ISG Provider Lens™ Digital Engineering Services - Integrated Customer/User Engagement - U.S. 2023

Digital engineering capability is at the forefront of business transformation initiatives

Industries and businesses are recording a rise in the number of digital products with the development of tools, techniques and capabilities that collaborate and connect in various ways. Cloud-based, no-code, low-code, scalable, resilient and secure platforms are in high demand because they efficiently deliver digital engineering services, including design, experience, operations and applications, across industries. Platform engineering toolchains enable self-service capabilities and help address end-user requirements.

The digital twin technology is driving digital engineering adoption in various ways because it helps in the accurate design and testing of products and systems, provides real-time data on physical asset performance, improves maintenance, refines data analysis and reduces downtime.

Digital platforms play a vital role in delivering business objectives by developing solutions that combine various systems and components. Technology and software vendors strive to provide end-to-end system integration services rather than point solutions. This growing association among niche technologies leads to innovative solutions, such as private 5G networks and edge/multiaccess edge computing, modernizing deployments, design engineers and managed services. It also includes platform integration with telecom cloud platforms, testing, automation and orchestration.

The 5G technology is frequently paired with AR and VR technologies, facilitating immersive experiences for customers. The high speed and low latency power IoT applications with use cases in smart cities, connected cars and industrial automation.

Several technologies and tools ensure digital resilience with a structural framework and multilayer architecture. Applications must have immediate threat and risk management capabilities and ensure seamless business continuity, considering they operate on multimedium operations and are exposed to various internal and external environments. A digital system leverages AI to enable observability, auto-remediation, chaos engineering, supply chain security and site reliability. Applied actions involve observing data in real time using technologies such as AIOps, automation and ML to minimize delays in decision-making. Combining Scrum and Kanban methodologies ensures regular process iterations and continuous workflow and eliminates batch processing.

The need to increase awareness of and practice sustainability is among the top three focus areas of every business portfolio. Sustainability requires across-the-board design reengineering linking systems to provide a unified view of an enterprise. Manufacturers must reinvent the entire design blueprint across the extended value chain, embedding sustainability in processes, products, operations and recycling. Value chain partners must take an ecosystem-based approach, focusing on neural manufacturing, to fulfill sustainability commitments. This approach also helps meet regulatory requirements dynamically, attract investors and drive growth.

Metaverse is the new and futuristic driver that enhances CX and customers’ interaction with a company’s products and services. Although it has valuable use cases in digital engineering and manufacturing, its operationalized usable model in these industries is yet unseen. It helps test virtual prototypes and enables stakeholders to get a real-time experience, thereby helping in gauging customer interest.

Design for manufacturing (DFM) helps address supply chain disruptions and margin pressures. It also assists in designing and developing parts cost-effectively. It bridges the communication and collaboration gaps between design engineers and suppliers before a product enters production, mitigating potential supply chain issues, reducing costs and maintaining quality. Via 3D prototyping, DFM empowers stakeholders to collaborate and recalibrate designs in real time. It improves fault tolerance levels and reduces sourcing and redesign issues, preventing costly late-stage redesign, additional material costs and product failure or recall. It also helps train junior staff quickly and precisely. From a sustainability standpoint, DFM reduces cycle times, lowering the manufacturing carbon footprint and optimizing the product development cycle.

1. The benefits of adopting digital engineering services include the following:

2. Reusable models - Digital twin models can be saved and reused after suitable modification in the future.

3. Reusable models - Digital twin models can be saved and reused after suitable modification in the future.

4. Broad suite of industrial applications – These applications range from a plant to an entire company, which can be quickly designed and implemented.

5. Proactive maintenance – This is made possible by embedded IoT devices, which generate real-time sensor data.

6. User and CX monitoring – User and customer engagement can be better tracked using mobility solutions to optimize costs.

The adoption of digital engineering services in the U.S. market

About 40 percent of U.S. manufacturing companies are yet to adopt digital engineering services and leverage AI/ML, Industry 4.0, IoT and cloud computing. However, U.S. industries are warming up to digital engineering, which pivots around innovation by validating concepts, observations and analytics. Digital twins enhance testing capabilities, predict outcomes and mitigate risks. Cloud technology providers such as AWS also play a key role in promoting engineering in the digital space by providing industry-vertical solutions. Furthermore, the best practices followed by the aging workforce in the U.S. can be identified and institutionalized to empower the nextgeneration workforce through a digital UX on workstations and mobile devices.

Quality engineering (QE) is a discipline gaining prominence as it ensures standardized outcomes at every solution development point. It is a systematic approach to ensure the quality of products, services or processes throughout their lifecycle. It involves the application of engineering principles, methodologies and tools to design, develop, test and maintain systems that meet or exceed customer expectations and regulatory requirements. Quality engineering aims to minimize defects, reduce variability and optimize performance while maintaining cost-effectiveness and efficiency. Digital engineering processes encompass critical aspects, including quality planning, design for quality, process improvement, quality control, verification and assurance.

The track and trace capability refers to the ability to monitor the movement and location of products throughout the supply chain, from manufacturing to their distribution to end customers. This capability is critical for product quality and safety and regulation compliance. In the U.S. market, the track and trace capability is essential for pharmaceuticals, food and beverages, and consumer goods. Track and trace systems typically rely on various technologies, such as barcodes, QR codes, RFID tags and GPS tracking, to provide realtime information about product location, status and condition.

Digital engineering plays a pivotal role in Industry 4.0. The manufacturing industry will become increasingly lean and agile using technologies such as 3D printing, robotics and artificial Intelligence of Things (AIoT). However, some sectors that are poised for drastic changes include the following:

• In the healthcare sector, digital engineering can help develop innovative medical devices, improving patient experience and reducing costs. For example, VR and AR can help monitor patients’ vital signs remotely and enable quick medical help

• Another use case is the transport sector, where digital engineering services are revolutionizing the industry with inventions such as self-driving cars and ride-hailing apps, facilitating easy transport availability.

• The retail sector also holds immense potential, where digital engineering services can enhance CX and reduce operating costs.

• In the financial services sector, online and mobile banking has enabled anywhere, anytime banking. Newer technologies such as blockchain improve the security and transparency of financial transactions.

• In the education sector, digital engineering helps improve learning outcomes while increasing affordability.

M&A in the digital engineering space may slow down in H1 2023 due to the macroeconomic headwinds of high-interest rates, inflation and tepid investor interest. However, private equity will be key to future funding opportunities. Cloud computing tops the M&A agenda, while technologies such as 5G and metaverse intrigue investors. This is followed by AI/ML, where monetization is the primary hurdle. Through the next decade, market consolidation will likely gain more steam. Sectors of investor interest continue to be FinTech, healthcare, life sciences and sustainability.

More critical than cloudification is the data migration to the cloud. Integrating AI and data engineering will facilitate rapid decision-making and issue resolution. Anything-as-a-service (XaaS) will gain momentum as ecosystem partners deliver platform-based tailored solutions to users anywhere, any time.

Integrating AR/MR into mobility devices will not only widen their reach and adoption but also open the doors to new revenue streams. Use cases include field support, training and development, and tech support, resulting in immense cost savings. Private 5G networks powered by private cloud services will ensure the much-needed cybersecurity for the struggling industry.

Vendors can deploy self-service tools, provide empathetic real-time assistance, embark on omnichannel deployment and leverage Web 3.0 and metaverse for an immersive experience, improving CX. Intelligent operations, coupled with Industry 4.0, facilitate interconnectivity, digitalization and automation enabled by IoT, additive manufacturing, cloud computing, edge computing, analytics, robotics, cybersecurity, AI/ML and AR/VR. Furthermore, intelligent mobility garners a large proportion of engineering and R&D spend.

Vendors are responding to customers’ changing expectations by building frameworks and accelerators for architecting, designing, building, testing and integrating digital twins. The market is also witnessing the entry of nimble new-age players that, with chipsets, autonomous driving algorithms and cloud capabilities, are intensifying the competition with incumbents. Employees are also focusing on reskilling to become agile and crossintegrate horizontal capabilities. Additionally, ongoing macroeconomic challenges have led to budget cuts, which are more maintenanceoriented than innovation-centric. However, budgets will likely increase after recessionary trends moderate.

Today’s customers demand a complete portfolio of digital solutions that are original and protected by IP rights. This spans the product lifecycle development, comprising consulting, design, development, verification and validation, deployment and system integration, and managed services and support.

A digital engineering service suite must include collaboration tools, a centralized data repository, computer-aided design (CAD) tools, supply chain integration, inventory management, ERP and change management.

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