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Alation today released its latest State of Data Culture report, which focused on how ignoring data can lead to major business missteps. The report highlights that 97% of data leaders say their companies have suffered the consequences of ignoring data, either missing out on new revenue opportunities, poorly forecasting performance, or making bad investments.
“The organizations that learn from data faster understand their customers, innovate, and sense markets quicker and more clearly than others,” Alation cofounder and CEO Satyen Sangani said in a press release. “Companies that invest in data and build a culture of data literacy do well. Those that don’t fall behind. Companies need to transform how they make decisions and how they work to incorporate data into everything they do. They have to build a data culture.”
Produced by Wakefield Research, the new Alation report, which surveyed 300 leaders at companies with more than 2,500 employees, found that 89% of organizations that fell short of their revenue goals blame their CFO for not investing enough in data and analytics. The respondents emphasized the value that data and analytics bring to the enterprise, including process optimization, increased revenue opportunities, and the ability to evaluate risk and better prepare for uncertainty as well as increase customer retention and drive product innovation.
Those surveyed in a recent McKinsey study expressed a similar sentiment, with employees at companies with the greatest overall growth in revenue and earnings citing data and analytics as a factor in the boost. Compared with others, employees from high-performing organizations were three times more likely to say that data and analytics initiatives contributed 20% — or more — to earnings before interest and taxes from 2016 to 2019.
Alation’s previous surveys investigating corporate data strategies have been decidedly pessimistic. In April, a whitepaper from the organization found that only 13% of companies are delivering on their data strategy, with a clear majority of employees pegging data quality issues as the reason management failed to successfully implement data-reliant technologies like AI and machine learning.
But despite the newest Alation report’s doom and gloom, respondents across the board said that their data culture has improved in the past year either because of enhanced data tools, governance, or literacy. For example, data leaders reported more than 14% growth in the three major pillars of data culture (literacy, search and discovery, and governance), with year-over-year increases reaching 22 points (37% to 59%) in companies that have adopted data literacy and 15 points (39% to 54%) in companies that have embraced data governance.
Data governance — the overall management of the availability, usability, integrity, and security of data used in an enterprise — is a particularly fast-growing subcategory. Kenneth Research expects the market for governance solutions to reach $5.13 billion by 2025, up from $879.25 million in 2016, driven by benefits including data consistency and superior data quality and accuracy.
“The big takeaway is that organizations are rapidly investing in data culture, adopting data literacy, data search and discovery, and data governance,” continued Sangani. “This report should be a wakeup call for the companies that want to delay their data [analytics] investments by another year or even another quarter. Building a data culture is the only sustainable way to develop a consistent competitive advantage.”
Stronger data cultures could lead to an uptick in the adoption of AI and machine learning technologies across enterprises. According to a new Gartner survey, one-third of technology and service provider organizations with AI technology plans said they would invest $1 million or more into these technologies over the next two years. The majority of respondents (87%) with AI as a major investment area believe that industry-wide funding for AI will increase at a moderate-to-fast pace through 2022.
“Rapidly evolving, diverse AI technologies will impact every industry,” Gartner managing vice president Errol Rasit said in a statement. “Technology organizations are increasing investments in AI as they recognize its potential to not only assess critical data and improve business efficiency, but also to create new products and services, expand their customer base and generate new revenue. These are serious investments that will help to dispel AI hype.”
Challenges stand in the way, however, as the Gartner survey shows. Just over half of respondents report “significant” consumer adoption of their AI-enabled products and services, while 41% cited AI emerging technologies as still being in development or early adoption stages.
“Very few respondents reported funding amounts of less than $250,000 for AI technologies, indicating that AI development is cost-intensive compared to other technology innovations. This is not an easy segment to enter due to the complexity of building and training AI models,” Rasit said. “These survey responses reflect the difficult cycle of developing AI technology, given its complexity, as well as industry-wide challenges in hiring AI talent due to the finite number of skilled individuals.”
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