GenAI Drives Application Development Innovation, Market Growth in Europe -- ISG

Generative AI (GenAI) advancements, changing client requirements, and the need for legacy modernization and regulatory compliance have transformed the European next-generation ADM market over the past 18 months, according to a new research report published today by Information Services Group (ISG) a leading global technology research and advisory firm.

Jan Erik Aase, partner and global leader, ISG

The 2024 ISG Provider Lens Next-Generation ADM Services report for Europe finds GenAI has been revolutionizing the application development landscape by automating complex tasks such as code generation, bug detection and performance optimization, significantly reducing development cycles and improving accuracy. These advances help meet the growing demand for flexible, tailored and scalable ADM solutions that comply with stringent European regulations such as GDPR.

“The continuing trend towards GenAI adoption is driving persistent innovation in development processes,” said Dr. Matthias Paletta, ISG research director and technology modernization solution lead. “The use of GenAI is key to future differentiation and leadership in ADM.”

The adoption of GenAI requires substantial initial investments in infrastructure and training, and challenges enterprises to ensure data privacy and ethical use of AI. Furthermore, integrating such advanced tools with existing legacy systems without disrupting ongoing operations remains a significant hurdle, and educated personnel with key GenAI skills remain sparse and expensive.

GenAI is expected to drive innovation by enabling the creation of advanced predictive models and enhancing AI-driven application capabilities. This technological advancement will foster greater efficiency and innovation, though its exact impact on the next-generation ADM landscape is impossible to predict.

“GenAI can transform legacy code into modern, more efficient, methods with little or no human intervention,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Organizations are using GenAI to help automate the transformation of outdated systems.”

Clients seeking to improve time to market and operational efficiency have widely adopted Agile and DevOps approaches for their ability to enable faster release cycles, enhanced quality and better alignment between development and business goals, the report says.

The larger providers of technology resources are dominating the next-gen ADM space, with global reach and local expertise. Smaller ADM providers have more limited geographical reach, financial resources and technology partnerships, but can be more agile and competitive by focusing on niche markets and offering specialized services and personalized client engagements.

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