Kyndryl's Marios Kapiris: While 76% of businesses are investing in traditional AI and machine learning, only 42% see a positive ROI

Uncertainty over when they will see a return on their investment (ROI) in IT modernisation is a cause for concern for global business leaders, according to the Kyndryl Readiness Report, which was presented in Nicosia on 23 January by Marios Kapiris, Director (Cyprus), Kyndryl Greece & Cyprus.

According to the report, which combines feedback from 3,200 senior decision-makers with insights from Kyndryl Bridge, the Company’s AI-powered digital business platform, to illustrate global business challenges and opportunities across markets and industries, IT modernisation is helping companies gain a competitive edge, even as just 42% of businesses currently see positive return on investment from AI.

The report also explores the paradox of why 90% of executives believe their IT infrastructure is best-in-class but only 39% of them think it’s ready to manage future risks.

In the digital economy, business leaders say they’re relying on their IT to mitigate risk, build talent and take advantage of new tools. Yet while 94% of leaders say technology modernisation is a high priority for their companies, data from Kyndryl shows that 44% of mission-critical IT infrastructure is approaching or at end-of-life, increasing vulnerability and raising barriers to modernisation. Business leaders say they need help with decision making and talent development.

More specifically:

AI ROI is elusive

While 76% of businesses are investing in traditional AI and machine learning, only 42% see a positive return on investment. The biggest barriers to AI adoption remain data privacy concerns (31%), uncertain ROI (30%) and compliance challenges (26%).

End-of-life technology challenge

Nearly all modern businesses face the challenge of keeping their systems up to date. 64% of CEOs are worried about outdated IT, and Kyndryl Bridge shows that 44% of mission-critical IT infrastructure is approaching or at end-of-life.

Technology is outpacing training

Over 40% of leaders are experiencing technology skills gaps that hinder modernisation progress.

Security still top concern

Some 65% of executives are worried about cyber-attacks, and only 30% feel ready to manage those risks.

Leaders report business-tech alignment

Companies farther along in digital transformation report greater collaboration between business and technology leaders, and greater ROI on tech projects.

Report maps out risks and benefits

Cybersecurity tops the list of business concerns: 65% of business leaders are worried about cyber-attacks, and only 30% feel ready to manage them. Similarly, 59% express concern over climate and environmental disruptions, yet just 25% believe their systems can effectively respond.

An accelerating regulatory landscape is also top of mind for executives, as major measures come online. While 48% of executives are concerned that the pace of regulation is moving too fast, 66% see regulation as having a positive effect overall.

“Despite these challenges, businesses that do modernise are realising clear benefits from those projects,” said Kapiris. Looking back on the past year, leaders said they have experienced improved efficiency (85%), greater innovation (71%) and an improved employee or customer experience (60%). However, there is still room to improve as executives see less of an impact in data security and compliance with regulations (34%) and from sustainability-based outcomes such as decreased energy use or emissions (27%), he said.

Even companies that have adopted more advanced IT tools, like automation programs that monitor and solve for issues across an entire IT estate, have room for additional improvement. Kyndryl Bridge shows an average of 8% of IT issues are remediated by automation without human intervention. Kyndryl sees the potential for up to 30% of IT issues being resolved through automation - potentially saving companies billions of dollars per year in maintenance costs and prevented downtime, said Kapiris.

Creating a roadmap to readiness

According to the report, organisations face tough decisions to in their readiness journeys. By plotting out blind spots and difficult trade-offs, the Report offers a roadmap to readiness in a rapidly changing business landscape:

1. Being 'people-ready' is just as important as being 'tech-ready.’ IT is everyone’s business. Organisations farther along on their tech journeys also report alignment between business and tech leaders. With IT playing a more prominent role in shaping workplace culture and processes, CIOs and CTOs who collaborate across the C-suite will be more prepared to bring employees along with upgrades in technology. Leaders who nurture a skilled workforce are more likely to feel ready for future risks, so investing in talent development, particularly in AI and cybersecurity, is crucial.
2. Weigh the new vs. the familiar: To build the case for smart investments, leaders need to understand how new tools will integrate not only with technology but the company culture, processes and goals. Balancing immediate needs with long-term investments will help leaders navigate complex modernisation challenges. And new capabilities, like AI, rely on a solid data foundation; investing in the foundation first may achieve higher ROI in the long term.
3. Reframe the conversation about tech debt: The data shows that in an evolving market, with nearly everyone confronting aging infrastructure, businesses are not alone in the end-of-life tech challenges. Reducing technical debt eliminates operational inefficiencies and unlocks potential for faster growth—an investment in future agility and innovation. This includes fully embracing new capabilities like automation to increase efficiency and reduce downtime.

To read the full report, visit Kyndryl's 2024 Readiness Report.