Industry Disruptions Shape the Future of Modelbased Systems

Industry Disruptions Shape the Future of Model-based Systems Engineering Marc Halpern, P. E. , Ph. D. CONFIDENTIAL AND PROPRIETARY This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other intended recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates. © 2018 Gartner, Inc. and/or its affiliates. All rights reserved.

No One Gets Credit for Avoiding Failures Like These! 1 © 2016 Gartner, Inc.

Key Issues § What business trends are shaping the need for next generation MBSE? § What key technology trends shape new MBSE opportunities and risks? § How can manufacturers navigate the opportunities and risks of MBSE? 2 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved.

Key Issues § What business trends are shaping the need for next generation MBSE? § What key technology trends shape new MBSE opportunities and risks? § How can manufacturers navigate the opportunities and risks of MBSE? 3 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved.

Top 12 CEO Business Priorities 4 © 2018 Gartner, Inc. and/or its affiliates. All

Speak to These Challenges to Gain Executive Attention 5 © 2018 Gartner, Inc. and/or

External Macro Trends That Keep Executives Awake at Night! Macro economic growth/stability 16% Regulations 13% Political and social environment 13% Consumer behavior and demand 12% Changing business structure in specific industry 11% Advances in technology-innovation disruption 11% Industry competition 10% Currency exchange rate 8% General costs 7% Trade conditions 6% Digital change 6% Enviromental sustainability 6% IT change (other than digital) 6% Emerging markets evolution 6% Demographic changes 5% Oil and other energy prices and sources 5% Access to capital/investor confidence 5% Workforce/talent/skills 4% Interest rates and inflation/deflation 4% 4% Government spending and investment Geopolitical situation 3% Globalization 3% Taxation 2% Organizational factor/not macro enviromental 2% Cybersecurity 2% Healthcare 1% Terrorism 1% Other 6 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved. Market conditions Political/social Technological Financial 3% "What are the two most important external macro trends shaping your business strategy? " (Open-style responses) n = 388 CEOs and senior business executives © 2017 Gartner, Inc.

Digital Business Gains Executive Mindshare! 7 © 2018 Gartner, Inc. and/or its affiliates. All

“Digital Products” Accelerate the Need for Systems Engineering "In a business context, the term 'digital' does not have an agreed definition. In your own words, what do you mean when you think about 'digital business' in the context of your business and industry? " (Open-style responses) 2017 Gartner CEO and Senior Business Executive Survey Large companies, worldwide, 4 Q 2016, n = 388 8 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved. 5% "Not applicable" responses

As Product Network Complexity Accelerates, Value Chains Need Systems-Centric NPD and NPI 9 ©

As Product Network Complexity Accelerates, Value Chains Need Systems-Centric NPD and NPI Supply Chain Disruptions New Product Innovations Diverse Market Demands Material and Resource Constraints Maze of Regulations 10 © 2015 Gartner, Inc. and/or its affiliates. All rights reserved. Manufacturing Vulnerabilities

Digital Business Demands Systems and Systems-of-systems Thinking to Design Products Complex Machines Processes Even Retail Stores Factories #Gartner. SYM © 2014 Gartner, Inc. and/or its affiliates. All rights reserved. Services

Key Issues § What business trends are shaping the need for next generation MBSE? § What key technology trends shape new MBSE opportunities and risks? § How can manufacturers navigate the opportunities and risks of MBSE? 12 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved.

Ecosystems Will Also Be Part of Digital Business Models Ecosystems APIs Mobile BIM Cloud Nexus Social Data BI Io. TPhysical Smart World Smart Machines 13 © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. MES PLM IT ERP Core Systems OT CRM

Balancing Innovation vs. Core Capability Transform Expectations Peak of Inflated Expectations Positive Hype Innovation Trigger Plateau of Productivity Negative Hype Grow Slope of Enlightenment Trough of Disillusionment Run Time 14 © 2017 Gartner, Inc. and/or its affiliates. All rights reserved.

Hype Cycle for Discrete Manufacturing and PLM, 2017 expectations Cloud-Native CAD MRO PLM Functionality Product Innovation Platforms Cloud-Native CAE, Simulation and Virtual Prototyping MPM Frameworks Model-Based Manufacturing Cloud Computing in Manufacturing Operations Cloud-Based Internet of Things PLM for Manufacturing Applications Operations Supply Planning Digital Twin Parts and Materials Search and Selection Simulation and Virtual Prototyping Medical Devices — PLM Enterprise Manufacturing Intelligence Product Requirements Management Value-Chain-Centric PDM MES Applications for Discrete Manufacturing Enterprise Labeling Plant Engineering and Design Product Portfolio and Program Management Simulation and Test Data Management Quality Process Management Applications Real-Time SPC Applications Product Cost Management Industrial Operational Intelligence 3 D Printed Tools, Jigs and Fixtures (formerly 3 DP-Enabled Augmented Manufacturing) System Engineering Software Sustainable Design PLM Synchronized BOMs Supplier Quality Management Applications Peak of Inflated Innovation Trigger Expectations Trough of Disillusionment Slope of Enlightenment As of July 2017 Plateau of Productivity time Years to mainstream adoption: less than 2 years 15 © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. 2 to 5 years 5 to 10 years more than 10 years obsolete before plateau

Hype Cycle for Discrete Manufacturing and PLM, 2017 expectations Cloud-Native CAD MRO PLM Functionality Cloud-Native CAE, Simulation and Virtual Prototyping Product Innovation Platforms Parts and Materials Search and Selection MPM Frameworks Simulation Model-Based Manufacturing Medical Devices — PLM Cloud Computing in Enterprise Manufacturing Operations Cloud-Based Intelligence Internet of Things PLM for Manufacturing Applications Product Requirements Operations Supply Planning Management Digital Twin and Virtual Prototyping Value-Chain-Centric PDM MES Applications for Discrete Manufacturing Enterprise Labeling Plant Engineering and Design Product Portfolio and Program Management Simulation and Test Data Management Industrial Operational Intelligence Real-Time SPC Applications Product Cost Management 3 D Printed Tools, Jigs and Fixtures (formerly 3 DP-Enabled Augmented Manufacturing) System Engineering Software Supplier Quality Management Applications Peak of Inflated Innovation Trigger Expectations Synchronized BOMs Trough of Disillusionment Slope of Enlightenment As of July 2017 Plateau of Productivity time Years to mainstream adoption: less than 2 years 16 © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. 2 to 5 years 5 to 10 years more than 10 years obsolete before plateau

Facilities and Infrastructure as Digital Twins 17 © 2017 Gartner, Inc. and/or its affiliates.

Not All Digital Twins Need to be High Fidelity Physics Models § Digital twins should provide you with a view into assets — based on your business objectives § In the era of Io. T, we should be able to have a detailed view of every device. § If you do not have this view you will be commoditized. By 2020, OEMs Must Have a Digital Twin Strategy or Risk Commoditization Image sources: Courtesy of L. Shamanna, A. Velosa, A. Johnson 18 © 2017 Gartner, Inc. and/or its affiliates. All rights reserved.

Digital Twins Drive Better Decisions GE 90 turbine Blade erosion Emirates and GE Use Digital Twins to Optimize Maintenance and Identify Engines Requiring Extra Inspection Image source: Gartner and GE Aviation (www. geaviation. com/digital) 19 © 2017 Gartner, Inc. and/or its affiliates. All rights reserved.

Things and Processes Will Increasingly Involve Digital Twins https: //www. gerenewableenergy. com/content/dam/gepower-renewables/global/en_US/downloads/3 d-still-images/windonshore-digital-wind-farm-representation-1900 px. jpg 20 © 2017 Gartner, Inc. and/or its affiliates. All rights reserved.

Systems Engineering and Systems Simulation Take Center Stage in the Next-Generation PLM Market 21

Systems Engineering and Systems Simulation Take Center Stage in the Next-Generation PLM Market NPD Management Platform Architecture MCAD SW Systems ECAD Requirements Management Continuous Improvement 22 © 2017 Gartner, Inc. and/or its affiliates. All rights reserved.

Coordinating MCAD, ECAD, and Software Development ALM ECAD sends proposed component placement back to MCAD reviews and either suggests changes or accepts placement. When ECAD-MCAD agreement is reached, designs are synchronized 23 © 2017 Gartner, Inc. and/or its affiliates. All rights reserved. define board outline, hole locations, cut-out cavities, keep-in/keep-out areas, height restrictions, critical component placement

Key Issues § What business trends are shaping the need for next generation MBSE? § What key technology trends shape new MBSE opportunities and risks? § How can manufacturers navigate the opportunities and risks of MBSE? 24 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved.

The Challenge of Evolution New © 2018 Gartner, Inc. and/or its affiliates. All rights reserved. e ng C to y rit Flexibility to Adapt/Adjust/Update Low 25 io Pr Risk of "Lock-In" and Obsolescence ha C os Magnitude to f. C ha ng e High Age Old © 2017 Gartner, Inc.

The Digital Business Transformation Challenge Digital Business Progress Harvesting/Refining 2% 12% Scaling Delivering 35% Desire/Ambition Gartner CIO Survey, 2018 26 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved. [CATEGORY NAME] 28% Designing Do not have digital initiative Barriers to Progress 15% 8% [CATEGORY NAME] [VALUE] [CATEGOR Y NAME] [VALUE] Other 7% CEO Commitment 6% Board Commitment 4% IT Organization 0. 4% [VALUE]

Majority of organizations are using or plan to use Digital Twins in the next year itself 48% { 24 % 19 % 7% 20 [VAL % UE] Already using digital twins Not using, but planning to use in the next year Not using, but planning to use in the next three years Not using, but planning to use in four or more years Not planning to use digital twins Not familiar with this technology Percentage of Respondents Base: All respondents, excluding "don't know" responses, n = 200 Source: Gartner, 2017 © 2017 Gartner, Inc. In your Io. T solution implementation, is your organization also adopting digital twins? 27 © 2017 Gartner, Inc. and/or its affiliates. All rights reserved.

Think Bimodal to Enable Next-Generation Samurai Disciplined Evolution 28 © 2017 Gartner, Inc. and/or

Principle 1 - Bimodal Strategy § Changes the way you work 2 + Innovate § Experiment and learn § Domain of "fast" innovation and partnering - 2 Mode 2 Risk & Change Differentiate Governance § Driven by demand process improvements § Medium-term change management Mode 1 § Ongoing optimization, incremental value § Analog and mechanical 1 - Run § Standardization and cost reduction § Proven and reliable © 2015 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner and ITxpo are registered trademarks of Gartner, Inc. or it’s affiliates. + 1

Identifying Business Priorities and Maps to Priorities As-Is Target Interview Results Hot Topics Community Questionnaires Needed Capabilities Findings Existing Capabilities Initiative Candidates Pick Initiatives Define Roadmap © 2015 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner and ITxpo are registered trademarks of Gartner, Inc. or it’s affiliates.

Mode 1 Thinking: Evolving PLM Maturity © 2015 Gartner, Inc. and/or its affiliates. All

Case Study: Aerospace Company Prioritizes Potential PLM Investments at Each Maturity Level Initiative Evaluation: Business Value versus Feasibility High Complex Business Value Variant & Config. Mgmt. Reuse of Concept/ Design 9 11 Automated Interfaces Stable Eng. Environment Tool Best Practices PDM Standardization Change Mgmt. 10 3 1 High Priority 7 4 2 5 PM Tool & Method 8 SW Eng. & System. Level Integration Decisions on Eng. Standards 6 Requirements Mgmt. 14 Product Platform Governance 12 15 Manufacture Anywhere Low © 2015 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner and ITxpo are registered trademarks of Gartner, Inc. or it’s affiliates. 13 Supplier Integration Simple Low Priority Low IPP Guidelines but Low Value Initiative Feasibility High

Assess Technology Readiness, When to Manage Risk When Planning IT for Each Maturity Level expectations MRO PLM Functionality Product Innovation Platforms Industrial Operational Intelligence Cloud-Based CAD Cloud Computing in Manufacturing Operations IT/OT Convergence and Alignment Model-Based Manufacturing Cloud-Based PLM Applications Internet of Things for Manufacturing Operations MPM Frameworks Parts and Materials Search and Selection Manufacturing Scheduling Value-Chain-Centric PDM Product Requirements Management MES Applications for Discrete Manufacturing Cloud-Based CAE, Simulation and Virtual Prototyping CAD-Centric PDM Simulation and Virtual Prototyping Product Cost Management Mobility in Manufacturing Operations Supplier Quality Management Applications System Engineering Software ISA-95 Integration Standards for Discrete Manufacturing Innovation Trigger Peak of Inflated Expectations Product Portfolio and Program Management Label and Artwork Management Quality Process Management Applications Plant Engineering and Design Enterprise Manufacturing Intelligence Sustainable Design PLM Real-Time SPC Applications Synchronized Bills of Materials As of July 2015 Simulation and Test Data Management Trough of Disillusionment Slope of Enlightenment Plateau of Productivity time Plateau will be reached in: less than 2 years 2 to 5 years From "Hype Cycle for Discrete Manufacturing and PLM, 2015, " 20 July 2015 (G 00277491) © 2015 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner and ITxpo are registered trademarks of Gartner, Inc. or it’s affiliates. 5 to 10 years more than 10 years obsolete before plateau

Case Study: Aerospace Company Identifies Implementation Program Dependencies to Navigate Maturity Levels Decisions on Engineering Standards MCAD Best Practices PDM Standardization ECAD Best Practices Project Mgmt. Tool and Method Automated Interfaces SW Engineering and System-Level Integration Requirements Management © 2015 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner and ITxpo are registered trademarks of Gartner, Inc. or it’s affiliates.

Case Study: Aerospace Company Defines PLM Implementation Program That Orchestrates IT Projects and Maturity Readiness Year 1 Year 2 PLM Strategy Plan Adjustment Year 3 PLM Strategy Plan Adjustment PLM Program Execution Incl. Decisions on Engineering Standards CAD Selection CAD Best Practices Program Planning and Adjustments Identifying Best Practices/Processes PDM Program Defined and Launched PDM Rollouts PDM Standardization CAD-PDM Interfaces Legacy Req. Mgmt. Stab. PPM Stabilization Existing Project Automated Interfaces SW Engineering and System-Level Integration Requirements Management Implementation Future Architecture & Showcase Bid & PM Extension of existing Project © 2015 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner and ITxpo are registered trademarks of Gartner, Inc. or it’s affiliates. New Initiative Project Mgmt. Tool & Method

Adopt “Mode 2” Opportunities and Expand Appropriately Pilot Certify © 2015 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner and ITxpo are registered trademarks of Gartner, Inc. or it’s affiliates. Adopt Scale

Change Management Is Key to Achieving Each Maturity Level © 2015 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner and ITxpo are registered trademarks of Gartner, Inc. or it’s affiliates.

Change Management Is Key to Achieving Each Maturity Level § Executives must lead change § Empower the agents of change § Recruit the influencers § Educate the organization § Focus on changes that matter most § Eliminate conflicting commitments © 2015 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner and ITxpo are registered trademarks of Gartner, Inc. or it’s affiliates.

Summary § What business trends are shaping the need for next generation MBSE? – “Market-of-one”, Next-generation products, Digital business § What key technology trends are shaping MBSE capabilities and thinking? – Platform strategies, Internet-of-things, Digital twins § How can manufacturers navigate the opportunities and risks of MBSE? – Adaptive emergent thinking, Bi-modal practices, Exploiting change accelerators © 2015 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner and ITxpo are registered trademarks of Gartner, Inc. or it’s affiliates.