German Industries Forge Ahead to Software-Centric Future

Enterprises in automotive, finance and other sectors are adopting next-generation application development to stay competitive and growing, ISG Provider Lens report says

Enterprises in Germany, facing the continuing effects of the COVID-19 pandemic and other crises, are preparing for a future in which software is increasingly vital to business success, according to a new research report published by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

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“It is helping companies organize and speed up the development process, all the way through testing applications and predicting infrastructure growth.”

The 2022 ISG Provider Lens Next-Gen ADM Services report for Germany finds that supply chain disruptions, chip shortages, high energy costs and other challenges have forced companies in most large industries in Germany, including automotive, finance and logistics, to recognize the heightened importance of software. Future growth will depend on having secure software that meets new and redefined application development requirements, ISG says.

“Companies in Germany are investing in application development to make their products, services and organizations more valuable,” said Anna Medkouri, ISG partner in DACH. “In many cases, outsourcing provides the hard-to-find software skills and experience companies need to build large application landscapes.”

The growing use of cloud computing is a major reason companies have adopted new applications and managed services in Germany, where technology trends take hold more slowly than in other markets, such as the U.S., the report says. As German organizations recognize they do not need on-premises infrastructure for all operations and have embraced new, cloud-based software, the roles of top executives have also changed: CIOs now typically manage IT, while CTOs take over strategy development.

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For many enterprises in Germany, data consolidation is another core objective of large application development projects and a key offering from service providers, ISG says. Companies are using AI, machine learning and robotic process automation to bring together previously siloed or inaccessible customer data to generate business insights.

“AI is becoming a standard part of application development,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “It is helping companies organize and speed up the development process, all the way through testing applications and predicting infrastructure growth.”

Cybersecurity concerns play an increasing role in the application strategies of companies in Germany, partly as a result of the dual crises of the pandemic and the war in Ukraine, the report says. The number of large-scale cyberattacks has grown in recent years, as many enterprises are integrating IoT devices, and the rise of remote work has increased the need for connectivity through public networks. New technologies such as quantum computing are now emerging to help ensure application security.

The report also examines other application development and management trends in Germany, including a growing focus on sustainability by service providers — not yet shared by many enterprises — and the increasing use of nearshore and offshore delivery centers.

The 2022 ISG Provider Lens Next-Gen ADM Services report for Germany evaluates the capabilities of 52 providers across five quadrants: Agile Application Development Outsourcing, Agile Application Development Projects, Application Managed Services, Application Quality Assurance and Continuous Testing Specialists.

The report names Accenture, Capgemini, Cognizant, HCL and Wipro as Leaders in three quadrants each. It names Atos, Infosys, Materna and msg Systems as Leaders in two quadrants each. Arvato Systems, Datagroup, DXC Technology, Tech Mahindra and Zeiss Digital Innovation are named as Leaders in one quadrant each.

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