What's the return on your AI investment? In today's episode, I'm joined by Varun Bijlani, Global Managing Partner for Hybrid Cloud Services at IBM Consulting, to explore why 2025 is shaping up to be a pivotal year for IT leaders under pressure to deliver stronger, measurable outcomes from technology investments.
While many IT projects have historically delivered modest returns, expectations are rising. With a growing number of executives focused on increasing ROI by 25 percent or more, the ability to connect AI efforts to real business value is becoming non-negotiable.
Drawing on insights from IBM Consulting's latest book, The Great Tech Reset, Varun outlines how the shift from experimental AI projects to production-level deployment is exposing the cracks in outdated infrastructure strategies. He explains why many businesses are trapped in what he calls a hybrid by default architecture, and how that limits the potential of generative AI. Instead, he advocates for a hybrid by design approach, one that aligns cloud infrastructure with AI goals from the outset.
We discuss the organizational mindset shifts needed to move from fragmented systems to intentionally built environments that scale with innovation. Varun also shares real-world examples of companies achieving returns as high as 3.3 times their investment through more intentional planning and execution.
As IT leaders look to reset priorities for the year ahead, how can they build the kind of foundation that allows AI to thrive? And what steps can they take today to ensure their technology choices drive value, not just cost?
[00:00:03] The race to maximise AI, ROI is officially on. And as businesses move beyond GenAI experimentation, IT leaders are now under increasing pressure to connect those AI investments to real measurable returns.
[00:00:20] And yet, many organisations are unknowingly operating in hybrid default architecture systems. Systems that are fragmented, inefficient and ultimately guilty of holding back some of those AI adoption projects at scale. So my guest today is the global managing partner for hybrid cloud systems at IBM Consulting.
[00:00:43] And together, we're going to explore why a hard tech reset is crucial for AI success this year. Because my guest is also one of the authors of IBM's new book called The Great Tech Reset. And he believes that the key to unlocking AI's full potential in intentional cloud strategies and hybrid by design architectures.
[00:01:07] So the big question I have for you all is, are businesses unwittingly building their tech estates on sand instead of cement? And how can shifting to a hybrid by design deliver 3x plus ROI on those AI and cloud projects? Yeah, I got your attention with that one, didn't I? And also, what real world success stories are there out there that show companies that are getting this right?
[00:01:31] So, with that stage perfectly set, it's time for me to officially introduce you to today's guest. So, a massive warm welcome to the show. Can you tell everyone listening a little about who you are and what you do? Neil, thank you very much for having me. My name is Varun Bijlani and I work with IBM Consulting up until the end of last year.
[00:01:56] I had the privilege of leading IBM Consulting's hybrid cloud services practice globally. And then this year, I've taken on a new role to lead our delivery capability globally across all our practices. Well, thank you for taking the time to sit down with me today. So much I want to talk about, especially because I think over the last two years, everybody's been talking about AI.
[00:02:20] And then this year, suddenly there's a focus on, hey, why are we not getting ROI from these expensive AI projects? And what about the measurable difference that we're making and problems that we're solving? So, I'm curious from what you're seeing and the conversations you're having, why is ROI becoming a top priority for IT leaders this year? And what's driving this shift in expectations that we're seeing?
[00:02:44] Oh, I really like that you're starting from the outcome, the ROI. I think most conversations to start from there. Now, ROI has always been important, but has emerged as the top priority due to a number of different factors.
[00:03:07] I think we've seen historically lower returns on digital and cloud transformations, especially when you go beyond lift and shift to the cloud. This, you know, escalating challenges and scaling AI and realizing the advertised benefits and the speed at which, you know, business and IT landscape is evolving. It's rightfully driving more scrutiny on all investments. So, I think this focus on ROI is very fair.
[00:03:36] The C-suite, I think, is increasingly demanding that IT initiatives are connected directly to revenue growth, cost savings or competitive advantage.
[00:03:48] You know, according to a study done by our own Institute of Business Value, 72% of executives agree that improving ROI from an IT investment by 25% or more is now a C-suite priority.
[00:04:09] And to me, this becomes even more relevant because this comes in the context of that only one in three clients say that their digital and cloud transformations, their projects are on time and on budget. And only one in four are saying that they are actually realizing ROI from these programs.
[00:04:28] So, I think because tech has become more central to this business strategy and Gen AI can only really unlock this value when it's integrated into a kind of well-designed digital hybrid cloud environment as opposed to being in those pockets. I think that's why this conversation on ROI has become so significantly important. Yeah, completely agree with you.
[00:04:54] And I think over the last few years, we have seen many organizations begin with tech first problem later. So, as you said, starting from the outcome, what we want to achieve, that's where the magic happens. And many organizations are also operating this hybrid by default model. So, I'm curious, how do you see that impacting Gen AI deployments? And also, what kind of challenges does that create? You know, I call this hybrid by default almost like it's like happenstance.
[00:05:24] It's evolved so much. And the challenges and the impact on, you know, the impact these have is, one, how do you leverage dispersed data? How do you look at cross environment, the management and optimization, orchestration of workflows, of resources? And as you start moving from experimentation to scale, these start stacking up in cost.
[00:05:53] Also, I think going forward, we're going to start seeing model independency. You know, how do you have models across different environments? And security will start becoming very important. So, when you start looking at all of these factors, you start saying that if I've done this by happenstance, or I've just done this by siloed evolution of what's happening, therefore hybrid by default,
[00:06:18] this really hinders AI adoption, both from speed, efficiency, and really being able to capture outcome. Maybe I'll give you an example. You know, one of our distribution sector clients wanted to leverage their data across their customers on different channels and to have targeted marketing campaigns and provide more kind of personal engagement service.
[00:06:48] We had already proved to them how Gen.ai can analyze vast amounts of customer data, including interactions, preferences, behaviors, to try and create these personalized campaigns and improve conversion rates. Now, we are working with them not only address their data challenges as that data resides across multiple different platforms and different environments, you know, their public environment, their on-prem environment, their SAP environment,
[00:07:17] and also how their processes and governance will change to ensure that they can trust those outcomes and that that can be embedded into their new processes. So, I think, therefore, it's exposing that these technology estates have been built in the past on happenstance versus having strong intentional foundations. Well, before you came on the podcast, I was doing a little research on you,
[00:07:44] and I was reading that you said that AI is exposing tech estates that are built on sand versus cement. Can you elaborate on what that means? What that means? Yes, absolutely. You know, the lack of, it kind of picks up from that previous conversation of happenstance and the lack of intentional foundations. So, lack of consistency prevents that robust, flexible, scalable foundation.
[00:08:14] And there's an urgent need to move from AI pilots to scale. And that's what is highlighting more and more or exposing more of these technology silos, inconsistent development practices, operation practices, gaps in what I would call the hybrid cloud architecture, rigid or archaic governance and technical debt.
[00:08:40] So, those are the kind of things that, you know, I would call the built on sand. And then you start seeing that actually hybrid cloud and AI have a very symbiotic relationship. You know, AI is needed to accelerate the hybrid cloud transformation, app and data modernization, building new products and services, security.
[00:09:03] For all of these, AI has embedded in our tools and processes to accelerate this hybrid cloud architecture creation. And similarly, AI is accelerating hybrid cloud because, you know, you've got data in different places. You've got prompt engineers and users in different places.
[00:09:29] You've got, you know, right from prompt engineers and users might be sitting on the edge, might be in on the other spectrum, might be on a center of excellence. And therefore, how does that hybrid cloud architecture enable AI? It has to span all of these areas. So, I think that's why we call that to be more intentional as opposed to built on sand. A hundred percent with you all the way on that.
[00:09:57] And at the beginning of our conversation, I was talking about how there's almost been a collective epiphany this year. We have two years of going crazy over generative AI. Now, brands are starting to think, hey, what about the ROI? What problems are we solving? What's the measurable impact that we're having here? So, I'm curious. All these businesses wake up to this. What are the biggest mistakes that organizations have been making when trying to achieve meaningful ROI? From whether it be cloud or AI investments?
[00:10:26] You may be surprised here, but I would say that insufficient business and IT alignment is still the biggest challenge. According to a survey we did with over 500 CXOs along with HFS, only 18% said, that's around one in five, said that they had a clear technology blueprint aligned to their business value journeys.
[00:10:53] To me, that's kind of challenge number one, mistake number one. Along with this, there is inadequate operating models, ineffective process change, inaccurate value tracking. So, it's not just the technology challenges that we would expect when you are trying to achieve meaningful ROI.
[00:11:14] You know, if I may take an example, a cruise vacations company approached us about modernizing their core reservation system to reduce cost of ownership. Now, leveraging our kind of opposite to hybrid by default or hybrid by design framework, we help them recalibrate their success metrics in saying, how do you think more broadly about this? What are the true business objectives that you're really after?
[00:11:44] And if you're after improving customer experience, therefore ROI should include increased customer satisfaction and ticket sales as opposed to just TCO reduction. And then that became the, you know, how do you shape the aim of the platform that you're trying to build? Quicker market entry of new functionalities to engage, to better engage customers.
[00:12:12] So, you know, by recognizing the mistake of having a narrow lens to the conversation, now as we widen it to say, what is the true business outcome? They were able to see those connections and drive a significant ROI in their objective.
[00:12:34] And as we move forward and write a few of these wrongs that we're talking about here today, how do you see hybrid by design models differing from traditional cloud strategies? And why is it so key to maximize AI's potential, do you think? I think why is it key to maximize? I think because AI has such a significant potential that it will change everything that we do in every way.
[00:13:04] How does hybrid by design really differ from traditional strategies? I think I would say in five kind of ways. Number one, it helps us focus and be maniacally focused on being product centric. And what I mean by that is business product centric. If you're an airline, baggage handling, passenger movement. If you're a bank, a loan provisioning, you know, policy acceptance.
[00:13:32] Those kind of business product centricity, it anchors on that as number one. Second, it forces us to have a conversation around intentional architectures that are required for these critical business products. So what should be my platform architecture, my security architecture, containerization, things like that.
[00:13:56] The third thing the model calls out is consistency of development and operations across the hybrid multicloud estate. Because your AI is going to be built on that hybrid multicloud estate. The fourth one is around empowering teams. What I mean by that is the ways of working, the governance. How do you really, what's the operating model of how that team is going to work together?
[00:14:24] And then finally, how do you embed AI in executing all of these capabilities? So I think these five critical ingredients are what I would call out as part of our hybrid by design value framework.
[00:14:42] And just to bring to life everything that we're talking about here, are there any real world examples that might spring to mind where hybrid by design approaches significantly improve this elusive ROI for businesses that we've been talking about? Are there any examples you're able to share there? Yeah, sure. I mean, I gave you just a little bit of a glimpse of that cruise vacations company. But let me tell you about a data and analytics company.
[00:15:08] This global company provides business data, analytics and insights to help companies manage risk and growth. Now, initially, they aim to improve ROI by getting a new kind of vendors for their application management and development services. So, you know, typical application dev, application management. And the idea was, how am I going to reduce cost there?
[00:15:33] But as we spend time with them, we realized that the real challenge they faced when we started looking at what is that product centricity, they had failed launch of AI products. Their ambition was not actually just traditional cost optimized application management, but more about innovation and product led development.
[00:15:57] They were having challenges like, you know, long defect resolution times, insufficient automation, less reusable architectures. So when we constructed the actual execution program around new products and modernization, around technology business management and FinOps, around helping them create that generative AI platform,
[00:16:22] that by leveraging the hybrid by design approach and focusing on those parameters, actually, they were quite remarkable outcomes. Over $100 million in cost savings, 73% in reduction of time to market, and three new Gen AI products in the market for sale, one of which gave them a 212% ROI. Wow.
[00:16:52] That's incredible. So real impact when you start looking at it more holistically. Yeah, it really does. And also, before you join me on the podcast today, when I was guilty of Googling you, see if we can find out a few things about you, I read you got a book out as well. You wrote a book called The Great Tech Reset, where you discuss resetting IT infrastructure. So tell me a bit more about that book, and also one of the big takeaways.
[00:17:17] What are the first steps that organizations should take when resetting their IT infrastructure? I think it goes back to this, you know, built on sand versus built on cement kind of logic. And I think the few steps I would call out, I would always start out with that maniacal focus on business product centricity.
[00:17:42] I then call out saying, you know, look at your architecture. Is it aligned to those business priorities? You know, does each of those critical business priorities have the appropriate architecture blueprint? I would then say that helps you move further towards saying, hey, let's evolve a library of architectural patterns.
[00:18:09] And for each architectural pattern, what's the most relevant data pattern? So how am I going to deal with structured data, unstructured data, real time data or event data? Things like that. And then I would say, keep in mind a platform first strategy, which bakes in security, scalability and governance. So I think those are the few I would say when you talk about the technology piece.
[00:18:36] I've already covered some of the other, you know, business and operating model pieces earlier. And as we race through 2025 and almost have one eye on 2026 already, and AI adoption continues to scale at a rapid rate. How do you see IT infrastructure evolving over the next few years?
[00:18:58] And I appreciate looking into the next few years is almost impossible when a year of technological changes is almost like five a few years ago. But how do you see this all taking shape and evolving? This is an interesting one. Yeah, I really, really wish I had a crystal ball.
[00:19:17] But I think there is, you know, this whole shift from productivity use cases to real business value use cases is going to put a lot of pressure on IT infrastructure. A few things will evolve out here. One, I think AI optimized infrastructure. You know, how do you have systems that move very rapidly? Think GPU, DPU, TPU, that kind of evolution will take place.
[00:19:46] One, the next one is, I think AI will be everywhere. And you will start seeing infrastructure and the software ecosystem coexist. And you will start seeing this software hardware pairing start impacting a lot of innovation, data center innovation, innovation on your devices, innovation on the edge. I think another one might be around security.
[00:20:14] How is security going to get embedded into, you know, future IT infrastructure itself? I think maybe just call up a couple of other ones. One will be this whole shift to agentic AI is going to change the frame of how applications are developed. No longer will they be the traditional application development. I don't think it's even now it's any more valid.
[00:20:38] But agentic AI is going to change that, which will also start influencing governance and policies, which will sit on top of that IT infrastructure. And then the big one, demand for energy and more efficient resources. Yeah. We could have a whole separate podcast on that. We really could. And maybe I should get you back on later in the year to discuss that very topic, because as you said, to do it justice, we need an entire episode on its own. And you are an incredibly busy guy.
[00:21:08] So thank you for taking the time to sit down with me today. And as a way of repaying you, let's see if we can do something for you here, because some of the biggest names in business, VC, funding and tech have either been guests or maybe just maybe listen to this podcast. So is that a person that you'd love to have a private breakfast or lunch with? Because he or she might just get to hear about this, if not listening themselves, maybe through the six degrees of separation, a friend of a friend might may get to hear it. But who would it be and why?
[00:21:37] Let's see what we can manifest here. So I'm a big fan of Simon Sinek. Yeah. And I thoroughly enjoy listening to him. I think a role model in a number of different dimensions. And therefore, I'd love to have a breakfast or lunch with him sometime.
[00:21:59] I think he what resonates with me the most is he inspires leaders to focus on that purpose dimension, on that trust dimension. There is so much positivity about the conversation he has. And it's not just about the hard ROI. It's also about the people centered environments.
[00:22:23] And if you look at our hybrid by design framework, which starts with that business reason, what's the business objective of what you're trying to do? And if you look at what Simon says about, you know, always start with the why philosophy. I see a lot of connections there. Yeah. So looking forward to catching up with him sometime. I like it.
[00:22:48] You must manifest yourself there because it was not a doubt in your mind that I look forward to when this happens. So we will make that happen. It's out in the universe now. Let's see what happens there. For anybody interested in finding out more about your work at IBM, checking out your book, of course, The Great Tech Reset or anything in between. Where would you like to point everyone listening? Well, I think the easiest way to get in touch is via LinkedIn. You can just search for Varun Bajlani.
[00:23:16] And I think there's only one Varun Bajlani there. Along with that, of course, our Institute of Business Value. If you just go on to Google or to the IBM website, you'll get to our IBM Institute of Business Value and you can access our book there. Oh, fantastic. I will add links to everything you mentioned there. Make it nice and easy for people to find it. And just love chatting with you today about reaping the value of AI, why it requires an intentional cloud strategy.
[00:23:45] And we covered so much. So I'd be interested in learning from what people listening think about the patterns behind the lack of ROI progress from cloud strategies that they might have at the moment. But more than anything, just thank you for starting the conversation today. Oh, Neil, thank you very, very much. I've enjoyed speaking with you. Hope to do more of these with you. There you have it. AI isn't just about adoption anymore. It is about outcomes.
[00:24:11] And as my guest highlighted, organizations that treat cloud as an afterthought, they're struggling to scale AI effectively now. But those that take a more intentional approach, hybrid by design instead of hybrid by default, are already seeing exponential returns. But how is your organization approaching AI infrastructure? Are you operating in a patchwork system that hinders your plans to scale AI?
[00:24:40] Or are you building an intentional business first architecture, one that drives real value? Over to you. You've heard from me. You've heard from my guest. This is the moment for you to shine and also share those areas that you may think that we neglected to talk about or points we may have missed. So message me on LinkedIn, Instagram, just at Neil C. Hughes. Going to the DMs there. Easy to find.
[00:25:06] And if you want to work with me, techblogwriter.co.uk, where you'll find out more details and also 3,200 plus interviews. A way you can meet me on the road in the next few weeks. I am taking the podcast to Salt Lake City, Miami, Anaheim, California, and also Silicon Valley. So if you live in any of those areas, now's the time to let me know. And we can grab a hot coffee or a cold beer too. But that's it for today.
[00:25:35] I'll be back again tomorrow with another guest. Thank you for listening as always. And I will speak with you all tomorrow. Bye for now.