Business leaders have high hopes that artificial intelligence investments can drive market-changing innovations to transform everything from customer satisfaction to product innovation.

However, a poor data foundation is holding over three quarters (78%) of organisations back from achieving these goals.

A new report from MIT Technology Review Insights, in partnership with Snowflake, found that while businesses have big ambitions for generative AI – with 72% looking to increase efficiency or productivity, 55% betting on increased market competitiveness, and 47% aiming to see more innovation in products and service – the foundational data strategy needs to be improved to maximise AI’s potential.

Businesses need strong data foundations, powered by modern cloud data platforms, to enable them to harness their own stores of data, and also vast volumes of previously inaccessible data, largely from unstructured data such as videos and images.

According to the report, just 22% of business leaders say they are ‘very ready’ to engage with AI, while 53% are ‘somewhat ready.’

Higher readiness correlates with fewer challenges related to accessing scalable computing power, data silos and integration issues, and data governance.

Despite many business leaders’ confidence in the results AI can deliver, they are realising that data is key to how quickly and effectively they can unlock AI’s value.

Another challenge facing organisations is deploying AI at scale.

The vast majority (95%) of those surveyed reported facing hurdles when implementing AI. 59% of respondents cited data governance, security, or privacy as their most prevalent challenge, followed by data quality and timeliness (53%), and costs of resources or investment (48%).

Spending and resourcing decisions, including those needed to improve data foundations, are a challenge when it comes to any technology investment.

But the cost of generative AI itself is decreasing, with enterprises having begun to build smaller large language models (LLMs) that remain equally capable, and less expensive.

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“Many of today’s organisations have big ambitions for generative AI: they are looking to reshape how they operate and what they sell,” says Baris Gultekin, head of AI, Snowflake.

“Our joint research shows that as organisations feel increasing urgency to deploy AI applications, they are realising that their data can help them deliver insights from previously untapped sources of information.

“A strong data foundation is at the core of generative AI capabilities, and business leaders need to move quickly to deal with concerns such as data security and cost, and establish the foundation they need to deliver on the promise of AI.”

While companies further along their AI journey are now reaping some benefits, the importance of a robust data foundation remains key for companies looking to expand their AI adoption.