution spending appears aligned with growth expectations, as 51% of organisations prioritise IT investments to propel growth, with additional focus on acquiring skills (41%) and addressing capacity shortfalls (38%).

The research underscores the necessity of dependable data quality, recognising it as fundamental for resilient core infrastructure. Companies are finding that data quality issues or inadequate infrastructure can significantly impair the success rates of generative AI projects. This suggests that while firms recognise the transformative potential of AI, foundational improvements are essential to harness it fully.

The report reflects on a strategic shift within firms globally, moving from what is described as the "generative AI scramble" of 2023-24 to a more structured approach, referred to as "the AI pivot" expected in 2025-26. It forecasts that by 2029, digital services revenue could rise significantly, comprising nearly half (49%) of organisational revenue, up from 34%.

Strategic partnerships have emerged as vital, with 47% of firms acknowledging their influence as pivotal in the success or failure of generative AI initiatives. A substantial 50% of companies plan to broaden and diversify their partner networks to unlock AI's potential fully.

Commenting on these findings, John Cotterell emphasised the importance of updating core systems. "To navigate the fast-changing markets in the era of AI, companies must modernise their core systems and address outdated legacy structures. As we advance towards AI-driven business transformation, core modernisation is a foundational step."

Cotterell added, "It's encouraging to see industry leaders recognising this value, and as AI becomes increasingly ubiquitous, core modernisation will continue to rise as a key enabler of success in the digital era."