Cloudflare, Inc. (NYSE: NET) has released its inaugural 2026 App Innovation Report, highlighting a growing divide between organisations modernising their applications and those relying on legacy systems. The report warns that outdated technology stacks are creating a “technical glass ceiling” that is limiting artificial intelligence (AI) adoption, increasing cybersecurity risks, and contributing to rising costs and talent shortages.
According to the research, organisations that prioritise application modernisation are three times more likely to achieve a clear return on investment from AI initiatives. In contrast, companies burdened by technical debt struggle to integrate AI effectively and face greater exposure to cyber threats. The findings suggest that application modernisation has moved beyond being an IT objective and has become a critical business imperative across industries.
The report shows that 93% of business leaders consider updating software infrastructure the most important factor in improving AI capabilities. While AI adoption is widespread, the focus has shifted toward deeper integration, with 91% of leading organisations already embedding AI into their existing systems and 74% planning to expand these integrations further over the next year.
Cybersecurity also emerged as a key differentiator. Organisations aligning security strategies with modernisation efforts are four times more likely to reach advanced AI maturity. Conversely, companies delaying updates report significantly lower confidence in their infrastructure and often act only after experiencing a security breach.
The study also notes a growing push for simplification, as nearly all organisations surveyed reported challenges with complex technology stacks. Many leaders are responding by consolidating tools and reducing redundant systems to improve efficiency and speed.
The report is based on a survey of 2,351 senior leaders across North America, EMEA, and APAC, conducted between June and July 2025.