Kyndryl, a provider of mission-critical enterprise services, has released its second annual Kyndryl Readiness Report, drawing on responses from 3,700 senior leaders across 21 countries. The data reveals an instance of momentum and reflection – as businesses report growing returns from AI investments while facing mounting pressure to modernise infrastructure, scale innovation efforts, reskill workforces and manage risk in an increasingly fragmented regulatory landscape. 

“A readiness gap exists as enterprises grapple with the promise of transformative value from AI,” said Martin Schroeter, Chairman and CEO of Kyndryl. “While 90 per cent of organisations think they have the tools and processes to scale innovation, more than half are stalled by their tech stack, and less than a third say their employees are truly ready for AI. Closing that gap is the challenge and opportunity ahead.” 

The 2024 report revealed a critical gap between perception and preparedness: while 90 per cent of business leaders believed their IT infrastructure was best in class, only 39 per cent felt it was ready for future disruption. While there has been momentum – that tension remains. This year: 

ROI on the rise, but AI stuck in experimentation phase: While 54 per cent of organisations reported seeing positive returns on AI investments – an increase of 12 points from 2024 – 62 per cent still haven’t advanced their AI projects beyond the pilot stage. 

Confidence continues to outweigh capability: While 90 per cent say their tools and processes allow them to rapidly test and scale new ideas, more than half say their foundational technology stack holds back innovation. 

AI driving workforce transformation, but skills gaps remain: 87 per cent say AI will “completely” transform jobs at their organisations within 12 months, even though many say their employees are not using AI frequently today and few have the technical skills necessary.  

Geopolitical pressures forcing a data pivot: While reporting clear benefits from cloud adoption, organisations are now reevaluating where and how their data is stored, processed, accessed and secured amid an increasingly fragmented regulatory landscape. Businesses are also balancing legacy infrastructure challenges, with 70 per cent of CEOs saying they reached their cloud setup “by accident rather than design.” 

AI spending rises along with ROI expectations – with cyber resilience top of mind 

Business leaders across all industries and countries say their company’s AI spending jumped 33 per cent on average since last year, with 68 per cent investing “heavily” in at least one form of AI. As AI investments rise, so does the pressure to show value – and protect it. Three in five leaders say they feel more pressure this year to deliver ROI from AI than last. Their top use case? Cybersecurity.

Cloud is under pressure as geopolitical and regulatory disruption drive change 

Many organisations are also revisiting their cloud infrastructure, prompted by new global regulations and growing concerns about data sovereignty. Three in four leaders report concerns about the geopolitical risks associated with storing and managing data in global cloud environments, and 65 per cent have adjusted their cloud strategies in response – by investing in data repatriation, reassessing vendors, and shifting toward private cloud models. 

Talent and Culture – the next readiness frontier 

As leaders look to scale innovation, people readiness is emerging as a key barrier – and a key opportunity. While nearly 9 in 10 believe AI will completely reshape jobs in the next year, only 29 per cent feel their workforce is ready to successfully leverage the technology and concerns remain around the skills needed to succeed in this era. Many organisations are also battling cultural barriers – with nearly half of CEOs reporting their organisation stifles innovation (48 per cent) and moves too slowly in decision-making (45 per cent). Those pulling ahead – dubbed “Pacesetters” in the report – aren’t just investing in innovation. They’re uniquely prioritizing culture, upskilling and leadership alignment. 

Compared to organisations who are lagging in these areas, Pacesetters are: 

32 points less likely to cite their tech stack as a barrier 

30 points more likely to say their cloud can adapt to new regulations 

20 points less likely to report a cyber-related outage in the past year 

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Tags: AI, cloud, Kyndryl