European Firms Deploy GenAI in Mainframe Modernization

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Key Terms

generative ai technical

Generative AI is a type of computer technology that can create new content, like text, images, or music, on its own. It’s important because it can produce realistic and useful material quickly, which could change how we create art, write stories, or even develop new products. Think of it as a smart robot that can invent and produce things almost like a human.

genai technical

Generative AI (genai) is a type of artificial intelligence designed to create new content, such as text, images, or music, that resembles human-produced work. It matters to investors because it has the potential to transform industries by automating tasks, enhancing creativity, and enabling new products and services, which can influence company performance and market opportunities.

deterministic engines technical

Deterministic engines are software systems or calculation processes that always produce the same result when given the same inputs and settings—like a recipe that yields the same cake if you follow it exactly. For investors they matter because predictable, repeatable outputs make pricing, trading signals, risk models and regulatory reports transparent and auditable, reducing unexpected behavior and making it easier to verify and trust financial results.

data sovereignty regulatory

Data sovereignty is the principle that digital information is subject to the laws and control of the country or entity where it is stored or processed. For investors, it matters because where data lives affects a company's legal obligations, costs, ability to sell services across borders, and exposure to government access or restrictions — like owning a house that must follow the rules of the town it sits in.

encryption keys technical

Encryption keys are secret pieces of digital information used to lock and unlock data, similar to passwords or a pair of physical keys that secure a safe. They matter to investors because they protect customer and company data, enable secure transactions, and help meet legal rules; poor key handling can lead to data breaches, regulatory fines and reputational damage that can reduce revenue and share value.

hyperscalers technical

Hyperscalers are large technology companies that operate massive computing networks and data centers to provide cloud services, data storage, and online infrastructure at an enormous scale. They are essential to the digital economy because they enable businesses and organizations to handle vast amounts of data and run complex applications efficiently. For investors, hyperscalers represent powerful engines of growth and innovation in the technology sector.

mainframe modernization technical

Mainframe modernization is the process of updating or replacing an organization’s older, centralized computer systems with newer software, hardware, or cloud-based approaches so they run faster, integrate with modern apps, and cost less to maintain. For investors it matters because these projects can reduce ongoing expenses, speed product development, and lower operational risk—like renovating an old house to add modern wiring and plumbing, improving safety and future resale value, but with upfront costs and migration risks to weigh.

04/17/2026 - 04:00 AM

Enterprises adopt AI-enhanced methods that align innovation and compliance, ISG Provider Lens^® report says

LONDON--(BUSINESS WIRE)-- European companies adapting mainframe systems are moving from experimental to operational use of generative AI (GenAI) within standardized workflows, integrating it in key stages of modernization, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a global AI-centered technology research and advisory firm.

The 2026 ISG Provider Lens^® Mainframes — Services and Solutions report for Europe finds that enterprises are deploying AI-driven workflows built on deterministic engines to coordinate multiple tasks, including analysis, rule explanation, test creation and scaffolding. GenAI enhances existing modernization tools by speeding up analysis and planning while maintaining accuracy through verification.

“Enterprises increasingly expect explainable, production-grade and well-controlled AI within mainframe modernization processes,” said Matthias Paletta, director and ISG technology modernization solution lead for EMEA. “Providers that demonstrate repeatable, auditable GenAI capabilities are gaining credibility as organizations prioritize AI governance and integration.”

Mainframe modernization in Europe has entered a phase in which data sovereignty and regulatory demands are directly shaping how organizations carry out modernization. Enterprises demand clear, evidence-based assurances on where data is stored, how workloads are run and who can access and control encryption keys. They increasingly expect AI platforms and tools to operate in secure, isolated environments.

European organizations are moving away from large, one-time mainframe replacements toward gradual, carefully managed modernization programs to reduce risk, maintain compliance and accommodate limited skills and capacity. Providers are adopting a two-track approach that separates deterministic modernization, such as optimization and refactoring, from targeted transformation initiatives. This enables enterprises to modernize their mainframe environments incrementally while keeping core systems stable and avoiding disruptions caused by the scarcity of specialist skills.

While increasingly using GenAI in mainframe modernization, European enterprises are still taking a cautious approach, especially in critical systems. Rather than relying on fully automated AI-led changes, they are incorporating human review at key stages, along with clear records of decisions and thorough testing. This approach helps reduce risks and maintain accuracy. As a result, GenAI is increasingly used to support engineers and speed up work, while final decisions and accountability remain firmly with human teams.

“European enterprises are reshaping mainframe modernization around governance, stability and accountability,” said Oliver Nickels, lead author of the report. “Success depends on disciplined, risk-managed execution and transparent operations rather than rapid, large-scale change.”

The report also explores other mainframe technology trends affecting European enterprises, including reliance on hyperscalers to adapt to regional regulations and enterprises’ growing need for end-to-end alignment across consulting, modernization and managed operations.

For more insights into the mainframe-related challenges that enterprises face in Europe, and ISG’s advice for addressing them, see the ISG Provider Lens Focal Points briefing here.

The report evaluates the capabilities of 30 providers across three quadrants: Mainframe Technology Consulting, Mainframe as a Service and Application Modernization Services.

It names Atos, DXC Technology, HCLTech, Kyndryl, TCS and Wipro as Leaders in three quadrants each. Capgemini and Infosys are named as Leaders in two quadrants each. Accenture, Cognizant, LTM and Tech Mahindra are named as Leaders in one quadrant each.

In addition, Tech Mahindra is recognized as a Rising Star — a company with a “promising portfolio” and “high future potential” by ISG’s definition — in two quadrants. Additionally, Fujitsu is recognized as a Rising Star in one quadrant.

In the area of customer experience, mLogica is named the global ISG CX Star Performer for 2026 among mainframe service and solution providers. The provider earned the highest customer satisfaction scores in ISG's Voice of the Customer survey, part of the ISG Star of Excellence™ program, the premier quality recognition for the technology and business services industry.

A customized version of the report is available from DXC Technology.

The 2026 ISG Provider Lens Mainframes — Services and Solutions 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.