Nearly half of organisations across Asia-Pacific are falling behind on their technology modernisation goals, even as artificial intelligence adoption accelerates, according to new regional findings from Kyndryl.
The APAC findings, drawn from Kyndryl’s first global Modernization Report, show that 49 per cent of organisations in the region are behind schedule on their modernisation plans. The study surveyed 2,000 business and technology leaders across five continents and 12 industries, with 30 per cent of respondents based in Asia-Pacific.
Delays carry real costs
Among organisations that have postponed modernisation projects, 44 per cent reported higher long-term costs, 43 per cent said they were unable to adopt new capabilities quickly, and 38 per cent flagged new security or compliance vulnerabilities.
Rather than consolidating on a single platform, Kyndryl found that organisations across the region are expanding across multiple technology environments simultaneously — a trend the report says is adding to, rather than easing, operational complexity.
AI is one priority among several
While AI adoption continues to accelerate, it is not the sole driver of modernisation spending in the region. Performance, security and integration; business agility and innovation; and control and governance each ranked at 36 per cent, narrowly ahead of advanced AI capabilities at 34 per cent.
Still, AI’s influence is widespread. It is the top driver of increased mainframe and edge computing use in Asia-Pacific, the second-biggest driver of SaaS and private cloud expansion, and the leading reason organisations are upgrading their networks and application portfolios. According to the report, every organisation with a mainframe now has plans to deploy AI on the platform.
Agentic AI — systems capable of autonomously planning and executing tasks — remains at an early stage of adoption. Ten per cent of organisations in Asia-Pacific are using agentic AI in production for modernisation work, in line with the global average, typically for tasks such as dependency mapping, code conversion and documentation generation.
“Across Asia-Pacific, modernisation is no longer a choice between investing in AI and strengthening the technology underneath it. Organisations need both. As technology environments become more distributed, the challenge is deciding where to invest, what to modernise and how to keep those environments secure, resilient and future ready,” said Megawaty Khie, Vice President & Managing Director for ASEAN & Korea, Kyndryl.
Sovereignty moves up the agenda
Data sovereignty is also emerging as a growing consideration in regional modernisation strategies. In Asia-Pacific, 37 per cent of organisations address sovereignty selectively where external requirements apply, while 26 per cent treat it primarily as a compliance matter. Only 7 per cent anchor their enterprise transformation in sovereignty principles from the outset — even as 65 per cent expect to increase their use of sovereign cloud regions or dedicated zones over the next year.
The report also found that modernisation decisions now involve nine distinct stakeholder groups, from chief information and technology officers to boards of directors and finance and compliance teams, reflecting its shift from a purely technical matter to a board-level business priority.
