Data and AI

4 strategies for competing in a digital-first economy

Article Dec 12, 2024 Read time: 1 min

By Michael Bradshaw, Global Applications, Data and AI Practice Leader at Kyndryl

As 2025 approaches, many business leaders will reflect on the past year’s accomplishments, identify areas for improvement and set new goals. They will also think about organizational changes to implement, where to allocate dollars and talent, and determine specific steps for turning goals into reality — all while navigating an increasingly complex digital landscape.

While applying the latest technology, like artificial intelligence (AI), or adopting a new system is tempting, there is no quick fix to thriving in a digital-first world. In fact, only 42% of executives who invest in AI report a net-positive return. In other words, digital readiness extends beyond simply adopting new technologies. It requires focusing on modernization and building a robust foundation that can advance innovations and reduce risks.

Four steps business leaders can take to set up their organizations for success in 2025

1. Prioritize modernization

According to the Kyndryl Readiness Report, while 94% of leaders prioritize technology modernization, only 29% feel their business is leading in this area. This gap highlights the complexity and prioritization paralysis organizations face during IT modernization.

Modernization is not a one-and-done activity — it is a continuous process that organizations must prioritize to avoid being disrupted by external forces. Once businesses determine their modernization strategies, they must commit to them and hold everyone accountable.

Additionally, with the SAP S/4HANA deadline approaching, businesses need to prioritize IT infrastructure modernization to capitalize on new capabilities and ensure a secure and compliant operating ecosystem.

2. Address technical debt

It is a well-known idea that comfort is the enemy of progress, which holds true with technology. Familiarity with outdated systems can limit an organization’s progress, and with 44% of critical IT infrastructure nearing or at end-of-life, this can directly impact its ability to innovate and meet market demands. That’s why addressing technical debt is essential to modernization, ultimately leading to a successful IT transformation. By proactively tackling technical debt, organizations can future-proof their IT landscapes and avoid the pitfalls of relying on obsolete technologies.

3. Emphasize cultural and tech transformations simultaneously

An IT transformation requires specific skills and expertise and a cultural shift, with the entire leadership team rallying around the same goals, strategy, deadlines and resources. The Kyndryl Readiness Report notes that while 42% of leaders agree that technology skills gaps hinder progress and 28% face issues where digital solution implementation outpaces employee training, navigating the modern digital landscape is challenging. That’s why a cultural shift is critical. Once the team agrees on shared goals and deadlines, businesses can invest in the necessary skills, expertise and trusted technology partners to succeed.

4. Establish a foundation that supports AI

As organizations invest in AI and other emerging technologies, the need for a modernized IT foundation becomes crucial. While 25% of leaders find it challenging to integrate AI technologies with existing systems — and despite 86% claiming their AI implementation is best-in-class — only 29% believe it can manage future risks. Just like building a house requires a solid foundation, businesses must prioritize establishing a robust and modern IT infrastructure to successfully apply AI or any emerging technology now or in the future.

IT modernization isn’t just a strategic priority or a one-time project; it’s a necessity for organizations to thrive in a digital-first world. Businesses can create a resilient and future-ready IT infrastructure by focusing on modernization, addressing technical debt, embracing a cultural shift and building a strong foundation.