Kyndryl 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% 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.”
Last year’s report revealed a critical gap between perception and preparedness: while 90% of business leaders believed their IT infrastructure was best in class, only 39% 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 the experimentation phase: While 54% of organisations reported seeing positive returns on AI investments – an increase of 12 points from 2024 – 62% still haven’t advanced their AI projects beyond the pilot stage.
- Confidence continues to outweigh capability: While 90% 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% 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 re-evaluating 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% 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% on average since last year, with 68% 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% 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’s 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% 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%) and moves too slowly in decision-making (45%). Those pulling ahead – dubbed “Pacesetters” in the report – aren’t just investing in innovation. They’re uniquely prioritising culture, upskilling and leadership alignment.
