Model-based systems engineering is a way of designing complex products by creating and using shared digital models rather than relying mainly on separate documents. Like building from a detailed 3D blueprint or simulation that everyone can test and update, it helps catch problems earlier, speed development, and reduce costly surprises. Investors care because it can lower development costs, shorten time-to-market, improve reliability, and make regulatory or integration risks easier to manage.
autonomous logisticstechnical
Autonomous logistics describes systems that use sensors, navigation software and robots or self-driving vehicles to move, store and track goods without a human constantly directing each step. Think of it as a fleet of self-driving trucks and warehouse robots that pick, pack and route shipments much like an automated assembly line for deliveries. For investors it matters because these systems can cut labor costs, speed up shipments, reduce errors and require upfront capital and ongoing maintenance, affecting profitability and growth potential.
layered air defensetechnical
A layered air defense is a coordinated set of different systems—sensors, interceptors and electronic tools—arranged to detect, track and stop airborne threats at short, medium and long ranges. For investors, it signals long-term procurement and maintenance spending, technical complexity and export or regulatory considerations that can affect defense-company revenues and risk; think of it as multiple locks and alarms working together to protect a building.
sustainable aviation fuelstechnical
Sustainable aviation fuels are low‑carbon alternatives to conventional jet fuel made from renewable or waste raw materials (like used cooking oil, plant residues, or captured carbon) or synthesized with electricity. They act like a cleaner replacement for gasoline in a plane’s engine, cutting lifecycle greenhouse gas emissions, and matter to investors because growing regulation, airline commitments, and limited supply create a fast‑evolving market with long‑term demand, price premiums, and investment opportunities.
low-carbon propulsiontechnical
Low-carbon propulsion describes vehicle or vessel drive systems and fuels designed to produce substantially less carbon dioxide and other greenhouse gases than conventional fossil-fuel engines, including electric motors, hydrogen fuel cells, hybrids, and low-carbon fuels. Investors care because these technologies can reduce regulatory and carbon costs, open access to growing markets and subsidies, and change operating economics—like swapping a gas stove for a low-emission heat pump, it alters running costs and future value.
urban air mobilitytechnical
Urban air mobility is the emerging system of using small aircraft—often electric vertical takeoff and landing vehicles and delivery drones—to move people and goods around cities. Think of it as adding a new layer of roads in the sky that could cut travel time and congestion, but it matters to investors because success depends on technology, safety, regulation, airspace rules and new infrastructure, all of which affect costs, adoption and revenue potential.
performance-based contractingfinancial
A contract structure where payment or rewards are tied to measurable results or agreed performance targets rather than fixed fees; the provider earns more (or is penalized) based on whether they meet quality, timing, cost, or outcome goals. For investors this matters because it shifts revenue risk and incentive alignment—companies using these deals can show more variable but potentially higher-margin revenue if they consistently meet targets, or face downside if they do not, much like paying a contractor only after a house passes inspection.
low-earth orbittechnical
Low-earth orbit (LEO) is the region of space close to Earth where satellites circle at relatively low altitudes, roughly between about 160 and 2,000 kilometers. For investors, LEO matters because satellites placed there are cheaper and faster to reach, offer lower communications delay and clearer imaging, and enable large commercial services like broadband, Earth observation and logistics monitoring — much like a network of local cell towers and cameras in the sky that can generate recurring revenue streams.
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Companies innovate with AI and new approaches to engineering and operations, ISG Provider Lens® report says
LONDON--(BUSINESS WIRE)--
A new research report published today by Information Services Group (ISG) (Nasdaq: III), a global AI-centered technology research and advisory firm, finds that aerospace and defense enterprises in Europe are pursuing digital programs to modernize defense operations and support lower-emission aviation.
The 2026 ISG Provider Lens® Aerospace and Defense Services and Solutions report for Europe finds that the sector is moving from post-pandemic recovery into a new phase shaped by defense restocking, reindustrialization and investments in AI for operations and autonomous systems. Enterprises are balancing immediate operational demands with broader efforts to strengthen regional industrial capacity, improve resilience and modernize critical systems.
“European aerospace and defense enterprises are investing with greater urgency, but they are also demanding stronger execution discipline,” said Andreas Fahr, partner at ISG. “They are making digital continuity, industrial resilience and faster delivery immediate priorities.”
Across Europe, companies are investing in innovation while building stronger digital foundations for design, production and maintenance. They are accelerating the adoption of digital engineering and model-based systems engineering as they seek to shorten development cycles, improve traceability and support more complex multinational programs. Enterprises are developing next-generation defense capabilities, including AI-enabled target recognition, autonomous logistics and layered air defense.
Commercial and business aviation organizations are pursuing greener operations and new growth opportunities. Organizations are investing in sustainable aviation fuels, low-carbon propulsion and related research and development while exploring urban air mobility and next-generation transport models in markets including France, Germany, Italy, Spain and the U.K. These initiatives are advancing unevenly, but they remain central to long-term competitiveness and regulatory alignment.
As they pursue these initiatives, Europe’s aerospace and defense companies expect providers to support more integrated and outcome-focused operating models. As performance-based contracting and real-time data sharing become more common, providers are expanding capabilities in digital sustainment, condition-based logistics and technology transformation. Fragmented data environments and certification constraints continue to slow execution in some areas, increasing demand for partners that can help deliver interoperable systems, faster delivery and software-first approaches, ISG says.
“Funding increases are revitalizing Europe’s aerospace and defense sector, but enterprises also need to translate complex programs into operational results,” said Harish B, principal analyst at ISG and lead author of the report. “Providers that combine engineering depth, supply chain support and transformation capabilities are helping enterprises turn that momentum into execution.”
The report also explores other trends affecting Europe’s aerospace and defense sector, including workforce transformation and the expansion of small launch ecosystems for low-Earth orbit satellite missions in countries such as France, Germany, Spain and Norway.
For more insights into the challenges faced by aerospace and defense enterprises in Europe, plus ISG’s advice for overcoming them, see the ISG Provider Lens Focal Points briefing here.
The report for Europe evaluates the capabilities of 41 providers across four quadrants: Engineering, Design and Innovation; Maintenance, Repairs and Overhaul (MRO) and Aftermarket; Supply Chain Operations and Logistics Management; and Technology Transformation and Consulting.
It names Accenture, Akkodis, Capgemini, HCLTech, IBM, Infosys and TCS as Leaders in all four quadrants. Cognizant and DXC Technology are recognized as Leaders in three quadrants each. It names Atos, Cyient, Deloitte, EY, LTTS, PwC, Randstad Digital and Tech Mahindra as Leaders in two quadrants each. Genpact, Quest Global and Thales are named as Leaders in one quadrant each.
In addition, PwC, Quest Global and Tech Mahindra are named as Rising Stars — companies with a “promising portfolio” and “high future potential” by ISG’s definition — in one quadrant each.
The 2026 ISG Provider Lens Aerospace & Defense report for Europe is available to subscribers or for one-time purchase on this webpage.
About ISG
ISG (Nasdaq: III) is a global AI-centered technology research and advisory firm. A trusted partner to more than 900 clients, including 75 of the world’s top 100 enterprises, ISG is a long-time leader in technology and business services that is now at the forefront of leveraging AI to help organizations achieve operational excellence and faster growth. The firm, founded in 2006, is known for its proprietary market data and research, in-depth knowledge and governance of provider ecosystems, and the expertise of its 1,500 professionals worldwide working together to help clients maximize the value of their technology investments.
