ISG Provider Lens™ Enterprise Service Management - Services - Implementation and Integration Services - U.S. 2025

With an AI-first approach, AI orchestrates ESM’s future with workflows, people and technology stacks

In the U.S., enterprise service management (ESM) is increasingly seen as a strategic enabler of digital business, with a strong emphasis on integrating human-centered design, intelligent automation and digital strategy. This approach aims to transform ESM into the connective tissue of the modern enterprise that is adaptive, anticipatory and persistently value-driven. It has emerged from the shadow of ITSM and is increasingly recognized for its scope of functionality and strong value offered. The discipline helps enterprises speed up digital transformation from 2.0 (where they are and what they know) to 3.0 (where they aspire to be). ESM is driving this by enabling enterprises to bring traditional IT operations, disparate business services (such as CRM, inventory) and cross-functional services (HR, finance, facilities management and more) into a single, orchestrated service environment. Service providers have made impressive gains in this regard as they have notably improved their ESM architecture vision to enable business value. This mature approach to delivering business value has strengthened providers’ ability to engineer core elements that support continuous AI integration and support, multicloud execution and other features of modern systems. This fits well with how many U.S. enterprises are trying to transform their operations.

Leading ESM programs go beyond managing services to transforming them, by modernizing workflows and orchestrating them across an enterprise, its customers and key trading partners. ISG has identified important changes in the services and functions included in ESM and in how they are delivered in the U.S. market. ESM service providers are enhancing their core platforms by continually adding new prebuilt connectors to enable integration with popular enterprise software applications. They are also embracing REST APIs, containers, microservices and other integration-friendly technology foundations to facilitate service integration and execution across the entire enterprise architecture. If additional connectivity is required, agentic AI and low-code/no-code tools are reducing the time and effort needed to develop and test new integrations. Providers’ engineering prowess is crucial as it enables them to design future-state architecture, such as business orchestration architecture (BOA) or enterprise orchestration architecture (EOA) that can deliver immediate and long-lasting business value. This emphasis on connectivity has expanded the scope of what can be automated, orchestrated and managed in comprehensive ESM environments. For example, this study found examples of engineering operations, data pipeline management, facilities management, legal processes, enterprise risk management (ERM), sustainability data collection and reporting and other systems and workflows being automated and managed within integrated ESM environments. Support for these capabilities is not widespread - a differentiator among service providers.

It is common among service providers to expand ESM’s scope and increase its value by commercializing solutions and accelerators for specific industries and business processes. This is a highly competitive area for service providers, especially in large industries such as financial services and manufacturing. Therefore, enterprises benefit from the quality and range of solutions brought to the market.

Emphasizing platform agnosticism while leveraging key platforms (e.g., ServiceNow) While platforms such as ServiceNow are central to many offerings due to strong partnerships and capabilities, providers stress their ability to deliver services across multiple platforms (BMC, Atlassian, Workday) or adopt a toolagnostic approach to focus on solving business problems irrespective of the underlying technology. The emphasis is on the provider’s capability rather than being locked into a single tool.

Providing integrated and data-centric solutions

The move is toward providing integrated support that combines different functions and manages complex, multivendor environments. Providers play a significant role in data stewardship, managing data repositories and analytics across the entire ecosystem, recognizing data as increasingly valuable for automation and AI. There is increased demand for full-stack observability solutions integrating application and infrastructure monitoring.

Partners are a necessity, not a bonus

True ESM solutions sit at the top of the enterprise technology and systems stack, above ERP, ITSM and other business-critical systems, and orchestrate service delivery across these lower levels. Due to this position and responsibility, ESM performance and value depend heavily on the number of systems and environments they can support. This makes partners very important to every ESM service provider’s success. No single vendor can support all systems, integrations, functionality, user preferences, security requirements and compliance processes that modern enterprise systems require, even for small and midsize enterprises (SMEs). A partner ecosystem helps distinguish leading service providers from other competitors in each quadrant this study covers (Consulting and Advisory, Implementation and Integration and Managed Services for Converged IT and Business Operations). Every Leader profiled has a network of specialized partners. We do not attempt to list them all; partners are only referenced when they are especially relevant to add context about the provider’s positioning in the quadrant.

Rapid ESM transformation with AI

Every service provider prioritizes capabilities it can develop and own, and those it can rely on partners to provide. Bringing new AI innovations to the market is a priority for almost all service providers. However, there is a wide range of AI offerings, maturity, investment and innovation pace for new AI solution delivery among providers. Some providers are taking an AI-first approach where they use AI to automate as many processes as possible, and directing their new AI development to address what remains. Others are more measured, selectively applying AI for some tasks and preferring automation or existing processes for others. AI is the most dynamic segment of the market. ESM vendors’ solutions and functions where AI can be used change every month. Agentic AI is a highpriority development area among providers.

Providers’ focus on creating solutions for vertical industries and horizontal business process areas is redefining what ESM can cover. Their focus on AI, automation and citizen development is changing how ESM services are being delivered. The change is focusing solely on automation. Service providers have demonstrated many impressive examples of how automation, including intelligent automation with AI, has significantly reduced process execution time, failure rates and labor requirements. AI, automation and predictive analytics are preventing process failures, reducing ticket requests, resolving more tickets without human intervention, handling more customer service inquiries through chat and voice bots, automating reporting processes and much more. These instances have contributed to the success of providers when measured on traditional key performance indicators (KPIs) and have helped them develop some new creative metrics to assess performance and user satisfaction in various operations.

There is clear and persistent enterprise demand for outcome-based contracts where ESM services are paid on a flexible scale and clients and providers share costs, risks and rewards. Outcome-based contracts for ESM have clear appeal; however, in ISG’s experience, they are difficult to structure and manage to ensure mutual satisfaction. Outcome-based ESM contracts tend to work best with service providers that have a strong consulting background.

The ESM market has evolved considerably since this study was last conducted in 2023, and ISG expects accelerating change as enterprise demand and providers’ capabilities are increasing, especially around AI. Provider offerings are more mature, comprehensive and competitive. On the enterprise side, there is greater awareness of what ESM is and the value it can provide; however, many still struggle to distinguish it from traditional ITSM. Traditional boundaries of responsibility and service delivery limitations are disappearing as the ESM philosophy and supporting systems continue to evolve. We expect more marketaltering innovations to be released in 2025-26 based on providers’ insights on AI and other development pipelines.

Access to the full report requires a subscription to ISG Research. Please contact us for subscription inquiries.