Kyndryl’s first global Modernization Report finds that 98% of organizations delayed modernization and experienced negative business impacts, while nearly half remain behind schedule. Based on responses from 2,000 business and technology leaders across five continents and 12 industries, the study says AI adoption now ranks above cost reduction, legacy replacement and shortages of legacy-system expertise in shaping investment decisions. AI is the leading driver of increased mainframe and edge-computing use, the second-largest driver of SaaS and private-cloud expansion, and the main reason organizations are upgrading networks and application portfolios. Every organization with a mainframe reported plans to deploy AI on the platform. Ten percent have deployed agentic AI, systems that can autonomously plan and execute tasks, in production for modernization work such as dependency mapping, code conversion and documentation. Among those early adopters, 67% were ahead of or on track with modernization goals, compared with 51% of other organizations. The report says modernization has become a board-level business priority involving nine stakeholder groups, while sovereignty, regulation, cyber resilience and geopolitical considerations are adding to technology complexity. Mission-critical applications are now distributed almost evenly across public cloud, private cloud, mainframe and on-premises environments.