Cloudflare’s inaugural 2026 App Innovation Report delivers a clear message to businesses across industries: modernize your applications or risk falling behind.
The report highlights a widening gap between organizations that embrace application modernization—updating outdated tech stacks—and those weighed down by technical debt. Modernizers are leveraging AI successfully, enhancing security, and achieving measurable ROI. In contrast, laggards face rising costs, talent shortages, and greater cyber risk.
“In order to succeed with AI, having a modern and secure foundation is non-negotiable,” said Matthew Prince, CEO and co-founder of Cloudflare. “If you aren’t modernizing your business to embrace AI and prevent the next wave of cyberattacks, you aren’t just standing still—you’re rapidly falling behind.”
AI Success Requires Modern Infrastructure
Cloudflare’s research found that infrastructure age directly affects AI outcomes:
- 3x more likely ROI: Companies with modern apps are three times more likely to see tangible returns from AI initiatives.
- 93% cite software updates as critical: Leaders overwhelmingly report that updating applications is the single most important factor in boosting AI capabilities.
Modernization doesn’t just enable AI—it multiplies its impact, allowing organizations to integrate AI across workflows rather than rely on isolated pilots.
Security Is a Growth Multiplier
Modernization and security are tightly linked. Organizations that align security upgrades with application modernization are four times more likely to reach advanced AI maturity.
Meanwhile, companies stuck on legacy systems are not only slower to innovate—they’re more vulnerable to attacks. Many report only modernizing reactively, after a breach or operational failure, leaving them in a constant cycle of firefighting rather than growth.
Integration Over Adoption
The report finds that enterprise AI thinking has shifted:
- 91% of leading organizations have integrated AI into existing portfolios
- 74% plan to double down on integration in the coming year
Simply “adopting AI” is no longer enough. Real business value comes from weaving AI into every layer of operations—and outdated apps are the biggest barrier to doing so.
Complexity Kills Speed
Another major takeaway: complex tech stacks slow organizations down. The report shows:
- 96% of companies struggle with too many overlapping tools
- 85% of leaders are actively consolidating software and eliminating shadow IT
Simplicity is winning. Leaders are cutting redundant tools to streamline workflows, reduce maintenance costs, and accelerate innovation.
The Cost of Inaction
Organizations delaying modernization are facing stark consequences:
- 85% lower confidence in infrastructure stability
- Increased vulnerability to cyberattacks
- Reduced capacity to leverage AI for growth
Cloudflare’s findings make it clear: in today’s digital economy, modernization is no longer an IT initiative—it’s a strategic imperative that defines competitive advantage.
As Prince notes, “The winners of this era of the Internet will ultimately be defined by their infrastructure.” For companies investing in AI, security, and growth, the choice is simple: modernize—or risk being left behind.
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