Hybrid cloud adoption rises as AI & data sovereignty reshape IT
Most global enterprises are operating cloud environments developed without a deliberate long-term plan, according to new industry research, prompting concerns about the ability to meet the demands of artificial intelligence and regulatory requirements.
Cloud architecture concerns
Seventy percent of chief executives globally acknowledge that their cloud infrastructure emerged more from a series of tactical decisions than a coordinated strategy. Despite this, organisations are ramping up investment, with average cloud spending increasing by more than 30% over the last twelve months.
Nicolas Sekkaki, Global Cloud Practise Leader, Kyndryl, said:
"The gap between a reactive and a deliberate cloud strategy has never been more consequential. With AI demanding seamless data access and governance requirements rapidly evolving, a hybrid cloud model is the differentiator that enables successful AI adoption. Organisations that design for interoperability, trust, and agility will unlock continuous innovation and integrate AI securely at scale."
Australian landscape shifts
Among Australian organisations, cloud investment trends closely mirror global movements. Local businesses have reported a 31% increase in annual cloud spending. However, a significant proportion-74%-express apprehension about geopolitical risks associated with data being housed in global cloud environments. In response, 69% have already modified their data management strategies due to evolving geopolitical pressures.
The report further finds that 42% of Australian firms are repatriating some data back onto on-premises infrastructure. This shift is seen as a means to enhance control, improve operational performance, and ensure compliance with local data regulations.
Security and sovereignty
Security risk has become a top consideration. More than three quarters of Australian enterprises experienced at least one cyber-related outage in the past year. In light of these incidents, 94% indicated they would alter their cloud deployments to focus more heavily on security and compliance, deepen their understanding of integration challenges, and improve communication between business units.
Globally, data sovereignty is recalibrating cloud strategies. Three-quarters of senior leaders now identify geopolitical risk as a concern, and 65% confirm changes to cloud management practices in response to new sovereignty regulations.
Hybrid models dominate
Organisations across industries are increasingly turning to hybrid and multi-cloud environments. Eighty-four percent of surveyed leaders intentionally use multiple cloud platforms, seeking to balance system performance, regulatory requirements, and operational control. More than 40% are bringing certain workloads back to private or on-premises servers, highlighting a reversal of the earlier trend of wholesale migration to public cloud.
This is paired with a growing interest in specialised infrastructures tailored for artificial intelligence. Companies are deploying private AI environments or so-called 'neoclouds' designed for GPU-powered workloads. The intent is to harness the computing power necessary for AI while maintaining oversight on costs and security.
Adapting for AI
The convergence of cloud strategy and artificial intelligence is placing new pressures on enterprise infrastructure. Eighty-nine percent of leaders say that migration to the cloud has simplified AI adoption, but 35% report challenges integrating the technology into existing operations. As a result, there is heightened interest in both infrastructure flexibility and security, with many organisations investing in AI-enabled cybersecurity tools in response to an increasingly volatile threat environment.
Sekkaki said: "With AI demanding seamless data access and governance requirements rapidly evolving, a hybrid cloud model is the differentiator that enables successful AI adoption."
