Why Enterprise RAG Fails After the Demo
Most enterprise RAG initiatives look impressive in a demo and break down in production because:
Hallucination rates are 30% or higher, making answers unreliable
Inconsistent and unverifiable responses with no grounding or citations
Proofs of concept stuck in notebooks never operationalised
Slow response times and escalating costs as usage grows
No evaluation loop no quality benchmarks, no ownership model
Security, access control and auditability gaps thatblock enterprise rollout
Why Enterprise RAG Fails After the Demo
The hidden engineering failures behind enterprise RAG systems.
Failure Symptoms
Trust Killer
Hallucinations above 30% with
inconsistent and unverifiable answers.
System Stall
PoCs stuck in notebooks, slow response
times and rising costs.
Governance Void
No evaluation, no guardrails, no ownership.
Security Risk
Security and access control concerns.
Root Causes Due to Weak Engineering
Retrieval, Quality Control Issue
Naive chunking and retrieval strategies.
Missing reranking or grounding validation.
Operations Gap
No AI Ops for quality, cost and drift
management.
Evaluation Gap
No continuous evaluation loop (e.g., LLM-as-a-judge).
Security Oversight
No metadata aware access control.
Enterprise RAG Application Architecture
The hidden engineering failures behind enterprise RAG systems.
Enterprise RAG Solution Includes
The Cloudaeon Enterprise RAG Solution delivers a comprehensive set of production grade capabilities for enterprise scale RAG deployments.
Metadata Aware Document Ingestion
Preserves context, lineage and access controls across the ingestion pipeline.
Configurable Chunking and Embedding Strategies
Aligned to data types, document structure and enterprise use cases.
Hybrid Retrieval with Intelligent Reranking
Combines vector and keyword search to maximise relevance and recall.
Grounded Responses with Citations
Enables answer verification, traceability and user trust.
Built-In Evaluation Pipelines (LLM-as-a-Judge)
Supports continuous, automated quality assessment at scale.
Hallucination Detection and Scoring
Applies measurable thresholds to monitor and control answer reliability.
Policy Based Guardrails and Access Control
Enforced consistently across the entire RAG lifecycle.
Secure RAG APIs
Provides controlled access to RAG capabilities, with an optional user interface.
CI/CD Pipelines and Environment Promotion
Enables controlled, repeatable releases from development to production.
Monitoring Dashboards for AI Ops
Tracks quality, latency and cost to support ongoing operational optimisation.
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Delivered with a perpetual license
Full source code handover
No dependency on Cloudaeon hosted services
No usage based licensing
License & Ownership Model
Built for long term enterprise ownership
RAG Solution Delivery & Commercial Model
The Cloudaeon Enterprise RAG Solution is delivered through outcome driven delivery models for long term operational success.
One Time Implementation
A structured implementation focused on production readiness:
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Architecture finalisation aligned to your environment and governance requirements
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Deployment in the client environment
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System configuration and knowledge transfer to internal teams
Optional Proof of Design (PoD)
Optional Ongoing Support
For enterprises that require sustained operational assurance:
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SLA backed AI Ops
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Evaluation tuning and optimisation
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Performance and cost optimisation
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New data source onboarding
Optional Proof of Design (PoD)
Optional Proof of Design (PoD)
Used selectively for complex or high risk scenarios:
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Bespoke workflows
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Regulated or high risk domains
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Custom evaluation logic
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Agent or MCP integration
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PoD is used to de-risk complexity, not as a mandatory step
*When Needed
Solutions Used
The following accelerators are included as part of the licensed Enterprise RAG Solution:
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Cloudaeon RAG Evaluation Engine
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RAG Guardrails & Safety Framework
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Metadata Driven Ingestion Pipeline
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Document Normalisation & Chunking Engine
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RAG Cost & Latency Optimisation Playbooks
*Included with the Licensed Solution
RAG Solution in Action
Enterprise Contract Intelligence Platform
A large enterprise deployed the Cloudaeon Enterprise RAG Solution to power a contract intelligence platform operating at production scale.
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1,200+ contracts ingested across multiple document types
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Hallucinations reduced from ~28% to <5%
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97% answer accuracy measured through continuous evaluation
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78% effort reduction in contract analysis workflows
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Transitioned from implementation to AI Ops within weeks, not months
Technology Stack
Depending on your environment, the solution supports a platform first approach. Not platform locked:
FAQs
RAG systems hallucinate in production due to weak engineering, not because of the LLM. Typical causes include naive chunking, poor retrieval strategies, lack of reranking, absence of grounding validation, and no evaluation loop. Without guardrails and evaluation, hallucination rates often exceed 20–30%.
Most enterprise RAG projects fail because organisations build proof-of-concept demos instead of production systems. Common issues include notebook-based implementations, lack of ownership, no AI Ops, no access control, rising costs, slow performance, and declining trust once answers become inconsistent or unverifiable.
Hallucinations are reduced by implementing metadata-aware ingestion, hybrid retrieval with reranking, grounded responses with citations, LLM-based evaluation loops, and continuous quality monitoring. The Enterprise RAG Solution embeds these capabilities directly into the application architecture, achieving measurable reductions in hallucinations (e.g., from ~28% to <5%).
Enterprise-grade RAG requires policy-based access control, metadata-driven permissions, audit-ready logging, secure APIs, CI/CD, and full observability across quality, latency, and cost. Cloudaeon’s solution is deployed in your environment with full source code ownership, ensuring security, auditability, and long-term operational trust.