DxO's Nicolas Touchard talks about ISP challenges in his presentation on CPIQ forum. The main problem is to keep up with pixel shrink effects, despite a long ISP design cycle. So the modern ISPs are optimized to compensate pixel imperfections that were 2-3 years ago.
I don't completely agree with this view. There are ISP design teams with good connections with sensor vendors and there are others with bad or no connections. The later ones learn pixel effects from literature and naturally have 2-3 years lag. The former ones have quite good understanding of small pixels and their ISP account for all modern pixel effects.