NetApp Cloud Complexity: Reliable Data is Key to AI Success

NetApp’s second Cloud Complexity study highlights the divide between AI leaders and AI laggards, illustrating the value of a unified data approach

The race to adopt AI at scale is picking up speed, but there is a stark and widening divide between the leaders and laggards. Now, a study by NetApp highlights just how far ahead the AI leaders have pulled when it comes to deploying AI initiatives successfully, while showcasing the critical role of a unified data infrastructure in achieving AI success.

The company’s second annual Cloud Complexity Report found that technology companies are unsurprisingly leading the way in AI with 70% having live or pilot projects. Banking and financial services (55%) and manufacturing (50%) follow, while healthcare (38%) and media/entertainment (25%) lag behind.

Larger enterprises are also outpacing smaller companies, with 62% of firms over 250 employees reporting active AI compared to only 36% of those under 250 employees.

According to NetApp, a key differentiator is that AI leaders (67%) are more likely to have hybrid IT environments that can connect diverse data sources – a key enabler for AI success. “AI is only as good as the data that fuels it,” said Pravjit Tiwana, General Manager and Senior Vice President of Cloud Storage at NetApp. “Both the AI leaders and AI laggards show us that in the prevailing hybrid IT environment, the more unified and reliable your data, the more likely your AI initiatives are to be successful.”  

AI laggards must swiftly innovate to stay competitive

While there is a significant divide between AI leaders and laggards, the laggards are making notable progress in preparing their environments for AI initiatives. However, the window to close the gap to the leaders is rapidly closing.

The report found that a significant number (42%) of companies in lagging AI countries like Spain, Australia and New Zealand, Germany and Japan have already optimised their IT infrastructure for AI workloads.

Some laggards are even beginning to experience the benefits of having a unified data fabric in place. In Spain, 45% report easier data sharing across their hybrid cloud as a key benefit, while 54% cite increased visibility into their data assets. Similarly in Australia and New Zealand 43% point to improved data sharing, and in Germany 44% also highlight better data sharing.

Rising IT costs and data security challenges

While soaring costs and security risks loom large, they will not impede overall AI progress. Instead, leaders are getting ahead of these challenges through strategic shifts and investments.

40% of large enterprises say AI projects have already driven up their IT costs. Rather than pulling back, leaders are scaling back other IT operations, reallocating funds from lower-priority areas, and increasing specific AI investments to power through.

Cybersecurity concerns have also spiked 16% year-over-year, jumping from 45% to 61% of companies citing increased risk as a top challenge. However, leaders are shoring up their security posture, with 58% globally prioritising increased data security investments in 2024, up 25% from 2023 levels.

To fund AI deployments despite inflating costs, 31% of companies are reallocating funds away from other business areas. This financial prioritisation is most prevalent in India at 48%, followed by the UK at 40% and US at 35%.

Security, AI and CloudOps drive cloud investment

Whether AI leaders or laggards, NetApp’s report shows that companies are leaning on the cloud to support their data-driven strategies and AI goals moving forward. They expect AI-driven cloud deployments to increase by 19% from 2024 to 2030.

The leaders are accelerating their cloud operating model (CloudOps), with 85% planning to enhance CloudOps automation over the next year. This cloud operational efficiency will be critical as data estate continues growing exponentially to fuel AI.

With data security risk expanding, investments in protection are becoming a global priority. Companies have marked a 25% year-over-year increase in security spending, with 58% prioritising data security in their 2024 cloud budgets compared to only 33% in 2023.

“The rise of AI is ushering in a new disrupt-or-die era,” said Gabie Boko, Chief Marketing Officer at NetApp. “Data-ready enterprises that connect and unify broad structured and unstructured data sets into an intelligent data infrastructure are best positioned to win in the age of AI.”

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