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German Companies Seek Next-Gen Development Services for Faster, More Effective Digital Transformation

ISG Provider Lens report shows German enterprises are frustrated with the speed and cost of digitization and looking for stronger results, amid new demands from COVID-19

German enterprises, frustrated with the costs and delays of digital transformation, are turning to next-generation application development and maintenance services providers for rapid, ongoing modernization, according to a new report published by Information Services Group (ISG), a leading global technology research and advisory firm.

The 2020 ISG Provider Lens™ Next-gen Application Development & Maintenance (ADM) Services report for Germany finds companies concerned their digitization efforts are too slow and expensive, and deliver moderate results while adding complexity that hampers daily business. These worries come as IT departments react to ever-changing pandemic effects and the need for fast, secure home workplaces with higher software quality.

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“Digital transformation is a massive undertaking in terms of both technology and culture,” said Andrea Spiegelhoff, ISG EMEA partner based in Germany. “Many German companies are looking to share the burden of this effort with service providers, who themselves are in transition to new capabilities and ways of working.”

German companies are turning to next-generation ADM providers in their pursuit of optimized technology portfolios, employee efficiency and continuously improving customer experiences, the report says. They also seek lower development and maintenance costs and higher system stability, creating demand for application maintenance services.

Service providers are investing heavily in artificial intelligence (AI) and machine learning (ML) for their own offerings while also managing integration into client technology environments that are adding AI, ML, IoT, blockchain and other new features, the report says. This introduces greater complexity and poses new challenges for providers.

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As companies in Germany implement Agile development methodologies, service providers are assisting with the difficult cultural aspects of the transition through exercises such as hackathons and gamification, according to the report. Enterprises still face a shortage of skilled employees, though this has eased slightly.

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Continuous application testing methods also advanced in 2020 with increasing use of analytics, artificial intelligence and machine learning, the report notes. The large and growing volume of available test data makes visibility and insights more important, a trend that is also increasing demand for better visualization tools. Testing is shifting left into earlier stages of development, checking small parts of the software as early as possible.

Brexit is also on the minds of some German enterprises, the report adds. The looming break between Europe and the U.K.—the regional base for many Indian service providers—raises questions among midsize Germany companies over where these providers’ operations will be in the future. The German midmarket prefers a local presence, as well as the local language, and is accepting of nearshore operations but critical of offshoring, ISG says.

The 2020 ISG Provider Lens™ Next-gen Application Development & Maintenance (ADM) Services report for Germany evaluates the capabilities of 34 providers across six quadrants: Next-gen ADM, Application Management Services – Midmarket/Niche, Agile Development, Continuous Testing – Large Accounts, Continuous Testing – Midmarket and Expert Consulting and DevSecOps Consulting.

The report names Cognizant as a leader in five quadrants and Atos and Capgemini as leaders in four quadrants. DXC Technology, HCL, IBM and Wipro are named as leaders in three quadrants, and Deutsche Telekom (TSI) and Materna are named as leaders in two. The report names Accenture, Deutsche Telekom, Infosys and Zeiss Digital Innovation as leaders in one quadrant each.

In addition, HCL is named as a Rising Star—a company with a “promising portfolio” and “high future potential” by ISG’s definition—in three quadrants. Infosys and TCS are named as Rising Stars in two quadrants each, and Cognizant in one quadrant.

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