Creating an intelligent, connected and secure information advantage

DigitalTransformation in
Manufacturing:
Creating an intelligent, connected
and secure information advantage
December 2021
Author:
Lorenzo Veronesi

ID C #E MEA443870 1 8

An IDC InfoBrief, Sponsored by© IDC 2021

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Page 1An IDC InfoBrief, Sponsored byCreating an intelligent, connected and secure information advantage

Manufacturing at the Heart of Digital Transformation’s
Perfect Storm
IDC research shows that manufacturers worldwide
are rapidly embracing new technologies to transformtheir business models and operations to improveagility, customer engagement, profit and sustainable
competitive advantage.
They are at the heart of the perfect storm, both livingwith and seeking to exploit, disruptive information
technologies such as cloud, big data, AI-assisted
analytics and the Internet of Things (IoT), while
facing increasing IT security challenges, regulatory
pressures and a changing workforce. In the face of
new and disruptive competitors, they are changing
their businesses radically to offer value-added
services and leverage tightly linked ecosystems.
It should be no surprise then that a clear majorityof manufacturers are actively planning bold
transformation of information architecture,operating models and more. In fact, 86% ofEuropean manufacturers have already begun theirdigital journey. Improving customer satisfaction andachieving higher operational performance are seen
to be the key goals.

Q. Which of the following 5 stages of digitaltransformation maturity best describe yourorganization?

14%

Improving customer satisfaction

DIGITALRESISTER

11%

DIGITALDISRUPTOR

28%

22%

DIGITALEXPLORERDIGITAL
TRANSFORMER

25%

86%

DIGITAL
PLAYEREnterprise is aggressively disruptive in the use of new digitaltechnologies and business models to affect markets.
Integrated, synergistic business – IT management disciplines
deliver digitally enabled product/service experiences

More efficient operations/Cost optimization
Improving workforce satisfaction
Faster IT innovation rates
Expanded market share/Greater customer (patients/students) base
Increasing revenues/margins from core businesses
Reducing time to market
Fostering new business models
Faster business innovation rate
Brand uplift
Increasing revenues/margins from new digital businesses

Business-IT goals are aligned at enterprise level aroundthe creation of digital products and experiences

Being celebrated in media and by peers

Business has identified a need to develop a digitallyenhanced, word execution is on ad-hoc basis

No expected impact

Business and IT digital initiatives are disconnected andpoorly aligned with enterprise strategy© IDC 2021

Q. Where do you expect digital transformation
having the biggest impact on your business?

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Source: IDC European Tech and Industry Pulse Survey 2019-2020 – Manufacturing N = 290

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The Information
Advantage: Information
is at the Center ofBusiness Processes –and the Key to Process
Improvement

Information-Fueled Business Process

Technologies including cloud, mobile, big data and AI, as well as blockchainarchitectures, enable new services and models such as intelligent predictive
maintenance and as-a-service, outcome-based business models. In this digital
economy, information and analytics are fueling every business process.
With this in mind, manufacturers are realizing the importance of employing
advanced enterprise information management (IM)1.

Asset

Employee

Finance

Customer

ANALYTICSAI

INFORMATIONPROCESSING

INFORMATIONMANAGEMENTINFORMATION
DELIVERYINFORMATION CONTROL

Information Management (IM) allows organizations to capture, govern, exchange andenhance information while keeping it secure. IM brings together key technologies to enrichinformation and processes from end-to-end. Both unstructured and structured information
flow across the extended enterprise. Through IM, businesses can consolidate and integrate
information so it can be managed transparently throughout the entire information lifecycle.
1© IDC 2021

Product

BLOCKCHAIN

Information is delivered across business processes, from supplierengagement, manufacturing, logistics and asset management to HR, financeand sales and marketing, always as a part of a larger system of ecosystemapplications.

Supplier

Source: © Open Text 2020

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Companies Need to Pursue an Integrated Information
Management Approach
Information from IoT Connected Devices

To be effective, information has to flow in many directions:
top-down, bottom-up, from inside out and outside in, between
employees, business departments and across the businessnetwork. Companies must integrate data analytics, transactional
content and content-related services, and provide strong
reporting on activities such as content created and received via
easily-accessible dashboards.
However, most business applications — as originally conceived— excel at managing silos of information, but lack the capability
to seamlessly hand data and information to other businessprocesses and applications. In order to effectively cover intraenterprise processes, companies often need to rely on expensive
and cumbersome custom applications or on error-prone manual
processes.
Enabling a unified data platform is central to empoweringbusiness to work smarter with information to improve
productivity, completeness and customer experience, driven by
better business insight.

Utilities

OfficeIoT Platform

BIG Data
WMS• To integrate business strategies and operate acrossecosystems of innovation© IDC 2021

Warehouse

BIG Data

ANALYTICS

Procurement

ERP

Production
DISCOVERY

EIM

DesignOFTP2

PROCESS

INTERNAL
ENTERPRISE

Marketing

AS2

Sales

HTTPS
Suppliers

HQ

SupportEXPERIENCECONTENTFTP

BUSINESSNETWORK

Identity and

EDIFACT
HULFT
ANSI• To digitize, harmonize and improve business operations

ProductionXML

access management

NOTIFICATIONS

SWIFT

MFT

IDOC
Banks

Contract Mfg.

EXTERNAL BUSINESSECOSYSTEM

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Insurers

FAX

Distributors

3PLs
Customers

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Digitize, harmonize, and improve business operations

Creating an intelligent, connected and secure information advantage

The Factory of the Future Has a
Layered Approach to Information
In the Factory of the Future, the foundation layer will be automation intensive:
all production processes will be highly or completely automated with few orno people involved in production operations. Digital technologies will makecontinuous improvement a transactional exercise, allowing people to focus on
business reinvention.

DefineDesignERPThis transformation will provide a further growth opportunity for companies
deploying advanced automation that will cover all the processes where humans
cannot bring any added value.

CAD/CAMAn IT intensive operational layer will create real-time decision-making
environments. The connection between factory technology and enterprisesystems is based around an IoT layer supporting the seamless transition fromoperation technology (OT) to IT systems. This entails dismantling the traditionalorganizational boundaries that have OT and IT as separated domains.

Commercialize/Service

Logistics

SCM
PLM

CRM
MES

EAM

ENTERPRISE INFORMATION MANAGEMENT

Track location

Above all it will be information-intensive to support people’s decision making.
People will be at the center of the Factory of the Future as they provide thedegree of flexibility and decision-making capabilities that are required to deal
with increasing complexity.
EIM will be the facilitator that eases the exchange of information transparently
across organizational boundaries. EIM acts as the information highway assisting
the transmission of data between OT and IT for better business outcomes.

Manufacturing

Monitor conditions

Analyze performance

IOT FOUNDATION LAYERSENSOR-DRIVEN

VehicleTracking

Cameras

Power
Meter

Load Meter

Smoke/Fire
AlarmsHumidity
Sensors

Temperature
Sensor

MANUFACTURINGTECHNOLOGY

New
Material

3D
Printing

AR/VR

CNC

Robotics

MobileDevices

AGV

Source: IDC 2020

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Digitize, harmonize, and improve business operations

Creating an intelligent, connected and secure information advantage

The Factory of the Future Ecosystem
will Leverage Multiple Data Sources
with AI-Assisted Analytics
Digital transformation of manufacturingmeans a highly interconnected supply
chain and increased expectations
around quality, logistics and security.
Digital transformation requires notjust integrated processes in a factory,
but a tight coupling between suppliers,
customers and the manufacturingorganization to give greater closenessto the customers and better control
over WIP and raw materials; however,
the expectations will be towards greater
flexibility and agility in the ecosystem.
This implies a unified information
strategy across the organization’s assets
and extending across the supply chain.
Information sharing will be absolutely
vital to support this. Manufacturers’ toppriorities for operational investments
are around capturing and sharing theinformation their processes generate byleveraging cloud and analytics

What are your top three priorities for investment withinyour operational technology IT related initiatives?
Integration of OT systems with other OT or IT systems or sensors

FACTORY OF THE FUTURE

Cloud-based application software (for operational processes, such as DMS, MES and SCM)

Open Environment

Internet of Things - deploying sensors that can wirelessly connect to a network
Analytics - advanced analytics (simulation, optimization, artificial intelligence, machine learning etc.)
Security
Cloud-based operational data management and analytics
Analytics - business intelligence (KPI dashboards, graphic display)
Networking and connectivity
Refresh/upgrade of OT systems
Source: IDC 2018

Mobile applications and devices

0%

10%

20%

30%

40%

50%

60%

Source: WW - IT and OT Convergence Survey 2020, Manufacturing, N= 346© IDC 2021

OLD FACTORY Closed Environment

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Once information is created, it can reach multiple audiences. Mixing advanced
analytics of enterprise business data with operations technology data is central todelivering better, more powerful business applications.

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Digitize, harmonize, and improve business operations

Creating an intelligent, connected and secure information advantage

A Drill-Down on
IT/OT Integration

Status of OT/IT Integration
100%

Too many companies have a segregated approach to IT/OT integration,
where each plant makes independent investment decisions about technology
in the plant through execution and plant scheduling. Integration withcorporate systems is asynchronous (batch) and is usually limited to demand
download and finished product upload. However, things are changing. We
see more and more companies looking at coordinated integration models as
they create a common platform to manage operations at an execution level.
The trend will be for companies to achieve an integrated vision enabled bystanding centers of operational excellence with permanent staff.

90%
80%
70%
60%
50%
40%

Integrated

30%
20%

Coordinated10%

Segregated

0%

TODAY

THREE YEARS

Segregated. Each facility makes independent investment decisions about technology in theplant. Integration to corporate systems is asynchronous (batch) and is usually limited to demand
download and finished product upload.
Coordinated. Based on a common platform to manage operations at an execution level, withgovernance through PMO. Support is handled by IT with a local “power user” at each plant. The
plant continues to make control-level decisions.
Integrated. The company sets up a standing center of excellence with permanent staff, from thebusiness as well as IT. The control systems are shared between IT and OT.
Source: WW - IT and OT Convergence Survey 2020, Manufacturing, N= 346© IDC 2021

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Integrate business strategies andoperate across ecosystems of innovation

Creating an intelligent, connected and secure information advantage

Value chains as ecosystem networks
Manufacturing organizations are increasingly
understanding the importance of engaging much closer
with their broader ecosystem such as with suppliers,
partners, and customers.

Cloud: Key technology enabler forecosystem digitization• Scalable and secure cloud-infrastructures• Aligned architectures of edge and cloud depending
on requirements• Multi-cloud management solutions

By 2025, driven by volatile global conditions, 75% of business leaders will leverage
digital platforms and ecosystem capabilities to adapt their value chains to new markets,
industries, and ecosystems.
IDC FutureScape: WW Digital Transformation 2021 Predictions

31%

of manufacturingorganizations....

... already have a wellaligned and agile ecosystem
supporting a co-creation model
to develop new and innovative
solutions61%of manufacturingorganizations....

... are expanding

their ecosystem to scale
existing products, acquire newcustomers and create newofferings.

Data exchange: Key to fuelecosystems operations• Need for appropriate data management and data
sharing IT infrastructure and architectures.

Collaboration in ecosystems is very much about sharing data!

• IT architectures need to address specific needs
related to security and IP concerns, latency of dataexchange, and the volume of data exchange.

By sharing data within their ecosystem, manufacturers can achieve greater product quality andcustomer experiences, more efficient supply chain execution and manufacturing operations,as well as faster and better product and software innovation.

Source: Worldwide Future Enterprise Resiliency & Spending Survey, IDC, February, 2021, Manufacturing companies n= 127© IDC 2021

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Integrate business strategies andoperate across ecosystems of innovation

Creating an intelligent, connected and secure information advantage

Tracebility is the foundation to strong ecosystems
Traceability is more than just a capability for
quality and recall readiness. Traceability key forbuilding trust and ultimately, enhancing brandvalue. Customers – whether in B2B or B2C
markets – expect to receive both quality andreliability in the product they ordered.
This entails mastering the following elements:•••

The ability to communicate rapidly withcustomer about the status of any order(Pervasive visibility)
The ability to run automatic, machine-based
proactive replenishments to guarantee
product delivery and esure long-term
relationships with key customers
Using the information coming fromproduction machines to understand the
production status and anticipate possible
issues such as expected breakdowns, quality
issues, delays in delivery.

Automation
Source: OpenText 2021

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Intelligent and Connected
Manufacturing Directions Enable
Smart Manufacturing

Ultimately, the move to smart manufacturing requires movement along
multiple dimensions and enterprise information management is tracking
these to become a modern state-of-the-art digital backbone for the smart
manufacturer.
Investments around the 3rd platform, which is cloud-centric, have been abusiness imperative in recent years. These investments now pave the way
for future innovation and set the stage for a smooth transition to the 4th
Platform, which is based on cognitive and AI-based operations.

FROM

TO

Traditional IT

Abundance
Future of WorkNew Buying
Centers

Efficiency

Immediacy

On Premises Architectures

Personalization

NeutralInterfaces

Existing Operations

3D
Printing

IOT

Mobility

Millions o

Cloud

Cloud Platform

Cognitive
Systems

INNOVATION ACCELERATORS

Robotics

Traditional Equipment

Innovation Accelerators

SocialBusiness

Next Gen
Security

Smart Equipment

Big Data/
Analytics

3rd Platformf Apps | Billions of Users | Trillions of Things

Emerging Business Models

2nd Platform
1st Platform© IDC 2021

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Artifical Intelligence is Going
To Revolutionize The Way
Information Is Analyzed
Manufacturers need to equip their workforce with technologies that create visibility, seamless data
flow and offer real-time insights. AI and Machine Learning technologies play the role of the “brain” thatare able to process in high volumes, variety and velocity the information, coming from the processes(and exponentially augmented by data produced by ubiquitous sensors).
To this end, companies should focus on acquiring a way to make sense of the corporate information byenabling the following three capabilities.

01

Decision Automation• Conditional Decision Automation(Automating Decision-Making Process)– This automation provides rapid
identification and response for wellknown and slow-to-change conditions
across a variety of processes, including
IoT and production health monitoring.
• Algorithmic Decision Automation(Creating Decision Support Tool) – This
automation provides the business benefitof rapidly predicting upcoming problems
or immediate opportunities whereconditions change continuously and datais highly variable, including IoT use cases,
real-time promotions, quality controls,
and inventory outage predictions.

© IDC 2021

02

03Enterprise Performance
Dashboard

Data exploration and
Investigation• Continuous planning andforecasting – This is theability of using the mostrecent available data acrossthe organization for on-going
forecasting process.

• Key driver identification –It provides decision support
capabilities that not only identify
what happened but also provide
information on why it happened
and what can be done about it.

• Situational awareness – Itprovides capabilities for instantaccess or notification of thecurrent state of the enterprise
based on real-time internal andexternal data contextualized byhuman expertise.

• Guided root cause analysis
It provides decision support
capabilities via automation tounderstand why something
happened without requiring users
to spend endless hours on manual
data crunching activities.

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KEY USE CASES and VALUE OPPORTUNITIES“Cognitive” product andservice quality — detecthidden issues before they
happenAsset availabilty anduptime — Predict machine
failure and optimize service
execution

Operational analysis
and improvement —Use advanced analytics
to understand theimprovement opportunities

Autonomous execution ofprocesses — Enable “digital
workers” by automation

Inventory management— Right size inventory for
optimal balance between
cost and fulfillment

Demand planning andforecasting — Fine tune
predictions with contextual
analysis

Key driver
identification
Guidedroot cause
analysisSituationalawareness

INTEGRATEDANALYTICS
PLATFORM
Creating
Decision Support
Tool

Enterprise Performance Dashboard
Data exploration and Investigation

Continuous
planning andforecasting

Automating
Decision- Making
Process

Decision Automation

Source: IDC European Tech and Industry Pulse
Survey 2019-2020 – Manufacturing N = 290

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Cyber Security Has
Direct Business Impact
Manufacturing companies worldwide are involved in a number of initiatives aimed atmaking their organizations better able to cope with the challenges of digital transformation.
Implementing compliance regulations (e.g. GDPR, NISD, Cybersecurity Act)

Manufacturers see operational loss as being their greater concern regarding
a security attack. Effective management of cybersecurity has a direct business
impact that cannot be underestimated.

What is your organization’s greatest concern regarding asecurity attack?

Data loss/leakage prevention
Mobile device security
Cloud security (public, private and hosted private cloud)Addressing data privacy issues
Operational Technology Security

Equipment damage
and downtime

Security governance and management (e.g. reporting, metrics, risk management)

Financial loss

Ongoing compliance monitoring (including regulation)
Identity and access management

Loss of intellectual
property (IP)

Payment Security

Customer loss

Edge/ Endpoint Security

Reputational damage

Security analytics intelligence response and orchestration
0%

10%

20%

30%

40%

50%

60%

Source: IDC EMEA, IDC European Tech and Industry Pulse Survey 2019-2020 – Manufacturing. N= 290 Respondents asked
to select 3 to 5 Very Important IT Security Priorities (Multiple Selection)© IDC 2021

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Source: European Security Strategy Survey, Manufacturing sample, N=67

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New changes to the work
models are here to stay

Q. By 2022, how do you expect yourworkforce to be working?
100%

Q. In your opinion, which work practices and technology advances emerging
from the pandemic are most likely to endure?
Remote and hybrid work models will be an embedded part of accepted work practices for many industries

49%

Intelligent digital workspaces will be an expected way of working across locations, time zones and devices

80%

46%

Shift to the reliance on cloud-managed and based connectivity/devices/services

39%

Online-first preference for collaboration
Employee experience as a driver of business growth and innovation will remain a top priority

60%

37%

33%

40%

Physical workspaces will become increasingly instrumented, interconnected, and intelligent

Employees that can choose to work remotely or
at a corporate facility on an ad-hoc basis

29%

0%

10%

20%

30%

40%

50%

To ensure the health and safety of front-line employees who must be on-site manufacturers
need to communicate a change plan to minimize the proliferation of needless risks and provide
guidance on how they can protect themselves.
At the same time, hybrid workplace models are creating new challenges around how to make surelines of communications are not broken among distant workers and that the continuous change of
workplace does not disrupt the core innovation delivery and operational process.

© IDC 2021

Employees that are on a fixed hybrid schedule,
working remotely part of the week, and at
corporate facilities part of the week
Employees that are given the choice to work
remote or at corporate facilities but can’t easily
shift back and forth.

34%

Automation of repetitive tasks and workflows will become more ubiquitous

Employees that can only work onsite

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20%

Employees that are remote first, with physical
corporate locations for collaboration, including
meetings and training
0%

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Essential Guidance
Being a digital company is more than having the right technologies.
• Manufacturers are on the verge of a revolution in the way they use information. Everybody will need to access information through cloud, mobile tools and even wearables. Be aware: the more
information that is available, the more it will be requested by shop floor users and other business units.
• Users will want a continuous stream of information from integrated applications. In order to be relevant to the business, CIOs will need to find a way to bridge the gaps between business applications
as well as to continuously update existing applications for the latest and greatest functionality.
• Make sure you have the necessary technical and organizational foundation for smart manufacturing in place before starting the initiatives, specifically looking at how IT/OT functions need to be
integrated.

Information management impacts every manufacturing process. Companies need end-to-end information management tools and Concepts.
• Enterprise applications, content and document management, master data management, and IoT will converge to create this integrated information and process flow across the ecosystem.
• Carefully plan the transformation steps to avoid delays. Before achieving seamless, real-time, and bidirectional data and information flows, there will be many changes and disruptions to roles andprocesses.
• Consider the concrete outcomes to be a higher priority than eliminating information silos. Every piece of information has to be delivered to multiple audiences, inside and outside the organization, withthe right script and context around it.

Manufacturing organizations must look to implement an integrated governance model — this will be the norm within 5 years• Clearly define the value that is sought through the adoption of modern technologies. Relevant business cases must be sold throughout the manufacturing organization, starting from the plant floor.
• The fundamentals of a smart manufacturing initiative will require secure plant floor connectivity – for IP equipment and mobile devices, analytic capabilities (either in-house or sourced), robotic skills(hardware & software), system integration from shop floor to top floor and possibly customer to supplier, and IT/OT integration.
• An evolving and ever-tightening regulatory and IT security environment must also be considered. Business and IT must work together — it’s too important to be left to IT alone.

Bottom Line
© IDC 2021

Every company has to learn that new technology in an old organization just makes the old organization more expensive.

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MessageFrom
intelligent,Sponsorconnected and secure information advantage

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OpenText(TM) helps organizations reduce
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manufacturing efficiency.

Learn more

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About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer
technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. Morethan 1,100 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For 50 years, IDC has provided
strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world’s leading technology media, research, and events company.

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