Enterprise leaders are pouring billions into artificial intelligence (AI) with growing confidence yet massive gaps remain between what companies think they can do and what they’re actually accomplishing, according to Kyndryl’s second annual Readiness Report released Monday.
The survey of 3,700 senior business leaders across 21 countries paints a paradoxical picture. While 90% of organizations believe they have the tools and processes to scale innovation, more than half say their core technology infrastructure is holding them back. Even more troubling, less than a third report that their workforces are truly ready for AI.
“A readiness gap exists as enterprises grapple with the promise of transformative value from AI,” Kyndryl CEO Martin Schroeter said. “Closing that gap is the challenge and opportunity ahead.”
The findings echo concerns raised in last year’s inaugural report, which exposed a yawning chasm between perception and reality: 90% of business leaders then claimed their IT infrastructure was best in class, yet only 39% felt it could withstand future disruption. That tension persists today, despite reported progress in other areas.
On the positive side, enterprise AI investments are beginning to pay off. More than half of organizations (54%) report seeing positive returns on their AI spending, up 12% from the previous year. But progress masks a deeper problem: Some 62% of companies haven’t moved their AI initiatives beyond the pilot stage, leaving potentially transformative technology stuck in experimentation.
The momentum on spending tells a similar story. Average AI spending jumped 33% year-over-year, with 68% of companies investing heavily in at least one form of AI. As investments rise, so does pressure to deliver measurable returns, with three in five leaders reporting they feel greater pressure this year to prove their AI spending is generating value.
Cybersecurity emerged as the top use case driving this spending surge, with companies prioritizing AI to strengthen their defenses against an escalating threat landscape.
Perhaps the most striking disconnect involves people. Though 87% of leaders say AI will completely transform jobs at their organizations within just 12 months, only 29% believe their workforce is ready to leverage the technology. Many employees aren’t even using AI frequently today, and few possess the technical skills the transition will demand.
This skills gap represents what Kyndryl identifies as “the next readiness frontier,” a critical vulnerability that’s being compounded by cultural barriers. Nearly half of surveyed CEOs admitted their organizations stifle innovation, while 45% said their companies move too slowly in decision-making.
Cloud adoption continues delivering clear benefits, yet geopolitical upheaval is forcing companies to rethink their data strategies. A striking 70% of CEOs acknowledged they built their cloud setups “by accident rather than design,” leaving them vulnerable to shifting regulatory requirements.
Three-quarters of leaders now express concerns about geopolitical risks tied to storing data in global cloud environments. In response, 65% have already adjusted their cloud strategies, such as investing in data repatriation, reassessing vendors, and shifting toward private cloud models to maintain greater control over sensitive information.
Amid this landscape, Kyndryl identified a cohort of “Pacesetters” — organizations pulling ahead of peers by tackling readiness challenges head-on. These companies are doing more than simply investing in new technology. They’re uniquely prioritizing culture, upskilling initiatives, and leadership alignment.
The difference is measurable. Compared to lagging organizations, Pacesetters are 32% less likely to cite their technology infrastructure as a barrier to innovation. And they report 20% fewer cyber-related outages over the past year.
