Why AI Fails: The Overlooked Problem Of Messy Data

By Dan Stradtman 

Imagine losing more than three hours of productivity per employee daily because critical information is buried in digital clutter. This isn’t just a hypothetical — it’s a silent productivity killer impacting businesses globally.

Unstructured data — emails, documents, social media posts, customer chats and videos — makes up 80% of all organizational data. This sea of information hides a wealth of untapped insights, but without structure, it’s just chaos.

Executives are keen to discuss innovation, scaling and making smarter decisions with data. Yet they often overlook a significant challenge: the clutter of unstructured data that’s weighing down their organizations. Just as many of us start the year by decluttering our homes, it’s time to bring that same mindset to our digital ecosystems. By organizing and leveraging this hidden resource, we can drive meaningful growth and operational success in 2025.

Why unstructured data needs decluttering

Unstructured data is growing exponentially, and with it comes inefficiencies. Employees lose precious hours searching for files. As anyone who has tried implementing enterprise AI in the past 12 months knows, AI models produce mostly inaccurate outputs if your irrelevant or incomplete data isn’t cleaned up first. The promise of AI is missed simply because the right information just isn’t accessible when we need it.

For far too long we’ve treated unstructured data like a junk drawer, where everything goes when there’s nowhere else to put it. But when managed effectively, unstructured data transforms from a hidden challenge to a strategic asset that drives growth and operational success.

The stakes are high. According to a 2024 survey of customers of my company, Bloomfire, those that adopt knowledge management best practices save an average of 3.9 hours per employee each week. This reduction in time spent searching for information translates directly into improved productivity and operational efficiency. Instead of allowing unstructured data to act as a liability, organizations can streamline operations and unlock untapped potential by managing their knowledge effectively.

Here’s the silver lining: Decluttering unstructured data isn’t just about cleaning up — it’s about unlocking new value. It’s about giving your teams the tools and insights they need to innovate, collaborate and drive results.

The cost of digital clutter

Cluttered data is not only inconvenient, but also expensive. Poor data management costs businesses millions yearly in lost productivity, operational inefficiencies and missed opportunities.

• Operational inefficiencies: Employees waste time digging for information instead of focusing on impactful work.
• Missed opportunities: Hidden insights remain buried, leaving teams unable to respond to trends or customer needs.
• Financial risks: Storing ROT, or redundant, outdated, or trivial, data inflates costs and exposes organizations to compliance risks.

When managed thoughtfully, unstructured data transitions from a costly overhead to a resource that empowers decision-making and accelerates growth.

The decluttering blueprint: organizing unstructured data

The idea of decluttering unstructured data may seem daunting, but with a clear plan it’s entirely manageable. Here’s how you can transform chaos to clarity:

• Conduct a digital Audit: Identify critical data, archive what’s important, and eliminate ROT data. A thorough audit creates a solid foundation for your decluttering strategy.
• Implement data governance policies: Set clear rules for organizing and maintaining data. Assign ownership and make regular updates to keep your systems clean and efficient.
• Leverage AI and automation tools: AI can categorize data, extract insights and simplify workflows. Tools like natural language processing can turn customer interactions into actionable intelligence.
• Create a knowledge management ecosystem: Build a connected knowledge ecosystem that eliminates silos and ensures seamless information flow across departments. A centralized yet flexible approach allows teams to access what they need quickly.
• Maintain and iterate: Decluttering is not a one-time effort. Schedule regular audits and update your policies to maintain an organized digital environment.

Benefits of a clean data strategy

When you declutter your unstructured data, the business impact is immediate and measurable.

• Efficiency gains: Employees can focus on meaningful work instead of wasting time searching for information.
• Enhanced decision-making: Accessible, organized data enables faster, more informed decisions.
• Improved AI outcomes: Clean, high-quality data boosts the performance of AI models, delivering smarter insights.
• Cost savings: Streamlined data reduces storage costs and operational overhead.

Decluttering isn’t just about saving resources — it’s about unlocking your organization’s full potential and setting a foundation for sustained growth.

Organizing data for the future

Decluttering your unstructured data isn’t just a resolution for 2025; it’s a strategic commitment to the decade ahead. Clean, accessible data is the foundation of operational success. It empowers teams to collaborate seamlessly, respond quickly to market demands, and innovate effectively.

Let’s stop treating unstructured data like an afterthought. This year, transform it into a competitive advantage that drives meaningful growth and sets your organization apart.

Dan Stradtman is CMO of Bloomfire, a leader in AI-powered knowledge management platforms.

Illustration: Li-Anne Dias