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A Year in Review: Three 2023 Trends That Will Define 2024

Three pivotal trends were prominent in 2023. How will they continue to shape the data and analytics landscape in 2024?

• By Mark Van de Wiel
• December 13, 2023

After years of accelerating improvements in business intelligence and predictive analytics combined with expanding usage of data lakes, generative AI shifted the data world into a much faster gear this year. The generative AI explosion is creating incredible opportunities, but it also means that reliable and relevant data is more important than ever, and companies will need to make the most of their data stack.

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We’re already seeing some reassessment as the financial reality of deploying generative AI hits the bottom line in an environment where high interest rates are driving fiscal prudence. In this article, I'll dive into three pivotal trends that drove the news in 2023 and how they will continue to shape the data and analytics landscape in 2024.

Focus on Generative AI Productivity

First, I expect we’ll see a shift in generative AI that moves the focus from these unexpected capabilities to unlocking productivity. We’ve seen the potential, but we still must pay for it. Mark Zuckerberg called 2023 the “year of efficiency,” With improved productivity we can operate more efficiently.

We’re already seeing companies such as Salesforce, Snowflake, and Databricks make substantial investments in generative AI and integrate new AI features. One concern is that the largest tech companies -- Microsoft, Google, Amazon, and Meta -- may use their resources to lock down the expensive-to-build foundational large language models (LLMs).

RAG (retrieval augmented generation) is one of the quickest ways for smaller organizations to benefit from generative AI. Start with a foundational LLM, train and fine-tune it with your own data set, and you have the foundation for utilities such as chatbots or internal assistants. Restricted LLMs -- such as Meta’s Llama 2 that was announced as “open source” (it isn’t) -- limit small organizations from realizing such quick generative AI wins.

I expect 2023’s "year of efficiency" will extend beyond operational efficiency and focus on quick wins such as copilot or chatbot capabilities that enhance customer productivity in the short term. Smaller organizations will be challenged to realize ROI in light of high consumption-based SaaS pricing costs.

Getting Control of Consumption-Based Pricing

The growth of consumption-based pricing for SaaS products made it easier for companies to expand their data center resources, effectively on demand. The concept is simple: you only pay for what you use. However, when businesses start pulling in continuous streams of transactional or operational data, they may discover that they use a lot -- and they’re paying for every bit they use. This realization is going to drive companies to manage their data stack more effectively to minimize expenses while pushing cloud providers to offer a wider range of pricing tiers or caps to avoid a massive bill for computing resources.

This change will help customers estimate and budget for their expenses better but will require cloud providers to reassess their true cost of goods sold to determine the best pricing models.

High Interest Rates Continue to Impact Tech Valuation

The third trend throughout 2023 has been the influence of high interest rates on the valuation of tech companies. The resulting lower availability of venture capital has impacted tech company valuations since 2022, and companies have been tightening their belts on spending. Are companies going to run out of cash, and will this result in market consolidation?

The immediate impact of this trend is that technology providers will need to add clear value and be able to show how they make technical operations more productive. Companies that cannot articulate their value proposition clearly will face the harsh reality of restricted access to funding -- so they better get sharper on what they offer their customers to survive.

A Final Word

In 2024, businesses will require new adaptability and innovation to thrive when data, AI, and fiscal realities intersect. We’ve seen these trends dominate 2023, and going into this next year, it’ll be crucial for organizations to navigate these trends skillfully to continue to manage their data for the best results.