SYDNEY, 11 November 2026 — Kyndryl (NYSE: KD), a leading provider of mission-critical enterprise technology services, today released the findings from its third annual Readiness Report, revealing a widening divide between the returns Australian organisations are seeing from AI and their readiness to manage the risks and demands that come with it.
While 65% of Australian leaders report positive returns on AI/ML investments, the average share of leaders who say they are completely ready to manage external risks fell 10 points to 23%. The steepest declines were in readiness for regulatory change (down 18 points to 18%) and competitive disruption (down 16 points to 22%), as AI puts new pressure on business models, technology foundations and how organisations operate.
This year’s report captures the attitudes and actions of 3,700 senior business leaders across 21 countries. The data shows a dichotomy: while organisations are seeking returns on significant AI investments, they simultaneously report low readiness to manage the implications of adopting and implementing AI into business operations.
“As AI creates significant opportunity, organisations are now focusing on how to make early returns sustainable,” said Martin Schroeter, Chairman and CEO, Kyndryl. “This year’s Readiness Report shows a new kind of readiness gap: AI ambitions are moving faster than the systems needed to support them, and the bar for readiness keeps moving as AI becomes more integrated in enterprises. Our data shows that focusing on people, technology and governance can help organisations win with AI and keep the ability to adapt as opportunities evolve.”
“Australian organisations are seeing encouraging returns from AI in some areas, but the findings also show how much work is still required to support AI transformation at scale,” said Graeme Beardsell, Managing Director, Kyndryl Australia and New Zealand. “As organisations consider moving more AI initiatives from pilot into production, having strong technology foundations, effective governance and a workforce equipped to adapt will become increasingly important. The potential opportunity for Australian businesses is significant, but capturing it sustainably will depend on building the resilience, readiness and security to support AI as it becomes part of everyday operations.”
The report shows how Australian organisations are progressing and adapting their AI strategies:
- Nearly nine in ten (89%) are deploying AI in workflows beyond pilot projects, compared with 84% globally, although 66% say they have more AI and automation pilots than they can scale
- Fewer say innovation efforts are delayed by foundational issues in their technology stack than a year ago (down 12 points from 2025, to 51%)
- Over half (56%) substantially changed their AI strategies this year, higher than the global average (48%), with implications across tech, people and governance
- Over a quarter (28%) saw an AI investment fail, and 25% cancelled a major AI initiative
The transition from experimentation to broader, sustained adoption remains uneven, particularly in the workforce and talent. Organisations across Australia have further to go in adapting how people work:
- Just 26% say their workforce is completely ready to leverage AI
- 29% have formally updated roles and responsibilities around AI
- 22% have fully implemented change management for AI adoption at their organisations
Additional findings in the report include:
Readiness for regulatory change and AI risks remains low
In Australia, readiness to manage the consequences of evolving policy and regulation saw the steepest decline. Just 18% of Australian leaders say they are completely ready to manage regulatory change, down 18 points from 2025 and well below the global average of 24%. At the same time, 60% say they are concerned about it, compared with 51% globally.
Leaders are also wary of AI itself. Two-thirds (66%) of Australian leaders are concerned about AI system malfunction or unintended error, compared with 52% globally, yet only 20% say they are completely ready to manage it.
Security remains a top concern as readiness declines
For the third year in a row, security concerns topped the list of external risks globally, and this year contributed most to the overall decline in global readiness.
In Australia, cyber readiness dropped 13 points from 41% in 2025 to 28% in 2026. The pressure is particularly pronounced in Australia, where 61% of leaders say cybersecurity risks are growing faster than their organisation’s ability to address them, compared with 52% globally. More than four in five (83%) of Australian leaders say AI helps their organisations identify threats faster, even as confidence in their ability to respond to cyberattacks has declined.
Concern about AI challenges established business models
In Australia, readiness for competitive disruption from outside their industry fell 16 points to 22%, the second-largest decline. The finding comes as AI agents and other new technologies are being deployed to erode established industry boundaries, and leaders described both challenges of adopting new technologies and questioning established products and business models.
Retailers, for instance, are weighing how to benefit from AI shopping assistants without forfeiting direct customer relationships; software companies face questions about software-as-a-service (SaaS) models as AI rebalances the build-versus-buy equation; and financial institutions are challenged by emerging lending models.
Leaders put a premium on sovereignty
The research also captures how leaders are considering digital sovereignty, which the report describes as control over data, technology and critical digital operations. It also captures the trade-offs Australian organisations may need to make: 64% chose paying a premium of 10% or more for solutions offering full operational control, should they need it, over pursuing them only at little or no additional cost, and 65% say greater control is worth slower deployment and adoption of advanced capabilities.
Modernised infrastructure isn’t necessarily AI-ready
For the third year in a row, leaders globally said upgrading their IT infrastructure was the number one action their organisations are taking to mitigate external risks, while in Australia, 65% rate their infrastructure as mostly or fully modernised, compared with 71% globally. Yet, 64% of Australian leaders, compared with 58% globally, say their technology foundations need significant re-architecture before being fully ready for AI at scale. Leaders are also making a distinction between a modern IT estate and one ready for the increased demands of artificial intelligence. In Australia, nearly half (49%) say technical debt is holding them back, compared with 39% globally.
