ISG Launches Digital Engineering Business to Meet Booming Demand for Data- and Software-Driven Business Models

New ISG Digital Engineering advisory business will help global enterprises digitize products and create connected customer experiences

Information Services Group, a leading global technology research and advisory firm, announced the launch of a digital engineering advisory business to meet booming enterprise demand in this critical area, which supports everything from initial product design to digital systems for continuous product and service evolution and enhanced customer experiences.

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“In addition to accelerating changes in customer behavior and expectations for smart devices, the pandemic demonstrated that shop floors were not sufficiently resilient to withstand supply chain challenges. Manufacturers struggled to provide remote operations and data management.”

Data from the ISG Index™, which tracks global spending on technology and business services, show annual contract value (ACV) for engineering services grew more than 35 percent year over year in the first quarter of 2022. The total engineering services market is estimated to be worth $200 billion, although the market is still highly fragmented and mostly unadvised.

“Digital engineering is one of the hottest areas in the technology services and solutions market, as enterprises across industries turn to data- and software-driven approaches to support each stage of the product lifecycle,” said Gaurav Gupta, partner and head of ISG Digital Engineering. “This sea change in traditional engineering enables companies to update products online long after they’re sold, and to deliver actionable data and insights back to the manufacturer.”

Combining information technology and industrial machinery, enterprises are leveraging digital engineering to connect data, analytics and services with product design. This connection allows manufacturers to continually update and extend product functionality and create an ongoing customer relationship throughout the product lifecycle. Digital engineering also enables manufacturers to test the performance of physical assets before they are built. The data and analytics gathered from devices fuels and improves ongoing product development.

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“The pandemic acted as a catalyst for digital engineering, pushing companies to bridge the gap between information technology and operational technology,” Gupta said. “In addition to accelerating changes in customer behavior and expectations for smart devices, the pandemic demonstrated that shop floors were not sufficiently resilient to withstand supply chain challenges. Manufacturers struggled to provide remote operations and data management.”

Gupta said enterprises are turning to remote teams, virtualization and cloud technology to extend the traditional engineering bench, which is leading to growing demand for augmented and virtual reality, IoT sensors, artificial intelligence and machine learning and solutions. These solutions connect traditionally siloed organizations and data in the areas of information technology (IT), operational technology (OT) and engineering technology (ET).

The new ISG Digital Engineering business will work with clients to assess the current state of their transformation initiatives; perform a strategic re-design of their target operating model; define a sourcing strategy, including the design of flexible and modular contracts, and govern their ecosystem to track success.

ISG already is working with a number of digital engineering clients, including a multimillion-dollar engagement to develop a “Connected Mall as a Service” platform that will support the retail digitization of 30 shopping malls in Asia.

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