According to Silicon Republic, Kyndryl’s latest Readiness Report surveyed 3,700 senior leaders across 21 countries and found AI spending is up 33% compared to last year, with 61% of business leaders feeling more pressure to prove ROI. While 54% report positive returns from AI investments, a staggering 62% admit their AI projects haven’t advanced beyond the pilot stage. The report also reveals that 75% of respondents are increasingly concerned about geopolitical risks in cloud environments, yet only 37% feel prepared for cyberthreats. Additionally, 82% of businesses experienced cybersecurity outages in the past year, and 57% say tech innovation is delayed by foundational infrastructure issues. Gavin Goveia, Kyndryl Consult leader for UK and Ireland, calls this moment a “tipping point” for organizations.
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The Pilot Problem
Here’s the thing that really stands out: companies are spending more on AI than ever, but most projects are stuck in permanent pilot mode. That 62% figure is brutal – it means the majority of AI initiatives never actually deliver real business value. They’re just expensive experiments that never graduate to production. Goveia nails it when he says the initial on-ramp to AI is getting smoother, but scaling from proof-of-concept to real products is where everything falls apart.
And why are these projects stalling? Infrastructure complexity and regulatory concerns are the main culprits. Basically, it’s one thing to build a cool AI demo that works in a controlled environment, and quite another to integrate it into messy, real-world systems while navigating compliance requirements. The gap between what AI promises and what existing tech infrastructure can actually support is becoming painfully obvious.
<h2 id="geopolitics-meets-cloud“>Geopolitics Meets Cloud
Now here’s where it gets really interesting. Companies are completely rethinking their data strategies because of geopolitical pressures. We’re talking about where data lives, how it’s processed, who can access it – the whole nine yards. New regulations around data sovereignty, supply chain disruptions, and international instability are forcing businesses to consider factors they never had to worry about before.
But the real surprise? The least concerned groups about these geopolitical cloud risks are respondents from the US and China. That feels… telling. The countries driving most of the tech innovation are also the most confident about navigating these challenges. Meanwhile, everyone else is scrambling to figure out how to operate in an increasingly fragmented digital landscape.
Cybersecurity Reality Check
Let’s talk about that 37% preparedness number for cyberthreats. That’s alarmingly low, especially when you consider that 82% of businesses actually experienced cybersecurity outages in the past year. Companies know they’re vulnerable, and they’re turning to AI for help – three in four organizations are investing in AI specifically for cybersecurity, which is more than any other AI capability.
But here’s the catch: you can’t have effective AI-driven cybersecurity without solid technical infrastructure. And the infrastructure situation looks pretty grim. A quarter of mission-critical networks, storage, and servers are at end-of-service. How are companies supposed to build advanced AI security systems on top of aging infrastructure that’s already struggling to keep up?
<h2 id="the-tipping-point“>The Tipping Point
What really separates the successful companies from the struggling ones? According to the research, it’s not about having the fanciest AI models or the biggest data lakes. Pacesetters are 35 points more likely to have IT infrastructure ready for future disruption and 30 points more likely to have cloud infrastructure that provides flexibility. They’re getting the fundamentals right first.
Goveia calls this a tipping point because 87% of respondents believe AI will completely transform roles and responsibilities this year. But with all these scaling challenges, infrastructure issues, and geopolitical complexities, good outcomes are far from guaranteed. The companies that figure out how to align their technology with their organizational reality are the ones that will actually reap the benefits of AI. Everyone else? They’ll just be left with expensive pilot projects and unmet expectations.
