What digital platform does my business need?
IT Background on Platform Technologies for Decision-Makers in Manufacturing
Digital platforms are a core component of digitalization in manufacturing:
- Major business objectives can only be achieved by successfully exploiting this technology.
- Many investment decisions are connected with these issues or exert an influence on them.
Even so, a representative survey of German industry managers and directors by the IT association Bitkom again found that management often lacks sufficient background on this IT topic. According to the survey, only one-half of managers has an approximate idea of what is meant by terms like “platform economics” and “digital platforms”. One in four says they have never heard of these phrases.
No doubt these numbers would appear less dramatic if only the manufacturing industry had been surveyed. Nevertheless, we can be sure that Bitkom would have discovered knowledge gaps here as well.
This is because managers don’t usually consider it their task to become experts on current IT topics. Rather, management sets targets and a clear set of expectations, and on this basis mandates the relevant teams to find and implement the best solution.
But one can’t rely on this traditional division of responsibilities much longer. Today, decision-makers are faced with the same situation as almost all other professionals: To be successful at their jobs, it helps to get acquainted with the key IT components of digitalization.
A process engineer benefits from a basic understanding of software development and machine learning. A managing director or board member profits from knowledge of the IT solutions that support core business processes – and that includes digital platforms.
Below, we have compiled a series of questions and answers that offer a basic outline of the topic. Our experts would be pleased to assist you in gaining a deeper understanding of aspects that are particularly relevant to your enterprise.
- Platform economics, digital platform, digital backbone, digital continuity – What do these terms mean and how are they related?
- What are the functions and benefits of digital platforms in manufacturing enterprises?
- Our business processes are supported by various IT solutions. How do I ensure continuity?
- What benefit can I gain from cloud-based use of a digital platform? And when can I do without cloud connectivity?
- What determines whether operating a digital platform becomes a success?
- Is it possible to implement a platform via a step-by-step process?
Platform economics, digital platform; digital backbone, digital continuity – what do these terms mean and howare they related?
We have spent the past few years in fast-forward mode, and that has brought about a fundamental change: From a “linear, resource-heavy, producer-driven industrial model to the demand-driven, multi-sided platform model” (World Economic Forum).
Apple, Amazon, Alphabet (Google) and Alibaba are the leading protagonists of a business world in which digital platforms are the basic element of success.
To describe this phenomenon, commentators often use the term platform economics.
Typical business models in platform economics are:
- “Matchmaking”, i.e. brokerage between providers and demanders of services. This is how AirBnB, Uber or Alibaba made it to the top of the game. Previously, such providers had no real assets of their own, but interestingly this is now changing. “The digital world is growing ever more analog”, commented manager magazine.
- On-demand/pay-per-use provision of assets and services; providers like Amazon, Microsoft and IBM use this strategy e.g. to market their cloud applications (designed as software-as-a-service, platform-as-a-service or infrastructure-as-a-service). In a future with autonomous cars, even mobility could be debited this way: Customers no longer buy actual automobiles but instead pay for a mobility that also offers professional and entertainment options on the road.
Digital platforms provide the infrastructure for these business models. Fundamentally, a digital platform is any IT architecture that enables “data generation, data structuring and data exchange formats based on technical standards” (VBW).
This IT architecture acts as a digital backbone which provides digital continuity for all actors and actions contributing to value addition.
What are the functions and benefits of digital platforms in manufacturing enterprises?
The higher the degree of maturity, the greater the likelihood that a business will rely on more than one digital platform.
This may include both proprietary and non-proprietary solutions, as indicated by a VBW industry survey.
Typical use cases are:
- Transaction platforms, e.g. for purchasing and sales
- Data-centric platforms to support e.g. closed-loop or end-to-end systematics
Examples for purchasing and sales (transaction platforms)
The changes that a digital platform can bring to purchasing can be illustrated by the “Supplier Connect” project at Linde Engineering: Both sides, i.e. the plant manufacturer and its suppliers, profit from leaner project execution, enhanced data quality and better data exchange capabilities.
Leveraging a digital platform to establish new business models for sales requires that it transcends enterprise boundaries. For example, the digital twin of a product lets you set up new invoicing models, enhance your position as a systems provider or add new service models to your portfolio.
Regarding the digital twin, it must be noted that irrespective of its concrete manifestation, this concept presupposes the existence of an appropriate platform. No matter whether your goal is virtual commissioning or predictive maintenance – you must have a continuous “digital thread”.
Connected processes boost added value (data-centric platforms)
One important benefit dimension of data-centric platforms are “closed loop” scenarios: The outputs of a process are used as input data for the repetition of the process and thus create a closed loop. The control loop improves the overall result, enhacing e.g. manufacturing efficiency and customer orientation.
Of course, you could also go to your colleagues with a clipboard and a checklist, or work your way through feedback routines by entering data in an Excel list. But data feedback is more efficient and secure (data quality) if it is performed by a digital platform. And it’s the only way to automate control processes (long-term goal: autonomous manufacturing).
If your enterprise uses a platform to connect product development, quality management and production, you can control and regulate manufacturing processes on a quality-driven basis, says CENIT expert Armin Schöne in his article Tolerance Analaysis: From Excel to the Digital Quality Twin.
In a different scenario, our FASTSUITE team shows what changes can be achieved by linking the workflows of the development division directly with welding production processes.
Our business processes are supported by various IT solutions: How do I ensure continuity?
Usually, a variety of IT solutions will be deployed across the vertical and horizontal processes of a manufacturing business. This includes systems that can be described as digital platforms.
Even after modernizing their IT architecture by adding state-of-the-art end-to-end solutions e.g. from our partners Dassault Systèmes and SAP, businesses often continue to access and manage business processes in different IT systems.
This challenge can be overcome via thorough integration. As Horst Heckhorn underlines in a recent article, this must ensure that not just the data flows but also the processes become continuous.
To achieve this goal, your integration partner must be up to speed, because the IT landscape is changing at an enormous pace. At CENIT, we continually invest in our tools and our teams. That’s why we are also prepared for platforms in hybrid architectures.
Good for manufacturing businesses to know: CENIT has developed the SAP-recommended solution for linking SAP and 3DEXPERIENCE, which can be found on the SAP price list as a solution extension.
What benefit can I gain from cloud-based use of a digital platform? And when can I do without cloud connectivity?
The victory march of online marketplaces in the consumer sphere would not have been possible without cloud services. And the cloud has become standard for many business processes as well.
The specialist portal industrie.de quotes recent KPMG figures which indicate that in 2019, more than three out of four enterprises (76 percent) relied on the cloud for computing services.
Before using any cloud service, one must ask questions regarding data security and regulatory compliance. But unlike just a few years ago, most decision-makers now know that cloud providers invest more in risk avoidance and structural stability than many mid-size businesses.
And then there are the benefits of the cloud, which open up entirely new dimensions for many IT topics. This is also true for digital platforms.
- Users can be sure they are always working with the latest software.
- It’s easier to change processes for all users across the enterprise because everyone is using the same solution (standard software).
- New collaborative workflows are more user-friendly and more easily installed by the IT.
- The platform can be scaled up to include new users.
- The IT cost structure improves, e.g. because costs for infrastructure and program maintenance decrease.
Advantages like these are convincing more and more decision-makers. At CENIT, we see a rise in interest as well: For instance, Martin Thiel, Senior Vice President of 3DS-PLM expects that by 2025, CENIT Group will be selling half of its software for Dassault Systèmes solutions as cloud licenses.
What IT architecture a business finally chooses to create via cloud services remains to be seen and will differ from one company to another. By the word "cloud" you can mean very different things. You can combine the private cloud with public cloud services and on-premises systems. If you administrate such services via a common system, you create a hybrid cloud (NIST definition of deployment models).
“I think the term »hybrid« is very apt, and it clarifies that the users’ concerns about becoming too dependent on a single cloud provider is obsolete”, writes André Vogt, Senior Vice President for Enterprise Information Management in a recent article in Manage IT magazine.
Can a digital platform still be managed without cloud support? Yes it can. After all, the cloud is only worthwhile if it leads to an additional value contribution. The decision as to what layers, components or processes should be connected to the cloud must hinge on the aspect of added value.
But if you understand how fundamentally connectivity has now penetrated industrial production, you have to ask yourself how long you can stick to a “no cloud” verdict. Another thought on this matter: Is it even possible today to still keep all processes on-premises? The statement “we won’t have anything to do with the cloud” is often deflated – at the latest – by the sales team’s cell phones.
What determines whether operating a digital platform becomes a success?
“That’s it”, you say: Your new or expanded platform has gone live. And now? Your project will only be successful if you leverage this milestone to reach the next one.
- The “digital thread” may consist of bits and bytes, but it depends on people, and they need support. You have to continually train and motivate your staff. It is crucial that you regard the changes brought about by digital transformation as changes in the way you work as well – from the boardroom to the janitor’s office. If you like, call it “New Work”.
- You have a digital platform, but you’ll hardly have connected “everything”. Therefore you have to ask yourself which applications or data silos you want to integrate next. Is it more a question of going the last mile to your edge devices, or is it more important to connect your management’s strategy cockpit?
Is it possible to implement a platform via a step-by-step process?
The question should rather be the reverse: Can a business create a platform and take it live in one master stroke? It’s conceivable, but probably only for startups or limited-scale greenfield projects.
In our view, the introduction or continued development of a digital platform should always be based on milestones that already contribute to value addition.
“Think big, start small“ is a piece of advice that has already benefited clients in many CENIT projects.
This approach also dovetails with a modern understanding of efficient IT projects. In today’s world, it’s better to make a quick sprint to the first dummy and agree on this status with the stakeholders than to aim for a 100% solution that takes a long time and is already outdated when it’s finally in place.
You can’t take a wait-and-see attitude with digitalization, nor can you prepare for all future developments. It’s better to get going and stay with it!
LEARN ON, UNDERSTAND MORE - FURTHER CONTENT ON DIGITAL PLATFORMS
- Issue paper "B2B platforms - Made in Germany", BDI (June 2020)
- MIT Blogpost (October 2019): The authors develop a readable view of management issues, based on a diverging definition of the digital platform (operational platform versus digital platform)
- Great panel discussion at the DLD Conference which investigates complex questions regarding digital platforms in view of their topic: “AI-Powered Manufacturing“ (January 2020)
- Scientific article on “Digital Platform Ecosystems”: For all those who want to take a very close look at the aspect of definitions and demarcations (November 2019)
REGISTER HERE FOR THE CENIT MAGAZINE
Subscribe to the best technical articles and blog posts from the CENIT Newsroom plus additional updates from our company.
The CENIT Magazine brings you fresh thinking and clear messages to help you successfully manage digital transformation.
Don't miss an issue now!