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Smarter Data Architecture in M&A

David Fredriksen, Platform Senior Manager, Digital Realty
November 16, 2022

Respond to growth in customers & partners by accelerating integration of new sites

What are Smart Factories?
Global Manufacturers are evolving how they create and deliver value for their ever-increasing number of customers and partners. 86% of Manufacturers believe that their Smart Factory will be the main driver of competitiveness in 5 years1, and they will likely need to align people, processes, and data. With this being a competitive advantage, what exactly is a Smart Factory? According to Deloitte, Smart Factories are a highly responsive, adaptive, and connected system that converges information technology (IT) and operational technology (OT). They can connect data sources, drive insights, and by using Artificial Intelligence (AI) and Machine Learning (ML) provide improvements in performance, safety and sustainability1. Specific use cases for Smart Factories range from improvements within single OT systems to networks of multiple, highly advanced factories unlocking the power of aggregating disparate and siloed sources of data.

Optimizing Smart Factories
Through 2024, global 2000 Manufacturers as defined by Forbes’ annual ranking of the world’s 2000 largest public companies, will face an acceleration of Data Gravity Intensity by a compound annual growth rate of 144%2. This growth in the creation, aggregation and private exchange of data globally is emerging as of a result of new capabilities and software solutions that deliver tangible value but with an increase in types, volume and points of data exchange. One of these systems is a Manufacturing Execution System (MES). As defined by Gartner, MES is “a specialist class of production-orientated software that manages, monitors, and synchronizes the execution of real-time physical processes involved in transforming raw materials into intermediate and/or finished goods”3. MES often connect data communities across single assets, production lines, the factory floor, and across the factory network.

Leveraging MES can enable leading Manufacturers to overcome margin pressure, enable traceability, and improve the quality of production. Deploying MES on a global level, requires consideration of a data-driven business strategy. With IT spending to reach $4.4 Trillion in 20224, many global companies are operating increasingly complex systems, serving millions of users and endpoints, integrating Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) solutions, with coverage across global points of presence. Aggregating disparate sources of data from ERP, CRM, and Industrial Internet of Things (IIoT) empowers manufacturers with real-time insights and capabilities for AI/ML-based modeling and simulation. This increase in data across multiple points is where Data Gravity can threaten to be an obstacle, by inhibiting workflow performance, raising security concerns, and increasing costs.

A Connected Smart Factory Community
The future of Smart Manufacturing will likely include connected data communities to overcome the macro trends challenging this industry. For example, Industry 4.0 related Merger and Acquisitions (M&A) have doubled from 2011 to 20215 as Manufacturers look to expand their global presence. This often results in the need to achieve scale while also having to solve for an increasing number of disparate data sources that are now participating in data exchange.

As participants in data exchange continue to increase in number, manufacturers are faced with more points of risk when it comes to complexity, data sovereignty and cybersecurity. This risk is also tied to stringent regulations like the European Union’s General Data Protection Regulation that can levy fines of up to 2% of global turnover against companies that fail to protect their customers6. This is often where traditional strategies to exchange and store data are not enough. Most Smart Factories must maneuver through globalization, increased data points, and regulations when it comes to their business models. Data first strategies can help by optimizing for data exchange across existing and acquired assets amplifying the importance of partnering with a data center provider who can offer a secure and neutral meeting place. These strategies can reduce the Manufacturer’s risk through their globalization journey as environments, business partners and solutions continue to evolve. By leveraging a platform that inverts traffic flow and brings users, networks, software, and clouds together in a privately hosted open and neutral center of data exchange.

New Business Architecture:
Because of the demand for Digital Transformation, more and more Manufacturers are realizing the need to operate ubiquitously and on demand. Through increased competition, there is an increasing need to compete with companies employing Direct-to-Consumer (D2C) models. This can be tied to demand sensing technology to capture supply chain intelligence to anticipate changes in demand7. This is where supply chain aims to be more agile and can differentiate the buying experience. However, to ensure tracing and visibility throughout production requires connecting Centers of Data. This is where the meeting place for private and public data sets comes in. With secure data migration to PlatformDIGITAL™, it is possible to have an open, multi-platform network that localizes traffic flows between centers of data. This also enables localized policy enforcement to manage entitlement, compliance, and zero trust security. This is the type of new business architecture that many leading Smart Factories should be considering in their data-first strategy.

Conclusion:
Smart Factories introduce potential opportunities accompanied by a variety of factors to consider. Solutions like MES combined with other aggregated data from IT and OT allow for real-time insights and capabilities that can change how Manufacturers produce and deliver value. M&As are likely to continue as a strategy to grow into new markets and reach new audiences. The evolution of applications and use cases are why global Manufacturers understand that where they place and connect their data matters, and that there is a distinct need for that secure and neutral meeting place for hybrid IT business models.

To help you in this journey, we have compiled a library of cutting-edge resources based on our PDx™ methodology for optimizing data exchange.

Developed by expert Solutions Architects, the Optimizing Manufacturing Data Exchange PDx™ Solution Toolkit includes:

  1. Pervasive Datacenter Architecture (PDx™) Solution Brief
    A codified strategy and solution approach to data-driven digital transformation
  2. Pervasive Datacenter Architecture (PDx™) Blueprint
    Three-step integration and hosting solution process to achieve target state architecture
  3. Pervasive Datacenter Architecture (PDx™) Design Guide
    Plan, identify, map and deploy methodology that shows real value impact

David Fredriksen, Senior Manager on the Platform team. He leverages the Pervasive Data Center Architecture (PDx™) methodology to enable enterprises to solve for challenges on their journey through digital transformation, to defy data gravity and unlock the power of connected data communities.

1. Smart factory for smart manufacturing. Deloitte United States. (n.d.).

2. Digital Realty. (n.d.). (rep.). Data Gravity Index DGx.

3. Gartner. (n.d.). Manufacturing Execution Systems (MES) software reviews 2022: Gartner Peer insights.

4. Gartner Press Release. “Gartner Forecasts Worldwide IT Spending to Reach $4.4 Trillion in 2022” (2022, April 6).

5. IoT.Business.News. (2022, October 21). The Rise of Industry 4.0 in 5 stats. IoT Business News.

6. Fines / penalties. General Data Protection Regulation (GDPR). (2021, October 22).

7. Mussomeli, A., Delesalle, P., & Kilpatrick, J. (2022, April 1). The new supply chain equilibrium. Deloitte Insights.

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