North American Automakers Accelerate Digital Transformatio
North American automotive companies are accelerating digital transformation to change how vehicles are designed, manufactured, maintained and experienced by customers. As software becomes increasingly important to vehicle performance and competitiveness, automakers and their technology partners are investing in artificial intelligence (AI), cloud computing, connected vehicle platforms and advanced engineering solutions.
According to a new research report published by Information Services Group (ISG), the automotive industry is undergoing a significant shift from traditional hardware-focused development toward software-driven products and operations. The 2026 ISG Provider Lens® Automotive and Mobility Services and Solutions report for North America examines how manufacturers and suppliers are modernizing their technology infrastructure, improving operational efficiency and responding to changing customer expectations.
ISG, a global AI-centered technology research and advisory firm listed on Nasdaq under the ticker III, identifies software-defined vehicles, agile engineering, cybersecurity and unified data platforms as important elements of the industry’s transformation.
As vehicles incorporate more connected features, advanced driver assistance systems and digital services, conventional engineering methods are becoming increasingly difficult to maintain. Automakers must manage complex electronic architectures, frequent software updates and growing volumes of vehicle data while continuing to meet safety, quality and regulatory requirements.
The report highlights the need for automotive companies to integrate digital capabilities into their core business strategies rather than treating technology as a separate operational function.
Software Becomes a Key Competitive Advantage
Software is increasingly determining how vehicles perform, how customers interact with them and how manufacturers generate revenue throughout their products’ lifecycles.
Automakers are moving beyond the traditional model in which most vehicle capabilities are fixed during production. Modern vehicles can support new functions, performance improvements and digital services through software updates delivered after purchase.
This transition is changing the competitive landscape for manufacturers and suppliers. Companies must develop systems that can evolve over time, respond to customer feedback and support new technologies without requiring extensive hardware modifications.
“Software has redefined what makes a vehicle competitive,” said Bob Krohn, ISG partner, Manufacturing. He emphasized that automakers must position digital capabilities at the center of their product development and business strategies to meet changing customer expectations.
Software-defined vehicles allow manufacturers to introduce new features, improve existing systems and enhance the ownership experience throughout a vehicle’s life. They can also create opportunities for subscription-based services, personalized infotainment, connected applications and other digital offerings.
However, this approach requires a fundamental change in how automotive organizations develop products. Engineering teams must coordinate hardware, software, electronics, data and cybersecurity requirements from the earliest stages of development.
Centralized Computing Transforms Vehicle Architecture
One of the major developments identified in the ISG report is the transition from distributed electronic control units to centralized computing platforms.
Traditional vehicle architectures rely on numerous electronic control units, or ECUs, each responsible for particular functions. Although this approach has supported automotive development for decades, it can become difficult to manage as vehicles incorporate increasingly sophisticated technologies.
Modern automotive platforms are moving toward centralized or high-performance computing architectures that consolidate multiple functions into fewer, more capable systems.
These platforms can support connectivity, infotainment, advanced driver assistance systems and, where applicable, autonomous driving capabilities. By reducing fragmentation across vehicle electronics, centralized computing can simplify software development and make it easier to coordinate updates across different vehicle systems.
A more unified architecture can also improve the delivery of personalized digital experiences. Manufacturers can integrate connected services and software features more effectively, helping vehicles remain technologically relevant for longer periods.
For automakers, this transition requires new engineering expertise, revised development processes and closer collaboration between hardware and software teams. Suppliers must also adapt their products and services to support new computing platforms and increasingly integrated vehicle systems.
Agile Engineering and DevSecOps Support Faster Development
The growing complexity of vehicle software is encouraging manufacturers and suppliers to adopt agile development practices and DevSecOps methodologies.
Agile engineering enables teams to divide complex development projects into smaller stages, test improvements frequently and respond more quickly to changing requirements. This approach can help automotive companies reduce development bottlenecks and improve coordination between engineering disciplines.
DevSecOps combines development, security and operations practices throughout the software lifecycle. Instead of treating cybersecurity as a final checkpoint, teams integrate security testing and controls into development, testing and deployment activities.
These practices are particularly important for software-defined vehicles, where updates and new features may be introduced after a vehicle enters service.
Continuous integration and delivery processes can help teams validate software changes, identify defects and deploy approved improvements more efficiently. When combined with suitable testing and safety controls, these methods can support more frequent releases without overlooking automotive quality requirements.
Secure over-the-air updates are another important component of this transformation. They allow manufacturers to deliver compatible software improvements remotely, reducing the need for customers to visit dealerships for certain updates.
Over-the-air capabilities can also help manufacturers address software issues, improve connected services and introduce additional functionality throughout a vehicle’s lifespan. At the same time, companies must ensure that updates are authenticated, tested and delivered securely to protect vehicle systems and occupants.
Cloud Platforms Create a Unified Data Foundation
Automotive companies are also modernizing enterprise technology by replacing fragmented legacy systems with integrated, cloud-based platforms.
Vehicle development and production involve large volumes of information generated across engineering, manufacturing, procurement, sales, after-sales service and connected vehicle operations. When this information remains separated across different systems, organizations can face delays, inconsistent reporting and limited visibility into business performance.
Cloud-based platforms can help connect these functions and establish a more consistent data foundation.
By integrating information across departments, manufacturers can improve collaboration, streamline workflows and make decisions using a more complete view of their operations. Engineering teams can access relevant product information, production managers can monitor manufacturing performance, and service teams can use connected vehicle data to identify maintenance requirements.
A unified data environment can also support more effective strategic planning. Organizations can compare information from different facilities, identify operational bottlenecks and evaluate the impact of production or supply chain changes.
However, successful implementation depends on more than moving existing systems to the cloud. Automotive businesses must also address data quality, system interoperability, governance, access controls and the integration of older technologies with modern platforms.
Artificial Intelligence Strengthens Manufacturing and Maintenance
Artificial intelligence and advanced analytics are becoming increasingly important as automakers seek to extract greater value from the data generated by vehicles, factories and business operations.
AI-enabled systems can help identify patterns that may be difficult to detect through conventional analysis. In manufacturing, these capabilities can support quality inspections, production planning and early identification of equipment problems.
Predictive maintenance is another significant application. By analyzing equipment performance, operating conditions and historical maintenance records, organizations can identify warning signs before a machine fails. This can help manufacturers reduce unplanned downtime and improve production continuity.
Connected vehicle data can also contribute to predictive maintenance by helping service providers identify potential problems and recommend appropriate inspections. These capabilities may improve vehicle availability while supporting more proactive after-sales service.
Advanced analytics can additionally help companies assess production performance, forecast demand and allocate resources more effectively.
Nevertheless, AI initiatives require reliable data, suitable infrastructure and clearly defined operational objectives. Companies must also evaluate model performance, protect sensitive information and maintain appropriate human oversight where decisions affect safety or critical business operations.
Cybersecurity Becomes Essential to Connected Mobility
As vehicles become more connected and software-dependent, cybersecurity is emerging as a fundamental requirement across the automotive value chain.
Connected vehicles can communicate with mobile applications, cloud services, external networks and other digital systems. Although these capabilities improve convenience and functionality, they can also create additional points of vulnerability.
Automotive companies must therefore incorporate security considerations into vehicle engineering, software development, manufacturing systems and after-sales operations.
The ISG report highlights the importance of identity management, continuous monitoring and stronger data governance frameworks. These measures can help organizations control access to systems, identify suspicious activity and protect sensitive information.
Cybersecurity by design involves considering potential threats early in the development process rather than attempting to resolve vulnerabilities after products are deployed.
Manufacturers also need processes for identifying software weaknesses, managing security updates and responding to incidents. Effective coordination among automakers, suppliers and technology service providers is important because vehicle systems frequently depend on components developed by multiple organizations.
Data privacy is equally significant. Connected vehicle services may process information related to vehicle usage, location, customer preferences and driving behavior. Companies must establish appropriate safeguards for collecting, storing, accessing and sharing this information.
Strong cybersecurity practices can help protect vehicle safety, maintain customer trust, reduce operational risks and support compliance with applicable regulations.
Digital Twins and Battery Technologies Gain Importance
Beyond software-defined vehicles and cloud infrastructure, the ISG report examines other developments influencing the North American automotive sector, including digital twins for supply chains and advances in battery technologies.
A digital twin is a virtual representation of a physical asset, process or system that can be used to analyze performance and evaluate potential changes. In supply chain management, digital twins can help organizations understand how disruptions, production changes or logistics constraints may affect operations.
By modeling different scenarios, manufacturers can investigate possible risks before implementing changes in their physical supply chains. This capability can support planning, improve visibility and help companies prepare for uncertainty in sourcing and distribution.
Battery technology is another important area as automakers continue developing electric vehicles and improving electrified powertrains. Battery performance, cost, durability, charging characteristics and manufacturing processes remain central considerations for vehicle manufacturers.
Digital tools can support battery development, production monitoring and quality management. Combined with advanced analytics, these systems may help companies identify manufacturing variations and improve operational consistency.
The report’s coverage of these areas reflects the broad scope of automotive transformation, which extends beyond the vehicle itself to include factories, suppliers, logistics networks and customer services.
ISG Evaluates 48 Automotive Service Providers
The 2026 ISG Provider Lens® Automotive and Mobility Services and Solutions report for North America evaluates 48 providers across five market segments, known as quadrants.
These quadrants cover Automotive Engineering and Manufacturing Services; Electric Vehicles (EVs) and Mobility Services; Autonomous Systems and Software-Defined Vehicles; Automotive Retail and Aftermarket Services; and Automotive Industry: Mid-tier and Specialist.
The report assesses providers operating across different areas of automotive technology and services. Its findings are intended to help enterprises understand the supplier landscape as they plan modernization initiatives and select partners for digital transformation.
According to ISG, Accenture, Capgemini, HCLTech, IBM, Infosys, KPIT, LTTS, TCS, Tech Mahindra and Wipro were named Leaders in four quadrants each.
Cognizant and NTT DATA were named Leaders in three quadrants each.
Akkodis, Alten, Cyient, Deloitte, eInfochips, EY, Hitachi Digital Services, Quest Global, Tata Elxsi and Tata Technologies were recognized as Leaders in two quadrants each.
Birlasoft, Bosch SDS, CI&T, Genpact, LTM, MHP, PwC and Softtek were named Leaders in one quadrant each.
These classifications provide an overview of providers that ISG identifies as having capabilities relevant to different automotive transformation requirements. They do not necessarily mean that every provider is equally suited to every automaker or project. Organizations must assess technical expertise, implementation experience, geographic coverage, integration requirements and commercial considerations when selecting a partner.
Rising Stars Highlight Emerging Opportunities
The report also recognizes several providers as Rising Stars in individual quadrants.
Birlasoft, eInfochips, Hitachi Digital Services, Quest Global and Sasken Technologies received this recognition in one quadrant each.
ISG uses the Rising Star designation for companies with a promising portfolio and strong future potential. The recognition highlights providers that the research firm considers noteworthy within the segments assessed.
For automotive businesses, emerging service providers may offer specialized expertise in areas such as engineering services, software development, connected technologies and digital modernization. However, companies evaluating these providers should consider their specific requirements, delivery capabilities, industry experience and ability to support long-term programs.
The variety of providers included in the report reflects the growing demand for expertise across multiple disciplines. Automotive transformation increasingly requires collaboration between traditional engineering specialists, software companies, cloud providers, cybersecurity experts and consulting organizations.
MHP Recognized for Customer Satisfaction
Customer experience is another important element of the report.
MHP was named the global ISG CX Star Performer for 2026 among automotive and mobility services and solutions providers. The company achieved the highest customer satisfaction scores in ISG’s Voice of the Customer survey, which forms part of the ISG Star of Excellence program.
The program recognizes quality in the technology and business services industry based on customer feedback.
Customer satisfaction is an important consideration for automotive technology partnerships because digital transformation programs often involve complex integrations, long implementation timelines and ongoing operational support.
Organizations depend on service providers not only to deliver technical solutions but also to communicate effectively, understand business priorities and respond to changing requirements.
Recognition based on customer feedback provides an additional perspective alongside assessments of technical capabilities and service portfolios.
What the Transformation Means for the Automotive Industry
The findings of the 2026 ISG report illustrate how digital technology is becoming central to automotive competitiveness in North America.
Software-defined vehicle architectures, AI-powered analytics, cloud platforms, agile engineering and cybersecurity are increasingly interconnected. Progress in one area can influence the effectiveness of others. For example, centralized vehicle computing creates opportunities for software updates, while secure development practices help manufacturers deliver those updates responsibly.
At the enterprise level, integrated data platforms can connect vehicle engineering with manufacturing, supply chain planning and customer service. Digital twins and predictive analytics can provide additional tools for improving efficiency and responding to disruptions.
For manufacturers and suppliers, the challenge is to coordinate these technologies within a practical business strategy. Successful transformation requires investment in infrastructure, employee skills, data management and collaboration across organizational boundaries.
Companies must also balance speed and innovation with vehicle safety, reliability, privacy and regulatory obligations. These requirements are particularly important as connected features and software updates become more common throughout vehicle ownership.
The growing role of technology service providers suggests that partnerships will remain important. Automotive businesses may need external expertise to modernize legacy systems, develop software platforms, integrate AI solutions and establish secure operating environments.
Access to the Full ISG Report
The 2026 ISG Provider Lens® Automotive and Mobility Services and Solutions report for North America is available to subscribers and through a one-time purchase, according to ISG.
Organizations seeking additional information about the challenges facing automotive and mobility enterprises can also consult the report’s Focal Points briefing through the official ISG research page.
As the automotive industry continues to evolve, digital transformation is becoming more than an information technology initiative. It is increasingly connected to product strategy, manufacturing performance, customer experience and long-term business growth.
For North American automakers, the ability to combine advanced software, reliable data, secure vehicle systems and adaptable engineering processes will be an important factor in responding to the next generation of mobility demands.
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