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Kyndryl Readiness Report 2025: AI Drives Business Transformation

In the latest Kyndryl Readiness Report, released on October 20, 2025, insights from over 3,700 senior leaders across 21 countries highlight the evolving landscape of artificial intelligence (AI) within enterprises. While organizations are witnessing positive returns from their AI investments, they also encounter challenges related to infrastructure and workforce readiness.

Growing Momentum and Reflection

The report indicates a noteworthy momentum in AI adoption, with 54% of companies reporting returns on their AI investments, marking a significant 12-point increase from the previous year. However, it also reveals a concerning trend: 62% of these organizations have yet to advance their AI initiatives beyond the experimental phase. Kyndryl's Chairman and CEO, Martin Schroeter, pointed out a critical readiness gap, explaining that while most enterprises believe they possess the necessary tools to innovate, many are hindered by inadequate technology stacks and workforce skills.

"Ninety percent of organizations assert they have the capability to scale innovation, yet over half find their tech infrastructure lacking," said Schroeter. This disconnect between perceived capability and actual preparedness will be crucial for enterprises to address in the coming years.

Skills Gap: A Barrier to AI Transformation

As businesses plan for the future, they acknowledge that AI will fundamentally reshape their workforce within the next 12 months. Surprisingly, only 29% of executives feel confident that their employees are ready to leverage AI technologies. Many organizations face significant skills gaps that must be addressed to realize the full potential of AI.

Although there is a willingness to embrace change, cultural barriers persist. Nearly half of the CEOs surveyed indicated that decision-making processes can be slow, and organizational cultures can stifle innovation. As companies strive to become leaders in AI adaptation, focusing on skill development and promoting innovation-friendly environments will be essential.

Geopolitical Pressures and Cloud Strategies

The report also highlights the impact of geopolitical factors on cloud strategies. With growing regulatory concerns about data management and security, organizations are reconsidering their cloud infrastructures. Three out of four leaders expressed worries regarding the geopolitical risks of using global cloud environments, leading many to adjust their cloud strategies accordingly. In fact, 65% of executives are implementing new approaches, such as data repatriation and adopting private cloud models.

Increased AI Investment and Cybersecurity Focus

As AI spending rises—now averaging a 33% increase since last year—so too does the pressure to deliver measurable outcomes. An overwhelming 68% of business leaders confirmed that they are heavily investing in some form of AI. This year, leaders reported a heightened sense of urgency around demonstrating ROI from their AI initiatives; enhancing cybersecurity capabilities has emerged as a top priority for many enterprises.

The Pacesetter Advantage

The report classifies companies that excel in both innovation investment and cultural readiness as "Pacesetters." These organizations report significant advantages over their peers in terms of technology adaptability and resilience against cyber threats. For instance, Pacesetters are 32% less likely to face barriers from their tech stacks and are more proactive in adjusting to new regulations. This proactive stance may prove critical as enterprises navigate a rapidly evolving digital landscape.

Conclusion: A Call to Action

The Kyndryl Readiness Report serves as both a mirror and a guide for enterprises embracing AI's transformative potential. As organizations thrive on the burgeoning gains from AI, they must also confront the pressing challenges associated with tech infrastructure, skills gaps, and regulatory pressures. The path forward requires a concerted effort to close the readiness gap and fully harness the power of AI.

For a comprehensive understanding of the findings and recommendations outlined in the report, visit Kyndryl's Readiness Report.