Navigating Challenges in Data and AI Adoption: Insights from ISG Research
A recent study by Information Services Group (ISG), a leading global technology research and advisory firm, reveals that while enterprises are ramping up investments in data and artificial intelligence (AI) initiatives, many organizations have yet to see the anticipated benefits. Despite the lack of immediate returns, companies remain committed to increasing their budgets for data-related projects over the next two years. The ISG Market Lens™ Data and AI Programs study highlights the complexities, talent shortages, and operational barriers hindering progress in this critical growth area for IT.
Rising Investments Amid Flat IT Budgets
The research shows that three-quarters of enterprises plan to increase their annual spending on data and AI projects, even as overall IT budgets remain stagnant. Key areas of investment include improving data quality, integration, security, and gaining actionable business insights. A majority of respondents expect the value generated by these initiatives to grow by more than 10 percent within the next two years. However, the study also points out that high spending in certain domains has not translated into significant performance improvements.
“Data is the cornerstone of IT growth, especially as it supports the adoption of AI,” said Alex Bakker, ISG distinguished analyst and co-author of the study. “Companies believe that investing in data will eventually lead to better insights and operational efficiency through AI. However, multiple technological and operational challenges are preventing many organizations from achieving their AI objectives.”
High Spending, Low Returns in Critical Areas
Among the most funded activities in 2025 are efforts to extract greater business value from data insights, enhance productivity, and improve data security and integration. Yet, despite substantial investments, some areas—such as productivity enhancement and data quality improvement—have yielded disappointing results. For instance, processes like data validation and deduplication have not delivered the expected outcomes for many enterprises.
Centralized data governance is widely regarded as essential for AI success, but only 43 percent of companies report having established a consistent data structure. Furthermore, 38 percent of respondents believe the costs associated with harmonizing data management outweigh the potential benefits. This disconnect underscores the challenges organizations face in aligning their data strategies with broader business goals.
Data Management Challenges Impede AI Adoption
The study emphasizes that unresolved data management issues have profound implications for AI adoption. Making data usable for AI applications is cited as the top challenge expected between 2025 and 2026. Nearly one-third of enterprises anticipate that data quality, accuracy, and consistency will pose significant obstacles to their AI initiatives.
One of the primary barriers to success is the sheer complexity of integrating and updating data infrastructure across thousands of applications in large organizations. Over two-thirds of companies attribute their slow progress on data and AI solutions to the difficulty of managing this complexity, rather than a lack of innovation. While some firms have centralized certain types of data—such as financial, employee, or IT information—no category of data has been fully integrated across a majority of enterprises.
Talent Shortages Compound the Problem
Another major hurdle is the scarcity of skilled professionals capable of driving data and AI projects forward. Enterprises struggle to find employees who possess both technical expertise and industry knowledge, which are crucial for applying technology effectively. More than a quarter of respondents identified talent shortages as the biggest barrier or cause of delays in bringing data initiatives to full production.
To address these challenges, organizations are increasingly turning to external partners. The study predicts that spending on outsourced data services will rise by an average of seven percent over the next two years, with 60 percent of enterprises engaging new service providers. Companies are seeking assistance in areas such as data organization, design, AI implementation, and access to multidisciplinary teams that combine technical skills with business acumen.
“Data is recognized as a key driver of revenue growth and profitability, but inflexible systems and ineffective tools for sharing data are holding enterprises back,” said Michael Dornan, principal analyst and co-author of the study. “In the age of AI, businesses need a data-first approach to tackle complexity, and this shift is reshaping how they collaborate with managed service providers.”
A Call for Strategic Reevaluation
The findings underscore the need for enterprises to adopt a more strategic and holistic approach to data and AI initiatives. Organizations must focus on simplifying their data architectures, fostering collaboration between IT and business units, and investing in workforce development to bridge the skills gap. Additionally, partnering with experienced service providers can help enterprises navigate the complexities of data management and accelerate their AI adoption journeys.
About ISG
ISG (Nasdaq: III) is a global AI-centered technology research and advisory firm. A trusted partner to more than 900 clients, including 75 of the world’s top 100 enterprises, ISG is a long-time leader in technology and business services that is now at the forefront of leveraging AI to help organizations achieve operational excellence and faster growth. The firm, founded in 2006, is known for its proprietary market data, in-depth knowledge of provider ecosystems, and the expertise of its 1,600 professionals worldwide working together to help clients maximize the value of their technology investments.
