European Enterprises Adopt AI-Native Application Services - Yahoo Finance Singapore

Companies rethink how software is built, maintained and assured as AI becomes embedded in application lifecycles, ISG Provider Lens® report says

LONDON, September 24, 2026--(BUSINESS WIRE)--Enterprises in Europe are extending generative AI beyond coding assistance and embedding it throughout software engineering to accelerate application modernization, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a global AI-centered technology research and advisory firm.

The 2026 ISG Provider Lens® AI-driven ADM Services report for Europe finds that enterprises continue to prioritize application modernization despite subdued economic growth, elevated energy costs and geopolitical uncertainty. Organizations increasingly expect these investments to produce measurable business results that include improving productivity, reducing operational complexity and strengthening resilience.

"European enterprises are now taking a more practical approach to older applications," said Matthias Paletta, director at ISG. "Instead of replacing them entirely, companies are retaining important business knowledge while updating the technology that supports them."

European enterprises increasingly favor continuous application modernization, using AI-assisted documentation, business-rule extraction, code transformation and automated testing to update older systems. Development teams are also taking greater responsibility for operations, while quality engineering is being incorporated earlier in software development. As the lines between them blur, application development, managed services and quality assurance are beginning to form a single engineering lifecycle.

Engineering platforms are becoming more important as companies seek a unified way to manage application work from requirements through deployment and operations, ISG says. European buyers also want to avoid dependence on a single foundation model, hyperscaler or AI platform. They increasingly expect to use environments that include different language models and integrate their own AI agents. As a result, providers are focusing less on proprietary models and more on how they coordinate AI while giving clients flexibility as technologies change.

Quality assurance is a growing priority as more software is generated by AI, the report says. European enterprises now expect testing to take place throughout development rather than after applications are completed. Quality teams are expanding their focus beyond conventional software to encompass AI-generated code, autonomous agents and models. Providers are responding by supporting ongoing validation, helping organizations maintain reliability as automation increases and making quality central to AI-based development.