There’s a moment in every transformation journey when organizations either tip toward competitive advantage or fall behind. I took a dive into Kyndryl’s 2025 Readiness Report this weekend and the research is clear, we are at that precise inflection point right now. And the data paints a picture that should have every technology leader paying close attention.
Drawing from insights gathered from 3,700 business executives across 21 countries, combined with real-world data from 1,200 companies using Kyndryl Bridge, this year’s report reveals something critical: the readiness gap isn’t narrowing — it’s evolving into something more complex and more urgent.
The Paradox Persists
Last year’s inaugural report uncovered a troubling paradox: while 90% of leaders reported they believed their IT infrastructure was best-in-class, only 39% thought it was ready for future risks. Fast forward twelve months, and organizations are still struggling with readiness, despite massive investments in modernization. This year on average, only 31% of survey respondents reported feeling completely ready across external risks, barely budging from 29% last year.
What’s changed isn’t the percentage, it’s the nature of the challenge. Organizations are no longer preparing for disruption; they’re reacting to it in real time. Between the breakneck pace of AI advancement and an increasingly fragmented geopolitical landscape, business leaders are being forced to navigate complexity that would have seemed unthinkable just a few years ago.
AI Investment Surges, But Scaling Remains Elusive
Here’s where things get interesting. According to the Kyndryl 2025 Readiness Report, AI investments have surged 33% over the past year, spanning everything from traditional machine learning to agentic AI systems that can reason and act autonomously.
But there’s a catch. While 61% of leaders report feeling more pressure than ever to demonstrate positive ROI on AI investments, most organizations remain stuck in the experimentation phase. Despite increased AI readiness, up to 36% this year from prior measurements, nearly two-thirds of companies still don’t feel their AI implementation is ready to manage future risks.
The data reveals an uncomfortable truth: 72% of organizations have more technology pilot projects than they can realistically scale, and 57% report that innovation efforts are often delayed by foundational issues in their technology stack. We’re drowning in proof-of-concepts while struggling to move innovations into production.
The Foundation Problem Nobody Wants to Talk About
One of the key findings from the Kyndryl Bridge data shows that 25% of mission-critical networks, storage, and servers are at end-of-service. Let that sink in. A quarter of the infrastructure underpinning enterprise operations is running on borrowed time, creating security vulnerabilities and limiting the ability to adopt modern, cloud-native solutions.
The implications extend far beyond security concerns. Outdated systems create what technologists call “technical debt” — resources that could fuel innovation instead get diverted to maintain aging infrastructure. Twenty-two percent of survey respondents explicitly cited technical debt as a barrier holding their organizations back. Readiness is also a concern, with only 31% of respondents saying they feel ready across external business risks — meaning the remaining 69%, well, they aren’t there yet.
I’m thrilled to see that organizations are taking security seriously; the report shows they are investing heavily in AI-powered cybersecurity, with 82% (three in four survey respondents) report pouring resources there more than any other AI capability. As quickly as we race to leverage the power of AI to increase productivity and efficiencies across organizations, threat actors are also eagerly leveraging the power of AI to fine-tune their campaigns, and speed and scale their deployments. It’s a money game for cybercriminals, and the better they get at leveraging AI, and the faster the more, the greater the opportunity.
It’s important to understand that this isn’t just a technology problem; it’s a business continuity issue. As the graph above shows, eighty-two percent of organizations reported experiencing significant cyber-related outages in the past year, stemming from causes as varied as human error, network connectivity disruptions, cybersecurity breaches, and hardware failures. The modern enterprise attack surface has expanded dramatically, and legacy infrastructure simply wasn’t designed for this level of complexity. There’s every reason for a laser focus on upgrading IT infrastructure, which you can see that 42% of organizations are working toward.
Geopolitics Reshapes Cloud Strategy
Another finding that caught my attention was this: 65% of organizations shared they have made changes to their cloud strategies in response to geopolitical pressures, including data sovereignty regulations, supply chain disruptions, and tariffs. Nearly a third cite regulatory or compliance concerns as the primary barrier limiting their ability to scale recent technology investments.
The geopolitical dimension adds an entirely new layer of complexity to technology decision-making. Seventy-five percent of organizations report increasing concern about the geopolitical risks associated with storing and managing data in global cloud environments. Eighty-six percent agree that the country of origin and regulatory alignment of cloud providers are becoming increasingly important factors in their evaluation process.
What’s particularly revealing is that different markets respond differently to these pressures. The United States and China report the least concern about geopolitical risks in cloud storage, while countries like the UAE, Sweden, and India report the highest levels of concern. This suggests that regulatory fragmentation and data sovereignty requirements will continue to reshape how global enterprises architect their technology infrastructure.
The Cloud Migration Hindsight Problem
Here’s a sobering statistic that every CIO should internalize: 95% of organizations say they would change how they implemented their cloud strategy if they could do it over again. The top changes they’d make? More focus on security and compliance, better understanding of integration complexity, and improved cross-departmental communication.
Even more telling, 70% of CEOs report that they arrived at their current cloud environment “by accident” rather than by design, versus 56% of all respondents. This suggests that organizations rushed to adopt cloud without fully understanding the architectural implications, and now they’re dealing with the consequences. I know my friend and cloud expert David Linthicumwill read this and quickly say: “I predicted this; they should have paid attention.”
The good news is that organizations are seeing tangible benefits from cloud investments. Ninety-one percent report that cloud has made their business more agile, and an equal percentage say cloud infrastructure gives them the flexibility to adapt quickly to regulatory requirements. But the lesson is clear: velocity without vision leads to costly do-overs.
The Workforce Readiness Crisis
While much of the conversation around AI focuses on technology, the Kyndryl report highlights an equally critical challenge: workforce readiness. Eighty-seven percent of leaders believe AI will fundamentally transform job roles and responsibilities within the next 12 months. Yet the majority worry their workforce lacks the necessary skills, both technical and human, to fully seize AI opportunities.
The numbers are stark. Only 29% of organizations say their workforce is currently ready to successfully leverage AI in the workplace. Even among technical employees, only 61% are using AI on a weekly basis, and that number drops to 43% for non-technical employees. We’re investing billions in AI technology while leaving our people behind.
The skills gap extends beyond technical capabilities. Forty-one percent of leaders cite “having the right technology skills to make the most of AI opportunities” as their top workforce concern, while 39% worry about “having the right core, human, and cognitive skills.” Organizations are beginning to recognize that AI adoption requires not just technical training but fundamental shifts in how people work and make decisions.
Cultural Adaptability: The Hidden Differentiator
One of the most compelling insights from the report centers on organizational culture. Organizations that describe their culture as dynamic and adaptable — about 36% of respondents — significantly outperform their peers across multiple dimensions. These “pacesetters” are 22 percentage points more likely to report their IT infrastructure is ready to manage future risks and 15 percentage points more likely to have achieved positive ROI on AI investments.
The contrast is stark. Among CEOs, 48% agree their organization’s culture stifles innovation, and 45% say their culture moves too slow in decision-making. Meanwhile, nearly every organization, a whopping 94%, claims to promote continuous learning, and 91% say they prioritize training and upskilling initiatives. The disconnect suggests that a reality check is much needed. Training alone isn’t enough; organizations need fundamental cultural transformation to enable the speed and adaptability that modern technology demands.
The Leadership Alignment Challenge
Perhaps the most concerning finding relates to leadership alignment, or rather, the lack of it. Sixty-five percent of CEOs say they and their CFO are not aligned on the long-term value of technology investments. Seventy-four percent report that the pressure to demonstrate short-term ROI undermines longer-term innovation goals.
This misalignment has real consequences. Organizations struggle to move beyond pilot projects because business and technology leaders can’t agree on how to measure success or what outcomes matter most. While 33% of leaders prioritize operational efficiency as the most critical ROI metric, others focus on customer satisfaction, cybersecurity posture, revenue growth, or organizational agility. There’s no single definition of success, which makes it nearly impossible to build consensus around technology investments.
What Pacesetters Do Differently
The report segments organizations into three categories: pacesetters (13%), followers (47%), and laggards (40%). What separates pacesetters from the pack isn’t just more investment, it’s how they invest and how they operate.
Pacesetters are 32 percentage points less likely to have innovation efforts delayed by foundational tech stack issues. They’re 20 percentage points more likely to have avoided cyber-related outages in the past year. Their technical employees use AI at significantly higher rates: 70% weekly usage versus 40% among laggards. And critically, they’re far less likely to report that their CEO and CFO are misaligned on technology investment value.
Interestingly, as organizations mature, their challenges evolve. Pacesetters struggle with the complexity of integrating and scaling advanced technologies, a higher-order problem that reflects progress, not failure. Followers continue to grapple with regulatory and compliance friction, while laggards remain constrained by resource and skills gaps.
Thoughts on the Path Forward
The 2025 Kyndryl Readiness Report confirms what the analyst community has been collectively highlighting: we are at a tipping point. In a market that’s moving faster than ever, organizations that successfully navigate the intersection of technology readiness, workforce transformation, and regulatory complexity will turn potential obstacles into competitive advantages. Those that don’t risk… everything.
The path forward requires action on multiple fronts simultaneously. Organizations need to modernize foundational infrastructure while managing the complexity of cloud optimization in a geopolitically fragmented world. They need to scale AI pilots into production while building workforce capabilities to leverage these tools effectively. And they need to align leadership around a shared vision of what technology success looks like.
Most critically, organizations need to recognize that readiness isn’t a destination; it’s a continuous state of adaptation. In a world where AI capabilities double seemingly overnight and regulatory requirements shift with geopolitical winds, the only sustainable advantage is the ability to sense change, decide quickly, and act decisively.
The readiness tipping point isn’t just about technology — in fact, it rarely is. It’s about people, processes, and technology, all working in concert. It’s about whether organizations can build the cultural adaptability, leadership alignment, and operational agility to thrive in an era of perpetual transformation. The data from this report confirms what we already know. Some organizations are already there. The question for everyone else is: which way will you tip?
Find and download the Kyndryl 2025 Readiness Report here.
This post was originally published on LinkedIn.
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