From VMware Exits To AI Readiness: What Midmarket IT Leaders Are Learning About Modernization

What IT modernization looks like now: shorter timelines, harder trade-offs and less room for wishful thinking.

(From left to right: Mike Cisek, VP Analyst for Infrastructure, Operations and Cloud, Gartner; Jason Frame, CIO, Southern Nevada Health District; Chance Irvine, VP, Information Technology, Transit Technologies; and Daniel Lehman, CIO/CISO, AGG, on stage at the Midsize Enterprise Summit, Spring 2026)

Not too long ago, midmarket IT modernization followed a familiar “rinse-lather-repeat" pattern: renegotiate contracts, buy what’s needed, and deploy.

That flow broke when VMware pricing skyrocketed after Broadcom’s acquisition of the company, AI became priority No. 1 for senior leadership, and today’s threat landscape—including the looming “Q‑Day”—turned cybersecurity into a 24x7 battle arena.

For many teams, modernization isn’t just urgent; it’s mandatory.

Faced with rising virtualization costs, one IT executive accelerated a move from Nutanix AHV to Microsoft Azure. Another hit the pause button on AI enthusiasm to focus on data classification, governance and cleanup; cutting risk; and reclaiming infrastructure. A third rethought the role of MSPs to move faster without inflating staff or budgets.

Their experiences show what IT modernization looks like now: shorter timelines, harder trade-offs and less room for wishful thinking.

The discussion took place during a session at the MES Spring Summit 2026, hosted by Mike Cisek, VP Analyst for Infrastructure, Operations and Cloud at Gartner, and featuring Jason Frame, CIO of the Southern Nevada Health District; Chance Irvine, VP, Information Technology at Transit Technologies; and Daniel Lehman, CIO/CISO at AGG.

Here’s how these midmarket IT leaders tackled modernization challenges head on.

The Pathway To Azure

For Lehman, the catalyst wasn’t cloud strategy—it was sticker shock.

Lehman spoke about migrating from Nutanix AHV, reducing costs from $1.3 million to a budget of $150,000 and eventually transitioning to Microsoft Azure.

“We had a technology refresh coming up for Nutanix ... and it was going to cost us about $1.3 million,” he said.

“We decided to move over to AHV. But then the strategy was always to migrate over to the cloud,” Lehman added.

His team used AHV as a stepping stone to Azure migration—providing huge cost savings.

“We had a budget of a couple 100 grand or 150 grand for that initiative ... one of the value-adds [was] we got to ... get everything transitioned over; all the data and all of the server infrastructure to line the security up,” he said. “I think overall, it’s been a success.”

Getting Real About Data

For Frame, modernization pressure came from another direction: AI.

In preparation for AI implementation, Frame said that he took a look at his organization’s data and concluded the company wasn’t ready.

“We started this process about 18 months ago to look out our data, do the classification, clean it up, and really get ready for AI so we can move forward,” he said.

Frame said that an enterprise tool that the company initially had used for the data project proved to be “way too complex.”

“We weren’t able to keep up with it. We looked at seven or eight other options, and we came down [to] Concentric AI. They’re a really good midmarket-focused company and what they did is help us go through our classification,” which amounted to about 200 TB, Frame said.

“Our AI engine that we were running was coming in about 85 [percent] to 90 percent classifying it correctly,” he added.

“We had to work on [our] training model and after a little bit longer, data context sensitivity. But it’s coming along really well to the point where now we have our data classified,” he said.

Outsourcing As A Force Multiplier

For Irvine, modernization speed depends heavily on how and why MSPs are used.

“There’s this idea that if it’s outsourced, it’s out of my control,” Irvine said. “That’s absolutely not true—unless you mess up your contracting.”

MSPs, he argued, still require leadership, structure and team development.

“It’s still your team. You still have all the same team dynamics,” Irvine said. “They need to operate as an extension of you and what you’re trying to do for the company.”

That approach has allowed Irvine to access a broader range of capabilities than he could reasonably build in‑house—without ballooning costs. He emphasized the importance of runbooks, clear operating models, and separating licensing from service contracts to reduce risk if partners need to change.

“You might save a few percent by bundling everything together,” he said. “But the overhead of making a change when something goes wrong is far more painful.”

The takeaway: Speed comes from clarity, not just outsourcing.

The New Reality Of Modernization

Across infrastructure, data and operations, the message from the panel was consistent: Platforms will continue to change. Cost structures will shift. AI will apply pressure long before organizations feel fully ready.

Modernization in the midmarket is no longer a slow, methodical road map. Today, it’s a series of tightly coupled decisions, made under pressure, with real financial and security implications. For IT leaders, that means execution matters more than ever.