Report: IT Modernization Falling Short of Expected ROI

Most organizations have various tech-related goals, ranging from AI adoption to more stringent security postures. Rocket Software and IDC have partnered to help businesses address gaps in another area of growth: IT modernization.

IDC report reveals barriers slowing IT modernization progress

IDC defines modernization as the following:

Research shows that as much as 25-30% of IT budgets are now dedicated to modernization, indicating ongoing demand for and belief in the benefits that many enterprises want to unlock. Approximately one-third of those surveyed cite operational efficiency improvements as the top driver for modernization efforts.

“Modernization maturity isn’t just about technology adoption — it’s about the ability to adapt, scale, and deliver measurable business value despite ongoing challenges,” said Mary Johnston Turner, IDC Research Vice President of Digital Infrastructure Strategies. “Organizations that are modernizing holistically across all six pillars are navigating cybersecurity risks, data silos, and technical debt more effectively, enabling them to sustain faster innovation and stronger performance over time.”  

“There’s probably a lot more validation than surprise in this data for us,” Michael Curry, the president of data modernization at Rocket Software, told Channel Insider. “Our anecdotal observations and things we have thought to be correct are proven out in this data.”

Curry also emphasizes this report as an important benchmarking tool for organizations, many of which are seeing more interest from the C-suite in modernization than ever before. 

“Our expectation here is that C-suite leaders will take notice of this data, and when I say C-suite, I mean the broader executive team, not just the CIO. Modernization efforts are not just an IT issue,” Curry said. “Of course, a lot of the work does fall into the CIO, but solid data is now needed in marketing, and legal, and so many parts of the business, it’s really a discussion for everyone.”

AI readiness and security remain the top priorities

Nearly half of organizations (44%) identify deploying AI-ready tools and platforms as their most important infrastructure goal for the next two years. Other top goals include:

• IT automation 
• hybrid cloud enablement 
• multi-cloud interoperability

Among the top 10% of organizations in modernization maturity, 82% are building AI-ready infrastructure to support high-performance models — more than three times the rate of their peers.

“AI has had such a profound impact on all of this,” Curry said. “The need to modernize has absolutely been emphasized by the demand for AI. The demand for AI, and what AI-ready data and infrastructure look like, are really forcing companies to change how they approach infrastructure.”

In addition to AI-ready infrastructure, maintaining or even elevating overall security is also crucial to most leaders. Curry noted that one thing shown in the report that did surprise him was the rate at which organizations are focused on issues tied to governance.

Over three-quarters of respondents said they were prioritizing data governance and compliance needs as they modernized, which Curry notes is likely connected to AI-related demand for clean and accessible data.

These high-level action items are catching the attention of those C-suite leaders Curry emphasized: nearly 60 percent of executives now see modernization as a priority for their business’s long-term success.

IDC and Rocket Software launch tool to benchmark modernization maturity

For those struggling to fully embrace modernization in their tech, the report suggests progress is slowed by barriers such as cybersecurity risks, data silos, technical debt, and shortages of AI and cloud skills.

To help identify where these barriers exist within an organization, IDC and Rocket Software have developed a 13-question assessment tool for enterprises. The personalized report generated by that assessment provides benchmarks against more and less mature organizations, as well as customized recommendations on how to enhance modernization plans.

“The key here is that there is a framework for prioritizing actions along the journey and showing the pathways to more successful modernization,” said Curry. “We think of this as an important benchmark for organizations to compare themselves to their peers in specific industries. Certain industries just generally are more mature on modernization than others, and this tool allows leaders to see where they are in comparison to others and then build a strategy to move forward.”

The assessment and the report, Curry says, are both intended to be “living tools,” meaning companies can refer back to both as they continue their modernization journeys. 

How MSPs can leverage modernization gaps to create stickier clients

Rocket Software says the study underscores that unlocking ROI requires pairing investments with strategic execution in the following key areas: 

• embedding security-by-design into every effort 
• adopting scalable architectures for AI and hybrid cloud 
• and addressing technical debt through phased refactoring and integration

For channel partners, the data provides important insights into what their clients may prioritize in building their technology for the future. MSPs can use modernization gaps to advise clients on AI and hybrid cloud strategies.

As we’ve reported before, the MSPs who get ‘back to the boardroom’ and position themselves as business advisors, not just tech experts, can build long-lasting trust in a changing market.

For Curry, the report also highlights the ongoing struggles and opportunities companies face as AI continues to top the list of demands from boards and executives. In areas like workforce development and AI use cases across departments, the channel continues to enable best practices in a new era.

“AI represents probably the largest reskilling of people that I will see in my lifetime,” Curry said. “There have been other waves of new technologies, but none of them have had this level of impact on the reconfiguring of people and processes as AI is having right now.”