SOFTWARE

INTELLIGENT TECHNOLOGY

of physical assets used for design, monitoring and reporting.

At the same time, investment in smart manufacturing and connected infrastructure is enabling closer coordination between physical systems and digital platforms. Enterprises are increasingly relying on integrated environments to improve responsiveness and operational efficiency.

The research highlights how leading organizations are creating AI-based digital threads that link digital twins, processes and products, eliminating fragmentation and technical debt. These connected environments are enabling systems that continuously translate data into action and improve operational performance.

The 2026 ISG Provider Lens Digital Engineering Services( DES) Midsize Providers report for the US finds that organizations are replacing fragmented technology deployments with cohesive architectures that connect research and development, operations and customer functions. This approach is delivering real-time visibility and measurable improvements across the value chain.

Midsize service providers are playing a critical role in this transformation by contributing industry expertise and agility. Their involvement allows enterprises to implement tailored solutions without the complexity often associated with largescale delivery models.

“ Leading organizations in the US are creating AI-based digital threads that link digital twins, processes and products, eliminating fragmentation and technical debt,” said Matteo Gallina, Americas lead, Digital Engineering Solutions, ISG.“ This enables a profound shift toward systems that continuously translate data into action, identifying and correcting performance gaps even as requirements change.”

At the center of this evolution are agentic AI systems capable of automating complex workflows across multiple functions. These systems plan, execute and adjust processes in real time, reducing inefficiencies caused by disconnected data and manual intervention. As a result, organizations can improve productivity, streamline processes and respond more quickly to changing business conditions.

Organizations are also increasing their focus on traceability and transparency in automated decision-making as regulatory expectations continue to rise. Digital twins support these goals by serving as continuously updated representations

Cloud strategies are also evolving toward hybrid architectures that balance scalability with control over sensitive data and high-frequency workloads. Enterprises are placing critical AI inference closer to operations through specialized silicon while maintaining centralized analytics in the cloud.

This strategy supports faster processing, lower latency and improved performance for mission-critical applications. It also enables tighter integration between digital platforms and physical operations, increasing enterprise agility and supporting more consistent business outcomes across distributed environments.

“ The competitive advantage for enterprises is shifting from deployment of intelligent systems to coordinating how they operate across environments,” said Shirish Kulkarni, lead author of the report.“ Midsize providers are acting as catalysts in digital engineering transitions, helping clients translate complex architectures into practical execution models.”

The report also highlights workforce upskilling, integrated enterprise environments and growing collaboration between IT and operational technologies as important trends shaping the future of digital engineering services across industries today. The shift is accelerating across multiple sectors. • www. intelligentcio. com

INTELLIGENT CIO NORTH AMERICA

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