Artificial intelligence is reshaping enterprise modernization strategies, with businesses increasingly focusing on business outcomes rather than simply replacing legacy systems, according to Kyndryl’s first global Modernization Report.
The study, based on 2,000 business and technology leaders across five continents and 12 industries, found that AI adoption has become a stronger modernization driver than cost reduction or legacy replacement.
AI is now the top driver of increased mainframe and edge computing use, while also driving SaaS, private cloud, network and application upgrades. Kyndryl said every organisation with a mainframe now plans to deploy AI on the platform.
Agentic AI Accelerates Modernization
Nearly half of respondents said they are behind schedule on modernization goals. Meanwhile, 10% have already deployed agentic AI in production for modernization tasks such as dependency mapping, code conversion and documentation.
Early adopters are reporting better progress, with 67% saying they are ahead of or on track with modernization goals, compared with 51% of other organisations.
However, visibility into existing technology remains a challenge. Only 9% of respondents said they fully understand application dependencies, while 25% reported having large numbers of undocumented applications.
Martin Schroeter, Chairman and Chief Executive Officer, Kyndryl, said AI is raising expectations around the business outcomes technology should deliver. He added that organisations making the most progress are investing across their technology environments while strengthening resilience and focusing technology investments where they can generate the greatest value.
Modernization Becomes a Business Priority
The report also found that modernization has expanded beyond the IT function, with CIOs, CTOs, boards, finance and compliance teams among the stakeholders influencing technology decisions.
Meanwhile, sovereignty and regulatory requirements are adding complexity. 63% of organisations expect sovereign cloud usage to increase, while 55% anticipate greater demands on network architectures because of sovereignty and regulatory requirements.
Kyndryl said enterprise technology environments are also becoming more distributed, with mission-critical applications spread across public cloud, private cloud, mainframe and on-premises infrastructure.
The findings indicate that modernization is increasingly about coordinating diverse technology environments around business priorities rather than pursuing technology consolidation alone.